GTHT Securities released a research report initiating coverage on CAOCAO INC (02643) with an "Add" rating. CAOCAO INC, by deeply cultivating its custom vehicle ecosystem, achieves profitability and efficiency gains through optimization of the Total Cost of Ownership (TCO); leveraging its Geely background to deploy autonomous driving, its valuation possesses significant upside potential. Based on the PS valuation method, the firm believes the company's reasonable market capitalization is RMB 22.455 billion, with a target price of HK$44.16 per share.
GTHT Securities stated that CAOCAO INC holds a solid market position and is on a growth trajectory with simultaneous revenue and profit expansion. The company currently holds a steady second place in China's ride-hailing market share, with shares reaching 8.8% and 8.5% in core first- and second-tier cities, respectively. The company's revenue has maintained rapid growth in recent years, reaching RMB 14.657 billion in 2024, with year-on-year growth rates exceeding 35% for the past two years. Benefiting from economies of scale and cost optimization driven by its custom vehicle strategy, the gross margin achieved "three consecutive annual increases" and reached profitability at 8.09% in 2024. The firm anticipates the company could achieve profitability by 2026, entering a period of dividends characterized by the simultaneous expansion of profitability and business scale.
Deep customization reduces costs, while an internal closed-loop drives differentiated growth. The company has built a commercial moat centered on its "custom vehicle strategy." By deeply participating in vehicle customization, it has reduced TCO to an excellent level of around RMB 0.5 per kilometer. As the "nerve ending" of the Geely ecosystem, the company not only gains access to stable, low-cost production capacity and a dense battery-swap network support but also powers its autonomous driving algorithms with massive real-road data. This internal closed-loop model of "manufacturing + platform + data" provides it with differentiated advantages in operational efficiency, vehicle durability, and compliance risk resistance compared to the traditional light-asset model.
Strategic upgrade to "F-Cube," the company is fully capturing the Robotaxi high ground. Facing the future of mobility, the company is comprehensively upgrading its strategy from "N-Cube" to "F-Cube," focusing on fully intelligent custom vehicles, unmanned driving, and automated operational systems. Leveraging the technological empowerment of Geely's "Qianli Zhijia," the company plans to launch an L4-level Robotaxi custom model by 2026 and has set a global strategic goal of "hundred cities and hundreds of billions in ten years." As driver cost structures are reconfigured, Robotaxi has the potential to redefine the industry's profitability ceiling.
Risk warnings include autonomous driving technology falling short of expectations, uncertainty in policies and regulations, funding pressures, and intensifying industry competition.
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