Citi Reiterates Its Buy On Bitauto Holdings Ahead Of Earnings

Bitauto Holdings BITA will report its first public quarter on March3 2011. Citi expects a solid set of results with revs and NP at the top end of Street expectations mainly driven by solid advertising demand and additional dealer subscription growth, benefiting from an OEM partnership/penetration strategy. BITA trades at 20x and 12x Citi's 2011E and 2012E non-GAAP EPADS, respectively, which it believes is attractive. Citi models 4Q10 total revs of US$20.99m and non-GAAP net income of US$4.79m vs. Street's US$21.7m and US$4.58m, respectively. Street estimates have more upside than downside risks. For 1Q11, Citi models total revs of US$14.2m and non-GAAP NI of US$1.85m, factoring weaker seasonality; Street is modeling revs of US$14.6m. Consistent with Citi's view, it sees limited impact from recent policy restriction implemented by BJ government. BITA's dominant position in dealers' promotional marketing vs. competing with major portals and auto vertical peers on “brand” advs budget could also prove more resilient on increasing competition from SNS and video platform. Citi has a $12 PT and Buy rating on BITA BITA closed Thursday at $9.72