TUHU Car Inc.: Maintaining Buy on Structural Market Share Gains and Scale-Driven Growth Despite Near-Term Margin Pressure

TUHU Car Inc. Class A, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Shelley Wang from Morgan Stanley maintained a Buy rating on the stock and has a HK$21.50 price target.

Shelley Wang has given his Buy rating due to a combination of factors that support TUHU Car Inc. Class A’s long‑term growth prospects despite near‑term margin pressure. He notes that industry data showing declining after‑sales service value mainly reflects the weakness of traditional small “mom and pop” repair shops, which are steadily losing business to organized chains like TUHU. Management indicates that TUHU’s order growth is surpassing the broader market, suggesting continued share gains even as the overall independent aftermarket remains under pressure.

Shelley also highlights TUHU’s rapid franchise network expansion, surpassing 8,000 stores by the end of 2025, and expects the company to keep prioritizing scale and transaction volume in 2026. While intensified promotional competition from internet-backed rivals and TUHU’s own discounting strategy are likely to weigh on margins and have led him to trim earnings forecasts and lower the target price to HK$21.5, he still sees substantial upside from the current share price. In his view, TUHU’s growing bargaining power with parts suppliers, its structural ability to capture demand from small independents and authorized 4S dealers, and a potential softening of destructive price wars in China together justify maintaining an Overweight/Buy stance on the stock.