Tencent-backed Tuhu Car expects 2023 profit turnaround as post-pandemic travel surge boosted demand for vehicle repairs
- The Chinese car maintenance company listed in Hong Kong, said it expects its financial results for 2023 to reflect a turnaround in business
- Last year, more Chinese tourists opted for short-distance trips by car, according to the China Tourism Academy
The Shanghai-based company expects to record a net profit of “no less than 450 million yuan (US$62.53 million)” for last year, it said in a filing to the Hong Kong Stock Exchange (HKEX) on Friday. That would represent a turnaround from a loss of 551.9 million yuan in 2022.
When extraordinary gains are taken into account, including the premium arising from the forced conversion of convertible preferred notes in its IPO last year, Tuhu expects earnings to have surged to at least 6.6 billion yuan (US$917.8 million), versus a 2.1 billion yuan loss in 2022.
“All our convertible redeemable preferred shares were converted to class A ordinary shares upon completion of our initial public offering and therefore we will not incur fair value changes of convertible redeemable preferred shares thereafter,” it said in the filing.
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Tourism in China has been recovering since December 2022, when the country’s zero-Covid policy was dropped, with the number of domestic trips last year returning to about 80 per cent of pre-pandemic levels.
Tuhu said it had also benefited from a growing customer base, more favourable terms from suppliers as it improved its economy of scale, better margins as a result of an enhanced product mix, and better operational efficiency.
The company raised US$152 million in its Hong Kong initial public offering in September, having priced its shares at the low end of the range flagged to investors, Reuters reported at the time. The international tranche of Tuhu’s IPO was 2.3 times oversubscribed, while retail demand was 2.67 times the number of shares on offer.
Tuhu had initially wanted to list in New York but changed its plan to Hong Kong, where it had originally sought to raise about US$400 million, a person familiar with the situation told the Post in August 2022.
It was one of many Chinese firms that made the switch to list in Hong Kong as relations between Washington and Beijing deteriorated.
The start-up was founded by Chen Min in Shanghai in 2011 and offers a wide range of services online and in stores for car owners ranging from tyres, battery and chassis replacement parts to other car maintenance and repair services, according to its stock exchange filings.
