China Business Daily (reporter Zhao Yiru) After five submissions, Tick Travel was finally successfully listed, becoming the first share of shared travel in China. In the shared travel industry, which is generally facing profitability problems, Dida Chuxing has achieved profitability for five consecutive years due to its ride-sharing business. At the same time, travel platform companies are still actively breaking the "profit problem" and going public in Hong Kong.
On June 28, Dida Chuxing officially landed on the main board of the Hong Kong Stock Exchange, becoming the first share of shared mobility in China. The picture shows the driver driving. (Photo courtesy of Photo.com)
The first share of shared mobility in China
On June 28, Dida Chuxing officially landed on the main board of the Hong Kong Stock Exchange, becoming the first share of shared mobility in China.
Founded in 2014, Dida Travel is a travel platform focusing on the digital transformation of ride-hailing and taxis.
At the listing ceremony, Song Zhongjie, founder and CEO of Dida Chuxing, said: "Listing on the main board of the Hong Kong Stock Exchange is not only an important milestone in our development process, but also a new starting point. We will continue to move forward with firmer beliefs, more innovative thinking and more fighting spirit. We will redouble our efforts to create greater value for society, users, shareholders and employees, and realize the vision of 'leaving no empty seats on the road' earlier." ”
"The listing has brought a large amount of capital injection to Dida Chuxing, and provided sufficient financial support for the company's future business expansion, technology research and development, and market promotion. In terms of brand promotion, the listing marks that Dida Chuxing's industry position in the field of shared travel has been recognized by the market, and will further enhance its brand influence and market competitiveness. Through the listing, Dida Travel may attract the attention of more investors and partners, creating more opportunities for its future business expansion and market expansion. Chen Liteng, a digital life analyst at the E-commerce Research Center of the Network Economic Society, told a reporter from China Business Daily.
Hitchhikers carry the banner of profit
In fact, in the shared travel industry, Tick Travel is not a "big" company.
In terms of revenue, in 2023, Didi Chuxing's revenue will be 192.4 billion yuan, Cao Cao's revenue will be 10.668 billion yuan, Ruqi's revenue will be 2.161 billion yuan, and Dida's revenue will only be 815 million yuan. And this is its highest revenue in the past three years, with revenue of 781 million yuan and 569 million yuan in 2021 and 2022, respectively.
However, Tick Travel has achieved continuous profitability.
According to the prospectus, from 2021 to 2023, the adjusted net profit of Dida Travel will be 238 million yuan, 85 million yuan and 226 million yuan respectively, and the adjusted net profit margin will reach 30.5%, 14.9% and 27.7% respectively. This means that since its first profit in 2019, Dida Travel has achieved five consecutive years of profitability.
And this is thanks to Dida Travel's ride-hailing-based business model.
A reporter from China Business Daily learned from Tick Travel that unlike the asset-heavy model of online car-hailing, Tick Travel's business model can be summarized as "asset-light and efficient". Dida Travel does not own or lease fleet vehicles, but provides users with ride-sharing services by integrating idle private passenger car resources in the society. As a result, companies don't need to incur onerous capital investments and vehicle ownership costs, enabling them to scale faster and be more profitable. At the same time, because ride-hailing is a mutually beneficial travel mode in which the cost of travel is shared between the owner and passengers, the platform does not need to pay a lot of incentives and subsidies to facilitate orders compared with online ride-hailing.
Hitchhiking has become the main driving force for the overall gross profit margin of Dida Travel. From 2021 to 2023, the gross profit margins of Dida Ride's ride-hailing platform services will reach 85.4%, 79.5%, and 75.9% respectively, while the gross profit margins of Dida Ride's companies will be 80.9%, 75.1%, and 74.3% respectively.
However, there is limited room for the development of the hitchhiking market.
According to the Frost & Sullivan report, China's auto passenger transport market, which includes taxis, ride-hailing and ride-hailing, have market shares of 54.2%, 41.4% and 4.4% respectively in terms of total transaction value in 2023.
At the same time, Dida Travel is also facing fierce competition in this field. It is reported that online car-hailing platforms such as Didi Chuxing, T3 Travel, and Hello Travel have all laid out in the ride-hailing market. The Tick Travel prospectus also shows that in the field of ride-hailing, it will rank first with a share of 38.1% in 2021; In 2022, its market share slipped to 32.5%, ranking second; In 2023, its market share slipped to 31%, maintaining its second place.
Ride-sharing companies are going public
In fact, most ride-sharing platforms still face monetization challenges.
Judging from the data, in 2023, Didi Chuxing's adjusted EBITA (earnings before interest, taxes, depreciation and amortization) will be a loss of 2.2 billion yuan, Cao Cao's annual loss will be 1.981 billion yuan, and Ruqi's net loss will be 693 million yuan.
"Hitchhiking and online car-hailing are not actually a track, and the business of hitchhiking is relatively light, but its operational risks and policy risks are also relatively large." An online car-hailing industry practitioner told a reporter from China Business Daily.
"If Didi Chuxing wants to be profitable, it is profitable, but it has been choosing a more aggressive market strategy and constantly expanding new business territories, which has affected its profitability. Other platforms, such as Cao Cao, have chosen to improve operational efficiency by reducing costs and increasing revenue, which is also feasible. The above-mentioned practitioners in the online car-hailing industry said.
In response to the profitability problems faced by the online car-hailing industry, Chen Liteng said that firstly, the operating costs of online car-hailing companies are high, and enterprises need to invest a lot of money in vehicle purchase, maintenance, insurance costs, driver salaries, etc., and these fixed costs make enterprises face greater pressure in the early stage of operation.
"Secondly, the market competition is fierce, and there are many players in the online car-hailing industry, forming a market pattern of the first echelon led by Didi Chuxing, the second echelon of Cao Cao Travel and T3 Travel, and the third echelon such as Xiangdao, Ruqi Travel, Wanshun, and Xihua Travel. In order to attract passengers and drivers, companies need to adopt various subsidies and incentives, which further compresses the profit margins of enterprises. In addition, ride-hailing companies face high compliance requirements and related policy risks, which may have an impact on the profitability of enterprises. Chen Liteng said.
"From the perspective of profit model, at present, the main profit model of online car-hailing companies still relies on the order income of passengers. However, the intensification of market competition and the change of user demand make it difficult for this single profit model to support the long-term development of enterprises. Chen Liteng said.
It is worth mentioning that other travel platforms are also gearing up to go public. On June 24, Ruqi Travel passed the listing hearing of the Hong Kong Stock Exchange; At the end of April, Cao Cao also officially submitted a listing application to the Hong Kong Stock Exchange; At the end of last year, Ni Licheng, CEO of Xiangdao Travel, mentioned that the company would prepare and launch an IPO plan in the second half of 2024.
"For the industry, the successful listing of Dida Chuxing shows the regulatory recognition of shared travel compliance, which will promote the development of the entire shared travel industry in a more standardized and standardized direction. At the same time, the successful listing of Tick provides an important reference and reference for other shared travel companies, which may inspire other shared travel companies to accelerate the pace of listing, thereby accelerating the survival of the fittest in the industry. Chen Liteng said.