Image source: Tick Travel official website
Hitting the IPO five times in four years, Tick Travel finally got what it wanted.
On June 28, Dida Travel was listed on the Hong Kong Stock Exchange. As of press time, the market capitalization of Dida Travel is HK$5.387 billion (about 5.015 billion yuan).
Before going public, Dida Travel has gone through 5 rounds of financing. According to the prospectus, before the submission of the prospectus, the total share capital of Dida Travel was about 2.955 billion shares, and the valuation of Dida Travel was about 9.3 billion yuan based on the last round of financing price. This also means that compared with the pre-IPO valuation, the value of Tick Travel after the listing has shrunk by nearly half.
It has been established for 10 years and has been blessed by many star institutions
Founded in 2014, Dida Carpool, formerly known as Tick Carpool, is one of the earliest players in the ride-hailing industry.
On May 1, 2014, the Tick Carpool APP was officially launched. In September 2017, Tick Carpool announced its entry into the taxi field and became a mobility platform that includes taxis and ride-hailing. Subsequently, Tick Carpool underwent a brand upgrade and officially changed its name to Tick Travel.
The founding team of Tick Travel consists of five people, among which the founder Song Zhongjie graduated from Beijing Institute of Technology with a major in computer software, and then worked at Hewlett-Packard for 12 years. In 2006, Song Zhongjie joined Google China and became the only director-level business executive in Google China at that time.
It was also during his time at Google that Song Zhongjie met three other important entrepreneurial partners - Li Jinlong, then Senior Channel Manager of Google China, Zhu Min, then Project Development Manager of Google China, and Li Yuejun, then Channel Account Manager of Google China. The fifth entrepreneurial partner is Duan Jianbo, an old colleague of Aibang.com who worked for Song Zhongjie at Baidu.
According to the prospectus, Song Zhongjie and other five co-founders hold 34.43% of the company through 5brothers Limited, and are the major shareholders of Dida Chuxing.
In the institutional investment part, the lineup is also quite luxurious - there is no shortage of IDG Capital, Hillhouse, JD.com, etc. According to the prospectus, NIO Capital holds 21.60% of the shares, IDG Capital holds 10.23% of the shares, Eastnor Castle Limited of Schunk Investment holds 7.15% of the shares, Yiche holds 4.95% of the shares, HH SPR-IV Holdings Limited of Hillhouse Capital holds 4.14% of the shares, JD.com's Sumptuous holds 4.14% of the shares, Ctrip holds 2.86% of the shares, and Trustbridge Partners V, L.P. holds 1.47% of the shares.
What is noteworthy is that as a recognized "godfather of travel" in the industry, up to now, Li Bin has harvested three listed companies: Yiche, Yixin and Weilai.
Successful breakthrough, but business worries
Although the IPO was successful, however, judging from the financial data of the past three years, there are still hidden worries about Dida Chuxing.
Generally speaking, four-wheeled travel falls into three categories: ride-hailing, ride-hailing, and taxis. Ruqi Travel and Cao Cao Travel belong to the category of online car-hailing, while Dida Travel does not own rental fleet vehicles, but provides users with ride-hailing services by integrating idle private passenger car resources in the society.
According to the prospectus, as of December 31, 2023, Dida Chuxing provides app-based ride-sharing services in 366 cities in China.
According to the prospectus, Dida Travel divides its business into three major sectors: ride-hailing platform services, smart taxi services, advertising and other services. From 2021 to 2023, the revenue of Dida Travel will be 781 million yuan, 569 million yuan, and 815 million yuan respectively. Among them, the revenue from providing ride-hailing platform services was 695 million yuan, 515 million yuan and 774 million yuan respectively, and the proportion of revenue increased from 89% to 95%.
Compared with online car-hailing, hitchhiking is an asset-light operation and does not need to bear heavy capital investment and car holding costs, so it can be seen from the prospectus of Dida Travel that from 2021 to 2023, the company's revenue will be 781 million yuan, 569 million yuan, and 815 million yuan respectively, and the net profit in the above three years will be 1.731 billion yuan, -188 million yuan, and 300 million yuan respectively, and it has achieved positive profitability.
However, the over-reliance on the ride-sharing business is also one reason why Dida Chuxing's growth prospects have been criticized.
Although the proportion of Hitchhike's business revenue has further increased, its profitability has also shown a downward trend in the past three years. According to the prospectus, from 2021 to 2023, the gross profit margins of Dida Chuxing's ride-hailing business will be 85.4%, 79.5%, and 75.9% respectively, a decline of nearly 10% in three years
In this regard, Dida Chuxing explained that the service cost of the rideshare platform has increased rapidly, due to the strengthening of technology, infrastructure and safety measures, resulting in an increase in operation and maintenance service fees, as well as a relatively rapid increase in insurance costs.
In terms of the overall ride-hailing business, in 2019, Dida Chuxing accounted for 66.5% of the market share of the ride-hailing market, making it the largest ride-sharing platform in China. But in 2023, Dida Chuxing has become the second largest ride-sharing platform in China, accounting for only 31%. In other words, in four years, Tick Chuxing's market share has shrunk by more than half.
Who will be next?
There is another phenomenon worth observing behind the IPO of Tick Travel, that is, the IPO boom of travel platforms this year.
Since the beginning of 2024, many online car-hailing platforms, including Dida Chuxing, have begun to rush to Hong Kong stocks.
In March, Ruqi Travel, which is backed by Guangzhou Automobile Group, launched a sprint to the Hong Kong stock IPO and recently passed the listing hearing of the Hong Kong Stock Exchange.
As a mobility platform under GAC Group, Ruqi Mobility was launched in Guangzhou in June 2019. Its business covers three parts: mobility services, technical services and ecological services. One of the most distinctive features is the Robotaxi service for mobility services.
Similar to Tick Travel, this is not the first time Ruqi Travel has submitted a form, as Ruqi Travel submitted a form to the Hong Kong Stock Exchange in August last year. After the prospectus submitted for the first time expired, on March 25 this year, Ruqi Travel submitted the form for the second time and finally passed the hearing.
In April, Cao Cao, a subsidiary of Geely Holding Group, made its first sprint to IPO, with Huatai International, ABC International and GF Securities (Hong Kong) as its co-sponsors.
Looking at the prospectuses of Ruqi Travel and Cao Cao Travel, although Ruqi Travel's revenue from 2021 to 2023 has steadily expanded, with 1.013 billion yuan, 1.368 billion yuan and 2.161 billion yuan respectively, its net profit attributable to the parent company lost 685 million yuan, 627 million yuan and 693 million yuan respectively during the above reporting period.
Cao Cao also faced the same dilemma. From 2021 to 2023, Cao Cao Travel will achieve operating income of 7.15 billion yuan, 7.63 billion yuan and 10.67 billion yuan respectively, but the annual losses will be 3 billion yuan, 2 billion yuan and 1.98 billion yuan respectively, with a total loss of about 6.98 billion yuan in three years.
In addition, Ni Licheng, CEO of Xiangdao Travel, a subsidiary of SAIC Group, also said at the end of last year that Xiangdao Travel will prepare and launch an IPO plan in the second half of 2024.
Behind this wave of IPO boom, on the one hand, is the reality of increasingly fierce competition in the online travel market; On the other hand, losses are still a common problem for these mobility platforms.
Against this backdrop, it's not hard to understand why various ride-hailing platforms are seeking support from the capital market to raise funds through IPOs and accelerate their expansion.
And who will be the next successful IPO travel platform will be, it is worth looking forward to. (This article was first published on Titanium Media App, author | Han Jingxian, editor - Zhang Min)