After 5 sprints, Tick Travel finally knocked on the door of Hong Kong stocks.
On June 28, Dida Chuxing officially landed on the main board of the Hong Kong Stock Exchange, and according to the announcement of the allotment results, Dida Chuxing offered 39,091,000 shares globally, including 19,545,500 shares for international offering and 19,545,500 shares for public offering. The public offering at the IPO stage was 112.9 times subscribed, with 19,815 subscribers. The final offering price was HK$6 per share, and the net proceeds from the global offering were approximately HK$182 million.
Source: Tick Travel
Since the first submission of the prospectus in August 2020, Dida Travel has submitted four consecutive prospectuses in April 2021, February 2023, August 2023 and March this year, before finally achieving its wish.
However, according to the current performance, the reaction of the capital market did not meet the expectations of Tick Travel, and its stock price fell by more than 12% on the first day of listing, and the company's market value was 4.622 billion Hong Kong dollars as of the close of trading on June 28.
Aim at the hitchhiker track and achieve the industry leader
The listing of Dida Travel is a landmark event in the shared travel industry and even in the entire sharing economy. After years of development, the sharing economy model has gradually matured and been recognized by the market, and consumers have a growing demand for travel services, and they are more inclined to choose convenient, environmentally friendly and economical travel methods.
Nonetheless, the mobility industry, especially shared mobility and traditional mobility services, faces a range of challenges, both internally operational and profitability issues, as well as external regulations, competition, and technological developments. Many ride-sharing companies have invested heavily in the early stages to quickly expand their market share, but many are struggling to become profitable, and finding a sustainable business model is a major challenge for the industry.
In this context, the successful listing of Tick Travel has its own uniqueness.
In 2014, the competition between Didi and Kuaidi became the focus of the market, and the online car-hailing field also gained the favor of a large amount of capital. In September of the same year, Tick Carpool was born, but it did not choose to enter the online car-hailing market, but chose the fledgling segment of ride-hailing.
In October 2017, Tick Carpool launched the taxi business, entered the field of traditional taxis, and created a taxi platform that does not do express cars, and in January 2018, the Tick Carpool brand was upgraded and renamed Dida Travel, and in June of that year, it launched the taxi enterprise version to provide taxi enterprise car services for enterprises.
According to the Frost & Sullivan report, the total transaction value of China's rideshare market increased from RMB19.3 billion in 2017 to RMB23.3 billion in 2018. After a decline in 2019, the total transaction value has recovered to a similar level before the pandemic in two years and reached RMB22.1 billion in 2021, and the total transaction value of China's rideshare market is expected to grow from RMB37.1 billion in 2024 to RMB103.9 billion in 2028.
Stepping on the growing pace of development of the shared travel market, Dida Chuxing quickly seized market share by virtue of its segmented track layout in the ride-hailing and taxi markets.
According to the prospectus, from 2021 to 2023, Dida Chuxing's operating income will be 781 million, 569 million and 815 million yuan respectively. Among them, the ride-hailing service fee is the most dependent source of income for Tick Travel, accounting for as much as 90%.
Source: Tick Travel Prospectus
China's ride-hailing market is highly concentrated, with the top three market players accounting for 96.1% of the market share in terms of ride-hailing trips in 2023, according to the Frost & Sullivan report. Dida Chuxing ranked second in China's ride-hailing market, with 130 million rides and a market share of 31.0%; In terms of total transaction value, the total transaction value of Dida Chuxing's ride-hailing was 8.6 billion, with a market share of 31.8%.
Source: Tick Travel Prospectus
As of December 31, 2023, Dida Chuxing provides app-based ride-sharing platform services in 366 cities across the country, with approximately 15.6 million certified private car owners, of which 5 million or 32% are active certified private car owners in 2023. Since its inception until December 31, 2023, Dida Travel has served approximately 69.4 million solo rideshare passengers.
After making continuous profits, Li Bin invested in another IPO
It is not easy for Tick Mobility to achieve today's results, many startups have fallen before dawn due to lack of funds, from this point of view, Tick Mobility's financing ability is the foundation of its development to this day.
Since its establishment, Dida Travel has been favored by the capital market and attracted the participation of many well-known investment institutions and enterprises such as NIO Capital, IDG, Schunk Investment, Bitauto, Hillhouse Capital, etc., among which Li Bin of NIO has a deep relationship with Dida Chuxing.
Source: Tianyancha
It is rumored that in 2015, Song Zhongjie, the founder of Tick Travel, met Li Bin through a friend's recommendation when he was seeking Series B financing. After only an hour of conversation between the two in a restaurant, Li Bin decided to invest in Dida Travel. In February of the same year, BitAuto completed its Series B investment in Dida Chuxing, with an investment amount of 20 million US dollars.
Since then, Li Bin has made three consecutive rounds of injections through NIO Capital, with NIO Capital and Bitauto being the largest and fourth largest external shareholders of Dida Chuxing, respectively, and Li Bin himself serves as a non-executive director of the company.
In addition to the huge growth potential of the shared mobility market itself, the business model and profitability are also the reasons why Dida Chuxing has gained capital attention.
As a pure information service platform, Dida Travel does not own or lease fleet vehicles, nor does it need to bear any expenses related to holding vehicle assets, and at the same time, because ride-hailing is a mutually beneficial travel mode for car owners and passengers, the platform does not need to pay a large amount of subsidies to facilitate orders compared with online car-hailing.
It can be said that such an asset-light model is the main starting point for Dida Travel to achieve continuous profits. From 2021 to 2023, the corresponding adjusted profit of Tick Travel will be RMB238 million, RMB85 million and RMB226 million, respectively. In 2023, Dida Chuxing's gross profit margin and adjusted net profit margin reached 74.3% and 27.7%, respectively, demonstrating its strong self-hematopoietic ability and sustained profitability.
Due to the collaborative and cost-sharing travel mode of Tick Chuxing's ride-sharing platform, there is no need to pay large subsidies to attract users. In 2021, Dida Chuxing increased the subsidies it provided to private car owners, but from 2021 to 2023, the total amount of subsidies for private car owners and cumulative incentives for rideshare riders will only be about 400 million yuan, accounting for no more than 2% of the total transaction volume of its ride-hailing platform, which is far lower than the average level of incentives and subsidies paid to drivers and passengers in online ride-hailing.
However, the development of Tick Travel is also under great pressure. It is obvious that from 2019 to 2021, Dida Chuxing's market share ranked first for two consecutive years, and with the efforts of competitors such as Didi and Hello Chuxing, Dida's market share gradually declined, and now ranks second.
In addition, Dida Chuxing's revenue is highly dependent on the ride-hailing business. This single profit model may make the company lack sufficient anti-risk ability in the face of market changes, and compared with large-scale ride-hailing platforms such as Didi, there is still room for improvement in terms of user number and market value. Dida Travel inevitably needs to adopt a series of strategies to optimize its business structure, improve user experience, and strengthen technological innovation and market expansion.
Overall, in the context of the general profitability challenges in the shared mobility sector, Dida Chuxing has achieved continuous profitability with its asset-light model and ride-sharing services, but it also urgently needs to innovate itself to cope with the increasingly fierce competition in the industry.
In this process, other travel platform companies are also actively seeking to break through the "profit problem" and have started the road to listing.
Mobility platforms are listed in a bunch
In the past two years, the field of travel platforms has ushered in a wave of IPOs.
On March 25 this year, Ruqi Travel updated its prospectus to the Hong Kong Stock Exchange and officially passed the hearing of the Hong Kong Stock Exchange recently. Cao Cao Travel also recently submitted an IPO prospectus to the Hong Kong Stock Exchange to apply for listing on the main board, and Didi Chuxing, T3 Travel, and Xiangdao Travel are also rumored to have listing plans.
Source: Ruqi travel
Ruqi Travel was launched in Guangzhou in 2019, jointly initiated and founded by GAC Group and Tencent, and later introduced Pony.ai as a strategic shareholder. At present, Ruqi's services mainly cover Guangzhou, Foshan, Zhuhai, Shenzhen, Dongguan, Zhongshan and other cities, most of which are located in the Greater Bay Area.
According to the prospectus of Ruqi Travel, in terms of transaction volume in 2023, Ruqi Travel has a market share of 5.6% in the Greater Bay Area, ranking second in the industry, and Didi Chuxing, the first place, has a market share of 56.5%.
According to the prospectus, from 2021 to 2023, Ruqi's travel revenue will increase from 1.014 billion yuan to 2.161 billion yuan, with a compound annual growth rate of 46%. In contrast to the growth, the gross profit margin of Ruqi Travel is good but has not yet turned positive, with a gross profit margin of -7% in 2023, and a cumulative loss of nearly 2 billion yuan from 2021 to 2023. Ruqi Travel admitted in the prospectus that it is expected to continue to generate net losses and net operating cash outflows from 2024 to 2026.
Like Ruqi Travel, Cao Cao Travel is also facing revenue growth and continuous losses. From 2021 to 2023, Cao Cao Travel lost 3.007 billion yuan, 2.007 billion yuan and 1.981 billion yuan respectively.
The reason for the loss, on the one hand, is the increase in R&D, marketing and other expenses, and the dependence on aggregation platforms, which also puts online car-hailing platforms under a lot of pressure. With the increase in the number of orders, the service cost of the third-party travel service platform is also increasing, such as the service cost of the third-party travel service platform from 2021 to 2023 will be 6.91 million yuan, 26.89 million yuan and 95.51 million yuan respectively.
Although Ruqi Travel, Cao Cao Travel and Tick Travel are all shared travel service providers, they each have different characteristics and focuses, such as Qi Travel and Cao Cao Travel provide online car-hailing services, and Tick Travel mainly provides ride-hailing services.
This difference in model has largely led to a difference in profitability, and the ride-hailing business model of Tick Travel has lower operating costs, and does not require the platform to own vehicles or hire drivers, but uses existing private car and taxi resources. The ride-hailing services offered by Ruqi and Cao Cao have relatively high fixed costs.
At the same time, companies such as Qi Travel will further increase their financial pressure by deploying the development and commercialization of Robotaxi at the same time, but it is also necessary to seek a new growth curve and expand market share.
The fierce competition in the market has increased the uncertainty of whether the relevant mobility service companies can turn losses into profits, and on this basis, seeking to go public can be said to be a key step to provide more direct financing channels for the company to support its expansion and technological upgrading in the highly competitive market.
Participating in the Smart Driving Competition?
In the face of market pressure, it is not uncommon for ride-hailing platforms to set their sights on Robotaxi. Integrating the latest technologies such as autonomous driving and artificial intelligence into your own vehicles and platforms is an ongoing challenge.
Taking Ruqi Mobility as an example, it began to promote the development and commercialization of Robotaxi in 2021. As of December 31, 2023, its Robotaxi service has been in operation for a total of 20,080 hours, covering 545 sites, and completing 450,699 kilometers of safe trial operation.
The current Robotaxi market is basically inseparable from the tripartite role of autonomous driving companies, car companies, and mobility service operation platforms. The model of their trinity joint development is not uncommon, and WeRide + GAC + Ruqi Travel, Momenta + SAIC + Xiangdao Travel are typical cases.
In this cooperation model, the car company often provides the vehicle, the autonomous driving company provides the pre-installed or rear-installed autonomous driving solution, and the operation platform provides terminal operation services.
Not all travel platforms play the same role, take Didi as an example, this year Didi Autonomous Driving and GAC Aion jointly established Andi Technology, Didi occupies the position of the travel platform, and at the same time makes efforts in the research and development of autonomous driving technology.
Source: Didi Autonomous Driving
Many other mobility platforms are solely responsible for the operation of Robotaxi vehicles. Cui Dayong, CEO of T3 Travel, has made it clear that the company will not build cars and will not touch algorithms.
The mobility industry has ushered in new opportunities, and the market is looking forward to the large-scale implementation of new technologies such as AI large models and autonomous driving, as well as the arrival of the era of autonomous driving in online car-hailing.
The importance of the operation platform is emerging, and it undertakes important tasks in terms of vehicle launch and operation and improving the taxi experience of end users. If there are not enough vehicles in operation, there is no good enough ride-hailing experience, and it is not able to meet the needs of users, it will be difficult for Robotaxi companies to recover their costs and achieve their profit goals. At the same time, it did not form enough scale to meet the requirements of data-driven technology iteration.
However, according to the current development trend, robotaxi is also full of uncertainty, such as Qi Travel admitted in the prospectus that it may not be able to successfully commercialize its Robotaxi services, and even if it can be commercialized, it will not ensure that its financial expectations will be met.
In this regard, Dida Chuxing does not currently have its own Robotaxi service, which is its "unsociable" point, and may be able to use its platform and user base to gradually introduce autonomous vehicles to meet the market demand for high-tech mobility solutions.
In any case, in the IPO of shared travel companies, Tick Travel is a step ahead, but it is not an enthusiastic market feedback, and it has not achieved a perfect "start" for the travel market, and the competition pattern has not yet been finalized.