Cao Cao's IPO in Hong Kong: What is the new listing story of Cao Cao's trip?

Text: Luo Zeng

Following Tick and Ruqi, Cao Cao also submitted his prospectus to the capital market before May.

"The competition between ride-hailing platforms is becoming increasingly fierce, and in order to gain more market share, major platforms have increased investment, including technology research and development, marketing, driver recruitment, etc. These investments require a large amount of financial support, and listing has become one of the important ways for online car-hailing platforms to obtain funds. Jiang Han, a senior researcher at Pangu Think Tank, pointed out that through listing, the platform can get more capital support, accelerate its own development, and improve market competitiveness; In addition, going public can also allow the platform to gain more exposure opportunities, increase public awareness, trust and brand value, and attract more users and drivers to join.

Looking at the industry, in recent years, with the gradual saturation of the market, the growth rate of the online car-hailing industry has slowed down significantly. In this context, Cao Cao's listing road is not only a feast of capital, but also a test of the market.

In the face of Didi's absolute dominance, AutoNavi's aggregation platform strategy, and the encirclement and interception of many other competitors, how will Cao Cao find its own position in this unpredictable capital and market game?

Under the tiger's mouth, he fell into losses year after year

After the initial brutal growth, the ride-hailing industry is now facing a double dilemma of growth: on the one hand, the market growth rate is slowing down, and the user scale tends to be saturated; On the other hand, the pattern of "one super and many strong" dominated by Didi in the industry has been formed, and it is difficult for new entrants to shake the existing barriers.

In this context, in the face of market share that is difficult to break through and losses for many years, Cao Cao's IPO road seems to be doomed to be bumpy.

According to Cao Cao's prospectus data, the company's revenue from 2021 to 2023 will be 7.153 billion yuan, 7.631 billion yuan and 10.668 billion yuan respectively.

It is worth mentioning that in 2023, Didi's GTV growth rate will be 45.4%, but Cao Cao's revenue volume is less than 6% of Didi's, and the GTV growth rate will only be 37.5%. In addition, from the perspective of order volume, the average daily order volume of Didi in 2023 will be 35 million, and Cao Cao's travel will only be 1.23 million. Under Didi's absolute dominance, Cao Cao's market share competition is extremely difficult.

It may be more feasible to compete for market share from other competitors than to compete directly with Didi. Among them, the aggregation platform that has absorbed many online car-hailing brands has become one of the battlefields. However, the competition of aggregation platforms is not an easy task, and some industry insiders told China.com Finance that for example, in AutoNavi, there are many online car-hailing brands and fierce competition, and in most cases, these companies bid for passengers through price wars. In this environment, Cao Cao, as one of them, naturally cannot avoid "price involution".

Its unique asset-heavy operating model, coupled with the impact of price battles, has undoubtedly exacerbated the company's financial burden. According to the prospectus, from 2021 to 2023, the company will have annual losses of 3 billion yuan, 2.007 billion yuan, and 1.981 billion yuan respectively, with a cumulative loss of up to 7 billion yuan. Although the gross margin turned positive by 5.8% in 2023, there is still a long way to go to profitability.

Price wars are not a long-term solution. Cao Cao Travel is well aware of this, so in order to improve its own revenue and profitability, the company began to work the cost side and explore the path of "reducing costs and increasing efficiency".

Custom + automatic, real gun or gimmick?

In recent years, at a time of increasing competition in the ride-hailing industry, Cao Cao is working with its "backer" Geely Holding Group to seek breakthroughs in customized cars and autonomous driving technology through technological innovation, trying to reduce operating costs, improve service quality, and open up new growth points in the industry.

For example, in the field of customized vehicles, Cao Cao Travel is not just a taste, but deeply involved in every aspect of vehicle design, deployment, pricing, sales, operation and service, in order to achieve fine management and cost optimization of the whole life cycle of vehicles.

At present, Cao Cao's customized car family includes two star products, Maple Leaf 80V and Cao Cao 60, the latter of which is the result of Cao Cao's own efforts in product definition and intelligent development. According to the data, the estimated TCO of customized vehicles is 0.53 yuan and 0.47 yuan per kilometer respectively, which is 32% to 40% lower than that of typical comparable pure electric vehicles with battery swapping function. As of December 31, 2023, Cao Cao operated a fleet of about 31,000 custom-built vehicles in 24 cities in China, the largest in its industry.

Although it is beneficial to reduce costs in the long run, in the short term, the investment in customized cars undoubtedly increases the financial pressure on the company. It is understood that from 2021 to 2023, Cao Cao Travel (including Top Hat Travel) paid 256 million yuan, 1.323 billion yuan, and 1.770 billion yuan respectively to Geely Holding Group and related companies for the purchase of cars (including customized cars).

For the future planning of customized cars, Gong Xin, CEO of Cao Cao Travel, revealed in an interview with the media that Cao Cao 60 will be put into use on the Cao Cao Travel platform after it is launched, becoming the main product of Cao Cao's "Huixuan" series, but at the same time, it is also sold to the entire B-end travel market and even individual drivers. In addition to being put into use on the Cao Cao travel platform, it will also be open to other platforms.

In addition, Jiemian News mentioned in the report that cutting-edge technologies such as intelligent driving and intelligent networking are highly hoped, and they will profoundly reshape the underlying logic and market structure of the online car-hailing industry. From 2020 to 2023, the government has successively issued a number of policy documents to promote the integrated development of electrification, intelligence and connected technologies, and vigorously promote the industrialization and commercial application of autonomous driving technology.

With the support of policies, the commercialization of unmanned driving technology is also increasing. According to the Daily Economic News, companies such as Carrot Express and Pony.ai have deployed unmanned autonomous driving fleets in many cities and launched commercial charging services, and Tesla also announced that it will release a driverless taxi on August 8.

As a member of online car-hailing, Cao Cao is also accelerating the commercialization process of high-end intelligent driving. At the same time, it has signed strategic cooperation agreements with many companies such as CITIC Zhilian, Innovusion, Yunchi Future, Black Sesame Intelligence, and Zhongzhixing, covering high-precision maps, lidars, chips, intelligent cockpits and other fields, so as to provide technical support and industrial foundation for its own commercial operation of autonomous driving.

Nowadays, Cao Cao Mobility is gradually transforming from a single online car-hailing service to a comprehensive travel service platform in terms of business layout. The company plans to use the raised funds to increase the research and development of cutting-edge technologies such as intelligent driving and Internet of Vehicles, drive service upgrades with technological innovation, and improve operational efficiency and user experience. In addition, Cao Cao will continue to expand its service coverage to cover more cities to meet a wider range of market demand.

The competition in the ride-hailing market is like a war without gunpowder, and every participant is working hard to survive and develop. As media reports pointed out, Tick emphasized its position in the ride-hailing market, and Ruqi highlighted its Robotaxi technology content. Cao Cao, on the other hand, went to Hong Kong for an IPO with a story of customized cars and autonomous driving.

At this point, the online car-hailing listing competition has officially begun, can Cao Cao successfully break through with its unique market positioning, innovative operation strategy, and strong backing of Geely Group?