Goldman maintains auto neutral rating of $34

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In the early hours of February 25, Beijing time, Goldman Sachs released its research report today, keeping auto Nyse:athm's stock rating "neutral" (Neutral) and keeping its 18-month target price unchanged at $34.

The following is a summary of the contents of the report:

Performance exceeded expectations;

-Company performance exceeded expectations:

Auto 2013 fourth quarter results exceeded expectations. The quarter's total revenue was 386 million yuan (up 74% per cent), while senior group analysts and Wall Street analysts surveyed by Bloomberg averaged an average of 7%, and did not follow us GAAP earnings by $0.21 trillion (up 145%). Higher-sheng group analysts and Wall Street analysts, on average, are expected to be 4 cents and 5 cents respectively.

Auto forecast that revenue for the first quarter of 2014 was RMB 318 million to RMB 332 million, with the higher value of the group having previously been expected to be 2% lower, which we think reflects mainly the weak effect of seasonal factors, but is 3% higher than average Wall Street analyst expectations.

-Investment advice:

The main driver of Auto's quarterly revenue came from an increase in average car-maker spending and from more dealers starting to use their subscription services. The company's management stressed that the network expansion was more prioritized than the commercialization process, which meant that the dealership business was likely to remain a volume driver for 2014 years.

On the cost side, operating profit margins for the fourth quarter, which did not follow us GAAP, rose by 1% in comparison with the previous two-quarter rise of 3% and 5%, the result of Auto's recent investment in trading operations. Auto started a trial operation on November 11, 2013, which sold 50,000 cars a day, with a total turnover of 2.2 billion yuan.

Auto management plans to increase its efforts in 2014 years to launch more E-commerce business, and it is likely to focus on the field of inventory management. Management expects that the company will continue to use a competitive marketing budget strategy while trying out new business models in an environment of increased competition.

We fine-tuned the earnings forecasts for each share of the auto in 2014 and 2015, and for the first time projected earnings per share for 2016. Based on the 0.8 times-fold Peg value (the market growth rate) and the forecast of a composite annual growth rate of 30% for each share between 20,014 and 2017, we will maintain the auto 18-month target price unchanged at $34, while keeping its stock rating "neutral".

-Risk: Sales growth in the automotive industry, implementation of dealer network expansion plans, and liquidity (upstream and downstream) risks.