The author is China International Capital Corporation (CICC) Research Department
After the cooperation with Alibaba and huge capital injections, Intime is expected to have more action in the O2O (online-to-offline) arena, which could bring new triggers for the stock price.
Intime’s Yintaibao is just the beginning, more mobile internet applications based on O2O will be launched.
As of April 9, Yintaibao, which is attached to Alipay, added 1.7 million users within one month. This electronic membership card is only one of Intime’s applications.
More products and innovation can promote customer stickiness, push forward personalized merchandise, and increase sales.
Intime will benefit from promotion of the sales of O2O solutions and applications to traditional brands and channel operators. It will also benefit from the introduction of Alibaba’s "search function" to offline and spread the use of traceable RFID tags, thus consumers can find the most appropriate goods conveniently, through which Intime can charge a service fee.
Other potential benefits include solving the online and offline income distribution problem, using large data models to compute solutions and traffic interchanges.
For investors who care about the profitability of Intime’s existing business, Alibaba will use flow, coupons and other ways to boost Intime’s sales.
Therefore, the performance of Intime’s existing business should be better than the industry average.
Therefore, we reiterate our buy rating with a target price of HK$11.45, that equals to 14 times 2014 estimated earnings.
(The article has been edited for clarity)