Chinese authorities have stepped up support for the automotive aftermarket sector, opening fresh opportunities for industry frontrunners. Seven government departments, including the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, recently issued a policy document aimed at boosting consumer spending. The plan explicitly calls for "expanding and strengthening the automotive aftermarket," with provisions to support maintenance services and vehicle modification businesses while encouraging brand-name chains to accelerate their footprint expansion in lower-tier cities.
As the country's leading independent player in the automotive aftermarket, Tuhu Car Inc (ASX: TUHU) stands to gain significantly from these policy tailwinds. The company's latest interim results for the first half of fiscal 2026 showcase solid momentum across all fronts. Revenue reached 8.778 billion yuan during the period, reflecting an 11.4% increase year-on-year. By the end of June, the company's factory store count had climbed to 8,825 locations, with a net addition of 817 stores over six months, representing 22.5% annual growth and putting the 9,000-store milestone well within reach.
Customer engagement metrics continue to trend upward alongside the store expansion. Registered users have hit 175 million, while users with at least one transaction in the past twelve months grew 17.2% to 31 million. The annual repurchase rate improved to 65.2%, and revenue contributions from existing customers reached 66.1%. Interestingly, approximately 65% of the new stores opened in the first half were established in lower-tier cities, a strategic alignment with the government's push to invigorate consumption in less-developed regions. The company's new energy vehicle services have emerged as a powerful growth engine, with 5.3 million NEV transaction users recorded over the past year, a striking 56.7% surge.
Segment performance shows tires and chassis components as standout contributors, generating 3.91 billion yuan in revenue, up 19% year-on-year and leading all business lines. On the industry front, the recent market correction has paradoxically accelerated share concentration toward top players. Raw material price increases and declining workshop visits have pressured independent repair shops, driving accelerated consolidation across the fragmented landscape. Tuhu, supported by its authentic parts supply chain, standardized pricing, and AI-powered quality inspection systems, managed to achieve positive growth in both same-store users and revenue during this turbulent period.
Institutional research echoes this constructive outlook. Analysts at CICC maintain their "Outperform Industry" rating on Tuhu with a target price of HK$15.00, implying approximately 25% upside from current levels. They believe store network expansion will continue to lift market share, while operational efficiency gains could drive further cost ratio improvements. Huatai Securities retains its "Buy" recommendation with a target of HK$18.03, betting on economies of scale and incremental growth from the NEV aftermarket and express maintenance operations. Guotai Haitong maintains an "Accumulate" rating, highlighting that "external environment volatility does not alter the trend of market share growth," and projects adjusted net profit to rise 15% and 22% in fiscal 2027 and 2028, respectively.
Adding to the chorus of positive sentiment, Kaiyuan Securities, Soochow Securities, and Founder Securities all hold favorable ratings on the stock. Soochow analysts explicitly assert that the company's "long-term market share expansion thesis remains intact." While near-term profit fluctuations have captured investor attention, the underlying growth story endures. With the new seven-ministry policy taking effect and industry regulations tightening, chain leaders equipped with authentic supply chains and standardized services are positioned to benefit from sector consolidation and rising concentration. The valuation re-rating window for Tuhu appears to be opening.