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What You Need to Know About Xiaoju Kuaizhi Inc (DiDi) IPO?

Xiaoju Kuaizhi Inc has started its IPO project and expected to list in New York Stock Exchange. Underwriters including Goldman Sachs (Asia) L.L.C., Morgan Stanley, J.P. Morgan and China Renaissance. What is Xiaoju Kuaizhi Inc? Here are the summary your should know about this company.

What is Xiaoju Kuaizhi Inc (DiDi)?

Xiaoju Kuaizhi Inc is the world’s largest mobility technology platform. The platform allows user to shared mobility with a comprehensive range of safe, affordable and convenient mobility services, including ride hailing, taxi hailing, chauffeur, hitch and other forms of shared mobility. Currently, the company is built up with four business units including shared mobility, auto solutions, electric mobility and autonomous driving. The company operates in nearly 4,000 cities, across 15 countries. The global platform provided services to over 493 million annual active users and powered 41 million average daily transactions for the twelve months ended March 31, 2021.

Market Opportunity

Global mobility market was a US$6.7 trillion market worldwide in 2020 and is expected to reach US$16.4 trillion by 2040, by which time the penetration of shared mobility and electric vehicles is expected to have increased to 23.6% and 29.3%.

China’s mobility market is expected to reach US$3.9 trillion by 2040, by which time the penetration of shared mobility and electric vehicles is expected to have increased to 35.9% and 50.2%.

Financial Highlights

Revenues were RMB135.3 billion, RMB154.8 billion and RMB141.7 billion (US$21.6 billion) in 2018, 2019 and 2020, respectively, and RMB42.2 billion (US$6.4 billion) for the three months ended March 31, 2021.

China mobility is the main revenue which accounting for 98.4%, 95.5% and 94.2% in 2018, 2019 and 2020, respectively. Global mobility accounting for 0.3%, 1.27% and 1.64% in 2018, 2019 and 2020, respectively. Other initiatives accounting for 1.23%, 3.14% and 4.06% in 2018, 2019 and 2020, respectively.

Net loss was RMB15.0 billion, RMB9.7 billion and RMB10.6 billion (US$1.6 billion) in 2018, 2019 and 2020, respectively. There was net income of RMB5.5 billion (US$0.8 billion) for the three months ended March 31, 2021. However, the net income for the three months ended March 31, 2021 was the result of RMB 12,361 million investment income.

Risk and Opportunity

Xiaoju Kuaizhi Inc ‘s operation is highly concentrated in China market. It’s global business only growth slowly over the past three years. Any change in business environment in China will heavily affect Xiaoju Kuaizhi’s business. On the other hand, Xiaoju Kuaizhi isn’t profitable yet and its valuation is mainly base on it’s future growth.

Xiaoju Kuaizhi Inc ‘s size and domination in China mobility market will help it to become an index component in nearby future. There is no doubt that global institute investor, such as index ETFs, will add Xiaoju Kuaizhi Inc in their portfolio.

Conclusion

Xiaoju Kuaizhi Inc may be a suitable target for short term investor, there may be positive momentum when Xiaoju Kuaizhi Inc include in index. For long term investor, there may be a better candidates which have proved record of operation and profitability, such as Alibaba Group Holding Limited (BABA) and Tencent Holdings Limited (0700.HK).

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