Chinese shared car specialist Didi’s smaller and similarly named rival, Dida, just filed for a Hong Kong IPO on February 20, with CICC, Haitong International and Nomura International as co-sponsors. The nine-year-old startup, which specializes in the business of carpooling with strangers, had failed two previous listing applications.
According to the company’s prospectus, in 2020, 2021 and the first nine months of 2022, the adjusted net profit of Dida was 343.3 million yuan ($50 million), 238 million yuan and 65.4 million yuan respectively. Dida’s profits are derived from the service fees charged to private car owners who provide carpooling services through the platform.
As of September 30, 2022, Dida has been providing app-based carpooling services in 366 cities across the country, with about 12.4 million certified private car owners. Dida emphasizes that only certified private car owners are allowed to provide ride services through the platform and only after they complete strict verification and background check procedures.
Amid the recovery of domestic consumption, Dida has shown resilient development. According to the prospectus, during the 30-day period before and after the Spring Festival holiday in 2023, according to the number of rides, its business has recovered to the level before the COVID-19 epidemic. Many private car owners have talked about the improvement in orders, “I needed to wait to see if there was a carpooling order. Now many passengers will take the initiative to send me an invitation.”
According to a Frost & Sullivan report, China’s travel market consists of offline ride-hailing from cabs, online ride-hailing from cabs, online ride-hailing from third-party platforms such as Didi, and carpooling, with orders in 2021 of about 14.4 billion, 1.8 billion, 10.2 billion and 300 million respectively. Among them, the carpooling market has become the fastest-growing with a compound annual growth rate of 28.0%.
However, China’s carpooling market is still relatively new, and there are uncertainties in the market’s acceptance of carpooling and the growth rate of demand. Dida admitted in its prospectus that its success will largely depend on whether the public accepts carpooling services.
Dida’s carpooling platform has received a total of 57 administrative fines, of which 36 have been subsequently canceled as of the date of its prospectus. The remaining 21 administrative fines ranged from 5,000 yuan to 30,000 yuan, totaling about 550,000 yuan.
It is worth noting that the relevant laws and regulations that are usually applied to online ride-hailing services cannot be directly applied to carpooling services. For example, the regulation that was revised on November 30, 2022, stipulates that online ride-hailing platforms and drivers on these platforms need to obtain a number of licenses and permits, and explicitly excluded carpooling from the prescribed licensing system. This means that government departments have held and may continue to hold reviews for Dida to solve public concerns or reiterate regulatory requirements.