Li Shufu's "Didi" is going public

Author | Chai Xuchen

Editor | Zhou Zhiyu

At the Beijing Auto Show, where top figures gathered, Li Shufu remained the most low-key, with no presence at press conferences or exhibitions. In contrast to other car industry figures who actively engage in live streaming, the focus of this "car enthusiast" is on financing and IPO.

On the evening of April 29th, Cao Cao Mobility submitted its listing application to the main board of the Hong Kong Stock Exchange. If Cao Cao Mobility successfully lands on the Hong Kong Stock Exchange, Li Shufu will also achieve his ninth listed company under his name.

In terms of Gross Transaction Value (GTV), Cao Cao Mobility is already one of the top three ride-hailing platforms in China.

However, the industry is facing challenges with Didi dominating the market and oversaturation of capacity. Prior to Cao Cao Mobility's submission, Dida Chuxing and Ruqi Chuxing have also submitted applications for IPO on the Hong Kong Stock Exchange this year.

Considering the current capital market environment, some industry insiders suggest that for Cao Cao Mobility to gain market favor, it needs to break free from the "shadow" of Didi and find a breakthrough in its business model.

Backed by Geely, Cao Cao Mobility understands this well. Among the companies listed or planning to be listed under Li Shufu's control, Cao Cao Mobility is one of the few companies where he holds over 80% of personal shares. On the business front, Cao Cao Mobility frequently interacts with the Geely group. In the second half of the intelligent electrification of automobiles, it also plays a crucial role in Li Shufu's business empire.

Since its establishment, Li Shufu hoped that Geely Group could use this platform as a starting point to combine AI and other intelligent technologies to transform from a car manufacturing company to a transportation service and information content provider.

In other words, Cao Cao Mobility will become an important part of Li Shufu's technological ecosystem. In his view, the traditional automotive industry chain is centered around electromechanical integration, while the new energy era industry chain combines information, communication technology, and electromechanical integration to form an ecosystem.

At a time when major car companies are fighting in the intelligentization of the second half, Cao Cao Mobility can also act as a catalyst for Geely to accelerate towards the future of new energy.

Industry insiders point out that only by reaching a wider range of end car owners can companies receive consumer feedback and continuously upgrade their models.

Therefore, the biggest differentiation of Cao Cao Mobility from other leading ride-hailing companies lies in its ability to customize cars with the help of the Geely group. By the end of last year, Cao Cao Mobility had a customized fleet of around 31,300 vehicles in 24 cities, the largest in the industry.

The customized car business significantly reduces Cao Cao Mobility's operating costs. Frost & Sullivan estimates that the Total Cost of Ownership (TCO) of two models under Cao Cao Mobility has reduced by 30-40% compared to similar battery-swapping cars, costing only 0.53 yuan and 0.47 yuan per kilometer.

By focusing on customized cars and car service solutions, Cao Cao Mobility can better ensure users' riding experience and successfully achieve continuous revenue growth. From 2021 to 2023, its revenue increased from 7.2 billion to 10.7 billion yuan, and the gross profit margin turned positive from negative to 5.8% last year Also, due to its ability to customize car manufacturing, Caocao Travel has a hidden advantage, which is the possibility of transforming into an autonomous driving taxi company by incorporating intelligent driving systems. Coincidentally, Didi's autonomous driving unit has previously established a joint venture with AEA to enter the Robotaxi market.

With such a grand vision, Caocao Travel needs to replenish its arsenal. The prospectus shows that from 2021 to 2023, Caocao Travel's net debt will be 3 billion, 4.4 billion, and 5.2 billion yuan respectively; while the operating cash flow during the same period will be -1.5 billion, -1.1 billion, and 136 million yuan respectively. On the other hand, the expansion of new businesses such as customized cars and Robotaxi also requires capital support, which is why it has chosen to go public at this time.

In terms of financial data, Caocao Travel is on an upward trajectory, but the overall saturated industry environment still poses significant challenges for it.

Data from Shangpu Consulting shows that from 2021 to 2023, the size of China's online ride-hailing market will increase from 350 billion to 500 billion yuan, with the year-on-year growth rate decreasing from 25% to 19%. Warnings of the online ride-hailing market becoming saturated have been issued in many places.

At the same time, the Matthew Effect in the online ride-hailing market is becoming more pronounced. Frost & Sullivan pointed out that the top five companies in China's online ride-hailing industry occupy nearly 90% of the market share, with Didi alone accounting for over 70%, and last year's total transaction volume was close to 16 times that of Caocao Travel.

In reality, Caocao Travel's revenue growth rate has declined from 66.4% in 2021 to 39.8% last year.

In this situation, many companies entering the travel industry have abandoned large-scale investments and turned to aggregation models, with Caocao Travel being one of them. Last year, 73% of its total transaction revenue came from this channel. For Caocao Travel, the pressure to further increase its scale is significant.

As Caocao Travel enters the capital market, it can be expected that the growth of the Geely Group will accelerate synchronously. It will also parallel Li Shufu's industrial chain, ecological, and global strategies, aiming to reclaim the title of the top player lost by Geely Group