Author | Wang Gangge
On the last day of the Spring Festival holiday, 58.com's same-city freight business "Fast Dog Taxi" passed the hearing of the Hong Kong Stock Exchange and will soon land on the capital market. This is good news for the "58 Series", which has long been far from the center of the Internet stage.
In fact, the 58 backed by the fast dog taxi has not been recognized by capital for a long time in the past. Even when the overall stock price of Chinese stocks soared in 2020, 58 Tongcheng was still tepid and no one cared. Since then, 58 has chosen to privatize the group and delist it, and split it into independent business segments for separate listing. This may be the hope that through spin-off listing, the market and investors can have a clearer understanding of the various businesses, so as to achieve a return to value in the secondary market.
But does the spin-off work? Since September 18, 2020, 58.com as a whole has been delisted from the U.S. stock market, and its split real estate intermediary platform Anjuke, the local life platform Swan Home, and the same city freight product Taiwan Fast Dog Taxi have independently launched an impact on Hong Kong stocks and the U.S. stock capital market.
However, since the second half of last year, due to the external policy environment and market environment, Anjuke's prospectus documents have expired so far, and Swan, who submitted an IPO application to the US stock market in July last year, has withdrawn its listing application. Fast dog taxi has undoubtedly become the capital of the "58 series".
The current capital market is far less friendly to Chinese stocks than it was in 2020. Whether it is the primary market or the secondary market of the Pre-IPO, under the pressure of policy risks, they have chosen to wait and see or withdraw. Can Fast Dog Taxi bear the desire of 58.com to realize the value revaluation of the secondary market? The answer is not optimistic.
Revenue slowed and scale stagnated
Fast Dog Taxi, formerly known as the express transportation business under 58.com, in order to enhance brand recognition, the Group upgraded the brand to Fast Dog Taxi in August 2018 in order to enhance brand recognition.
According to the prospectus, in 2018, 2019, 2020 and the first nine months of 2021, Fast Dog Taxi achieved revenue of 453 million, 549 million, 530 million and 473 million yuan respectively, that is, its revenue growth continued to slow down between 2018 and 2020.
Although in the first nine months of 2021, the revenue of fast dog taxis increased by 27.2% year-on-year, but this was mainly due to the outbreak of the new crown epidemic in China in early 2020, and the demand for same-city freight transport fell sharply, resulting in a low overall base in the first nine months of 2020.
From the perspective of the overall market share, fast dog taxi is currently in a state of being "pinched back and forth".
As one of the earliest players in the field of online logistics in the same city, before 2018, Lala and Fast Dog Taxi (formerly 58 Express) occupied the vast majority of the market share. Due to the initial difference in business focus between the two companies, it also formed a situation in which the early lalala was more dominant in terms of small single users at the C-end, and fast dog taxi was stronger in B-end enterprise services.
After entering 2018, with the substantial improvement of Lalala's resource investment, whether it is brand awareness or market share, Lalala and other players in the market have quickly opened up the gap.
In contrast, in terms of fast dog taxi, in addition to upgrading the brand from 58 express transportation independently to fast dog taxi, its aggressive market strategy of lala did not give corresponding feedback, but out of a conservative market strategy, it greatly reduced market investment. And this action seems to mean that Fast Dog Taxi has given up its determination to compete with Lalala for market position. The market share of Lalala in the same city express industry has also soared.
According to the disclosure of the fast dog taxi prospectus, in the whole year of 2020, the company's total transaction volume for the whole year was 2 billion yuan, with a market share of 5.5%, compared with the market number one company A, the business volume was only 1/10 of it. And company A is not surprising, it is the goods Lala.
However, with the demand of Internet giants such as Didi for offline business expansion, Didi Freight quickly opened up the situation in the market with the support of the overall traffic and funds of Didi Group. As of the first nine months of 2021, the market share of fast dog taxi has been surpassed by Didi Freight, becoming the third in the market; and the market share has also dropped from 5.5% in 2020 to 3.4%, a decrease of 2.1 percentage points.
Source: Fast Dog Taxi Prospectus
In terms of the number of users, although during the reporting period, both the number of registered shippers and registered drivers maintained an upward trend, in terms of the number of active users and orders, fast dog taxi basically stopped growing or even continued to decline.
According to the prospectus, in terms of platform services to the C-end, the average number of monthly active users of shippers fell from 869,000 in 2018 to 645,000 in 2020, a drop of 25.8%; and in the first nine months of 2021, this data is still continuing to decline, only 594,000, down 6.8% year-on-year.
In terms of consignment orders, the number of consignment orders on the platform fell from 31.33 million in 2018 to 25.86 million in 2020, a decrease of 17.5%; in the first nine months of 2021, the total number of orders increased only slightly from the same period last year.
In the context of the continuous decline in the number of users and orders, in order to delay the downward trend of revenue, Fast Dog Taxi has to make more fuss on the driver side. During the reporting period, the average commission rate of Fast Dog Taxi continued to increase, from an average of 5.8% in the Chinese mainland market in 2018 to 11.7% in the first 1-9 months of 2021, while the overseas market increased from 4.5% to 9.2%, an increase of more than 1 times.
After excluding market fees such as user subsidies, the net commission rate of Fast Dog Taxi still shows a continuous upward trend. Among them, the net commission rate in the mainland market in the first nine months of 2021 fell sharply, mainly due to the company's need to increase user subsidies in order to delay the continuous decline in the number of active users.
Market fees are reduced, but losses are still difficult to reverse
In terms of the number of users, orders and revenue, Fast Dog Taxi has obviously lost the "magic wand" that drives growth; on the other hand, the company has not found a suitable solution on the road to continuous losses, and needs continuous external "blood transfusions" to maintain the operation of the business.
According to the prospectus, fast dog taxi had adjusted net losses of 784 million, 397 million 185 million yuan and 213 million yuan in 2018, 2019, 2020 and the first nine months of 2021, respectively, with a cumulative loss of nearly 1.58 billion yuan in the reporting period.
Although the amount of loss decreased year by year between 2018 and 2020, this was mainly due to the company's strategic reduction of marketing fee investment, and after reducing market expenses, the negative effect was the continuous decline in the number of users and orders.
Entering 2021, in order to delay the further decline in the number of active users, Kuaigou Taxi had to increase investment in user subsidies, but this further led to the company's adjusted net loss expanding again, an increase of 33.4% year-on-year.
Long-term and persistent losses have put a lot of pressure on fast dog taxi cash reserves. During the period from January to September 2021, the net cash outflow from operating activities of Fast Dog Taxi was 380 million, 456 million, 126 million and 255 million yuan respectively, while as of the end of September 2021, the company's available cash reserves were only 318 million yuan.
Long-term losses have made the company's cash flow under great pressure and unable to maintain continuous investment in market competition; and the lack of investment has further led to a continuous decline in the number of active users and orders on the platform; the decline in the number of users and orders has been reflected in the lack of growth of the company's revenue and the difficulty of seeking external financing.
In the end, after losing its dominant position in the market, fast dog taxi entered a seemingly insoluble dead cycle.
Looking at the 58 same city behind the fast dog taxi, its business idea is very different from the fast dog taxi. As a company that started with classified information services, for a long time in the past, 58.com has been labeled by the capital market as "very profitable, but the business is not sexy".
Even in the last annual report released before the delisting of 58.com, the Group achieved revenue of 15.58 billion yuan in 2019, and achieved a net profit of 2.31 billion yuan for the whole year after excluding the right to sell many shares of the car. At the same time, between 2017 and 2019, the gross profit margin level of 58.com is as high as 90%, far exceeding the level of several Internet manufacturers recognized as the most profitable in the market.
However, it is such a high-performing company that has not been favored by investors in the capital market for a long time. Although the Group hopes to spin off and list each business segment independently after delisting, so as to achieve more focused business, so that the market and investors can understand the company's business at a higher price, so as to achieve value revaluation.
However, as of now, in addition to the relatively smooth listing process of Fast Dog Taxi, Anjuke, who submitted a prospectus on the Hong Kong Stock Exchange in April last year, has shown that the prospectus is invalid in October last year, while Swan Dajia, who submitted a listing application to the US stock market in July last year, has withdrawn its IPO application.
For fast dog taxi, with the company's current financial situation and operating data, it seems that it is difficult to give the capital market and investors a satisfactory answer. As the first sub-business that is about to complete the IPO after the overall delisting of 58.com, it is difficult to reflect the significance of the value revaluation of 58.