[HK IPO] DiDi Chuxing: The first shared mobility stock
I. Basic Information
1.1 Company Profile
$DIDA INC(02559.HK), founded in 2014, is a technology-driven platform in China providing hitchhiking and smart taxi services, focusing on building "real hitchhiking + smart taxis". It is primarily a hitchhiking service company and is thesecond-largest hitchhiking platform in China.
1.2 IPO Information
II. Fundamental Analysis
2.1 Financial Data
Revenue: The company achieved revenues of 781 million yuan, 569 million yuan, and 815 million yuan in 2021, 2022, and 2023, respectively, with a compound annual growth rate (CAGR) of 2.15%. The industry average growth rate during the same period was 3.1%. The sharp decline in revenue in 2022 was mainly due to the COVID-19 outbreak.
Profit: The company's gross profits in 2021, 2022, and 2023 were 631 million yuan, 428 million yuan, and 605 million yuan, respectively, with gross margins of 80.9%, 75.1%, and 74.3%. Even excluding the impact of the pandemic in 2022, the company's gross margin has been declining. Adjusted net profits were 238 million yuan, 85 million yuan, and 226 million yuan, respectively.
2.2 Industry Development
China's car passenger transport market includes traditional taxi hailing, online taxi booking, ride-hailing, and hitchhiking. In 2023, the total number of orders was approximately 11.8 billion, 1.5 billion, 10.9 billion, and 400 million, respectively.
By total transaction value in 2023, the market shares of taxis, ride-hailing, and hitchhiking in China's car passenger transport market were 54.2%, 41.4%, and 4.4%, respectively.
Both taxis and ride-hailing far exceed hitchhiking in terms of order volume and market share in China's car passenger transport market.
However, the hitchhiking market is expected to maintain a CAGR of 29.4% from 2024 to 2028, far exceeding the 7.3% for taxis and 19.5% for ride-hailing, making it the most robust growth segment!
2.3 Company Position
China's hitchhiking market is highly concentrated. By the number of hitchhiking rides in 2023, the top three market players accounted for 96.1% of the market share, with Dida ranking second in China's hitchhiking market with a 31.0% share. The top-ranked company is likely Hello, while the third-ranked company is likely Didi.
By total transaction value in 2023, Dida's transaction volume was 8.6 billion yuan, ranking second in China's hitchhiking market with a 31.8% share.
2.4 Business Segments
The company's business mainly includes hitchhiking services, smart taxis, and advertising. The primary source of revenue is hitchhiking platform services, while smart taxi services and advertising (including automotive value-added services) contribute relatively little to revenue.
According to the company's prospectus, revenue from hitchhiking platform services in 2021, 2022, and 2023 was 695 million yuan, 515 million yuan, and 774 million yuan, accounting for 89.0%, 90.5%, and 95.0% of total revenue, respectively.
In 2022, the hitchhiking business suffered a decline in revenue due to reduced rides caused by the pandemic. However, in 2023, the company's hitchhiking business revenue reached a new historical high.
III. Cornerstone Investors and Sponsors Analysis
None...
IV. Lottery Rate Analysis
The Hong Kong public offering consists of 3.9 million shares, with 500 shares per lot, totaling 7,800 lots. Currently, the margin financing exceeds 20 times. The recent enthusiasm for Hong Kong IPO subscriptions has been high, with good returns. There are currently five new IPOs simultaneously, which may lead to some capital retention. The final oversubscription is unlikely to exceed 50 times, triggering a 10% clawback. Thus, both Group A and Group B will receive 7,800 lots each. Assuming 5,000 subscribers, the estimated lottery rate for one lot is around 50%...
V. Comprehensive Analysis and Rating of the IPO
1. From a fundamental perspective, the company's average revenue growth rate from 2021 to 2023 was only 2.15%, partly due to macroeconomic factors. However, the company has remained profitable for three consecutive years, and the hitchhiking business is expected to enter a boom period.
2. In terms of brand recognition, the company ranks second in the hitchhiking market and is the first shared mobility stock. Although Didi was listed earlier in the U.S., its main business is ride-hailing, and it now trades only in the pink sheets with poor liquidity.
3. Regarding cornerstone investors, none were introduced. This is Dida's fifth attempt to list on the Hong Kong Stock Exchange, and early investors are growing impatient. However, Dida's initial investor lineup was impressive, including Nio Capital, IDG Capital, Chongde Investment, Bitauto, Hillhouse Capital, JD.com, Ctrip, and other renowned institutions and strategic investors.
4. From a market perspective, the shared mobility sector was once booming, reminiscent of the ride-hailing wars. However, recent IPOs have performed well, indicating renewed enthusiasm for new listings.
5. Valuation-wise, the company is valued at 4.9-6.9 billion HKD, with a P/E ratio of 21-30x based on 2023 earnings. Didi, listed in the U.S. but now trading in the pink sheets, has a market cap of 167 billion HKD but remains unprofitable.
6. Operationally, the company is issuing 3.9 million shares, aiming to raise 234 million HKD. All shares are freely tradable, which could lead to selling pressure. However, the recent Hong Kong IPO market has been exceptionally hot, with most new listings performing well except for one that fell below its issue price.
7. In summary, after four years and five attempts, Dida is finally listing on the Hong Kong Stock Exchange. I'll take a small position, hoping to recoup some of my past hitchhiking fares.
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