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Based in Beijing, China, Autohome (NYSE:ATHM) scheduled a $102 million IPO on the NYSE with a market capitalization of $1.3 billion at a price range midpoint of $13 for Wednesday, December 11, 2013. The price range mid-point has since been raised to $15 and the conclusion is the same.

Nine operating company IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

SEC Documents

Manager, Joint managers: Deutsche Bank, Goldman Sachs (ASIA)

Co-Managers: Oppenheimer & Co., Piper Jaffray

Summary

ATHM is the leading online destination for automobile consumers in China. Through its two websites, autohome.com.cn and che168.com, ATHM delivers comprehensive, independent and interactive content to automobile buyers and owners.

ATHM has a strong income statement.

. Sales increased 97% for the nine months ended September '13 vs '12.

. Gross margin was 80%.

Valuation

Proforma retained earnings

$21

Immediate per share dilution to IPO shareholders

($12)

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Sept 9 mos

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Autohome

$1,352

7.5

18.8

4.7

12.9

8%

Glossary

Conclusion

Buy ATHM on the IPO.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business

ATHM is the leading online destination for automobile consumers in China. Through its two websites, autohome.com.cn and che168.com, ATHM delivers comprehensive, independent and interactive content to automobile buyers and owners.

Autohome.com.cn ranked first among China's automotive websites and automotive channels of internet portals in terms of average daily unique visitors, average daily time spent per user and average daily page views in the nine months ended September 2013, based on data published by iResearch, a third-party market research firm, or iResearch Public Data.

In the same period, autohome.com.cn accounted for 46% of the total time that China's internet users spent viewing online automotive information, more than four times that of ATHM's closest competitor according to the iResearch Public Data.

ATHM has developed a strong and well-recognized brand. ATHM's " LOGO " ("Autohome") brand has been the most searched automotive-related keyword during substantially the entire period since July 2011 on Baidu.com, the leading Chinese language internet search engine.

ATHM's ability to reach a large and engaged user base of automobile consumers has made it a preferred platform for automakers and dealers to conduct their advertising campaigns.

ATHM generates substantially all of its revenues from online advertising services and dealer subscription services with automakers contributing the substantial majority of its total net revenues.

ATHM has a high penetration rate in the automaker market, with 80% of over 80 automakers operating in China having advertised on ATHM's websites in each of 2010, 2011, 2012 and the nine months ended September 30, 2013.

In addition, a large and rapidly growing number of dealers are purchasing ATHM's advertising services and subscription services, through which they showcase and market their inventories on ATHM's websites.

Intellectual property

ATHM currently has 20 pending patent applications.

Competition

ATHM competes with China's automotive websites, such as pcauto.com.cn and bitauto.com, automotive channels of major internet portals, such as Sina and Sohu, and traditional forms of media, such as television and magazines.

ATHM competes primarily on the basis of user traffic, user engagement and brand recognition, which drive the acquisition and retention of automakers and dealers as advertisers and their spending on ATHM's advertising services.

ATHM re-designed its che168.com website in October 2011 and converted it into its dedicated used car platform. ATHM's re-designed che168.com website faces competition from other used car websites, such as 51auto.com and taoche.com.

5% stockholders

Xiang Li 5.3%

Gabriel Li 12.6%

Telstra Holdings Pty Ltd 71.5%

Orchid Asia Funds 12.6%

AutoLee Ltd. 5.3%

Use of proceeds

ATHM expects to net $88 million from its IPO. Proceeds are allocated as follows:

$20 million for investing in ATHM's technology and product development;

$20 million for expanding ATHM's sales and marketing activities;

$37.5 million for the share repurchase consideration payable by ATHM in the West Crest Share Purchase, the sole shareholder of which is Mr. Jiang Lan, a former director of the company; and

the balance for general corporate purposes, including expenditures relating to the expansion of ATHM's operations.

Disclaimer: This ATHM IPO report is based on a reading and analysis of ATHM's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Autohome