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China Stocks: TuanChe Limited (TC)

TuanChe Limited (NASDAQ:TC) was founded in 2010 and is headquartered in Beijing, China. It has 679 full-time employees (6/30/2018). It belongs to TuanChe Internet Information Service (Beijing) Co., Ltd. and is a leading automobile in China. E-commerce platforms and offline scene transactions currently cover hundreds of cities in 30 provinces, autonomous regions and municipalities across the country.

TuanChe Limited

TuanChe Limited (TC):

Tuanche lays out a new retail strategy around the automobile transaction scene, and builds a complete automobile transaction service ecological chain. The main products include: scene-oriented automobile marketing platform, scene-oriented financial platform and scene-oriented transaction chain service platform.

At present, Tuanche has established long-term and stable cooperative relations with tens of thousands of dealers of more than 60 automobile brands at home and abroad, and has jointly launched 1,000 large-scale automobile exhibitions (Huimin Tuanche) with more than 20 provincial TV media. Section).

Since its inception, Tuanche.com has helped 800,000 groupmates successfully purchase cars, with a GMV of more than 120 billion yuan.

In 2017, Tuanche and Tmall Motors held the “Double 11 Global Carnival Tmall Auto 100 Cities Auto Show and Tuanche Net Auto Show”, creating a sensational example of new automotive retail in the industry.

According to the financing history of Tuanche, the latest financing time was September 14, 2017, and the amount was not disclosed. The investor was PricewaterhouseCoopers. Looking at the past financing experience, the editor only found that Tuanche.com received a round B financing of tens of millions of dollars in August 2013. From 2012 to 2017, Tuanche.com and Angel Wheel completed a total of 5 rounds of financing.

In addition, in August 2018, Cima New Car completed tens of millions of A round of financing, which was led by Tuanche.com.

TuanChe Limited (TC) Prospectus:

  • According to the prospectus of Tuanche.com, the company plans to use the funds raised from the public offering for business development and expansion, strengthening information technology and data analysis capabilities, and capital injection for potential strategic investments and acquisitions.
  • In the fourth quarter of 2016, the single-brand car group purchase business was upgraded to a multi-brand car fair business, and in 2017, the car fair business was expanded to third-tier and lower cities.
  • In the second quarter of 2018, Tuanche launched a virtual dealer trading business based on the sinking of channels in third-tier cities and below, and a DSP business based on big data operations.
  • The prospectus shows that Tuanche.com’s operating income in the first half of 2018 was 269 million yuan, an increase of more than 200% compared to 91.326 million in the same period in 2017; the net profit loss in the first half of 2018 was 33.4 million yuan.
  • Tuanche.com’s net income in 2016, 2017 and the first half of 2018 were 11.735.3 million yuan, 28.66 million yuan and 26.934 million yuan; its net losses were 86.568 million yuan, 90.671 million yuan and 21.252 million yuan.
  • The prospectus shows that before the IPO, Tuanche.com founder and CEO Wen Wei held 19.9% ​​of the shares and was the largest shareholder. Tuanche COO Sun Jianchen held 4.9% and Tuanche CFO Mao Zhihai held 1.2%. Xianfeng Evergreen holds 14.1% and is the second largest shareholder; Best Cars Limited holds 13.4% and is the third largest shareholder; Highland Funds holds 10.6% and is the fourth largest shareholder. Bertelsmann holds 9.9% and is the fifth largest shareholder, Beijing Z-Park Fund Investment Center holds 7.1%, and First Aqua Inc. holds 5.7%.
  • Since 2017, the main business of Groupbuy.com has undergone significant changes. Instead of relying on the group-buying business model, it has moved into offline auto exhibitions and invited multiple brand car dealers to the auto show at one time, charging a fixed booth fee for profit. According to the prospectus, the number of auto shows held in 2016 was only 26. In 2017, the number soared to 304, an increase of 12 times. In 2017, the auto show business revenue was 264 million yuan, accounting for 94% of the total revenue of 280 million yuan. Significant changes have taken place.
  • In 2018, Tuanche.com’s business focus has undergone a certain change, and it has begun to increase its virtual dealership business, that is, connecting upstream car manufacturers and franchisees with secondary dealers, providing rich car purchase information, and drawing commissions from it. As of the first half of 2018, this new business has sold 27 vehicles, with revenue of 60,000 yuan, and an average benefit of 2,000 yuan per vehicle. Tuanche.com has high hopes for this piece of business. The prospectus states: Our ultimate goal is to become a virtual dealer with a wide geographical coverage, provide more operation and technical support for secondary dealers, and manufacture automobiles. The distributor’s sales channels are expanded to more Chinese cities. We plan to provide financing services to secondary dealers, who often face cash shortages because they need to pay the purchase price of the car before they can get full payment from consumers. We will also expand cooperation with after-sales service providers who provide maintenance and repair services to consumers.

TuanChe Limited (TC) listing analysis (Sina Finance):

The following comes from Reuters, Author: Sina Finance TMT Correspondent

Whether it is the newly developed auto show business in 2017 or the virtual dealer business that joined in 2018, it reflects the strategic adjustment of Tuanche.com’s U-turn to the second and third tiers. Under the situation of saturation of cars in first-tier cities and shortage of car license plates, the second Third-tier cities, hold trade fairs, and expand distribution channels.

As we all know, due to China’s economic development, infrastructure improvement, and increase in per capita income in the past decade, the automobile industry has experienced explosive growth from 2009 to 2017.

According to the statistical analysis of the China Association of Automobile Manufacturers, in early 2009, after the state promptly issued the “Auto Industry Adjustment and Revitalization Plan”, the production and sales of passenger vehicles that year were 10.3871 million and 10.331 million; in 2017, the production and sales of passenger vehicles were 24.283 million. The number of vehicles and 23.764 million vehicles have more than doubled.

The main driving force for this growth comes from second- and third-tier cities, and the best-selling models are mid- and low-end passenger cars.

But since 2018, to be precise, since the second half of 2017, with the introduction of macroeconomics and subsidy policies, China’s passenger car market has begun to fall precipitously. Passenger car sales in September 2018 were 2.06 million units. Compared with the 2.343 million units in the same period last year, the decline was as high as 12.07%. This is a significant drop for three consecutive months.

Winter in the Chinese auto market is approaching.

Tuanche.com should also be able to feel this kind of breath. Therefore, it is a more feasible strategy to sell cars in the form of promotion. However, in the long-term downturn in the market environment, coupled with the integration of cars The business of many groups and Uxin Group has eroded, and the pressure after listing will not be small.

TuanChe Limited (TC) investment:

TuanChe Limited (NASDAQ:TC) submitted its IPO prospectus on 10/23/2018, and listed on Nasdaq on 11/21/2018 with an issue price of US$7.80 and 4 million shares issued, raising US$31.2 million.

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