Core Viewpoint - The ride-hailing platform Cao Cao Travel successfully listed on the Hong Kong Stock Exchange but faced significant market skepticism, leading to a sharp decline in share price on its debut day. Group 1: IPO Details - Cao Cao Travel issued a total of 44.18 million shares globally, with 4.42 million shares offered in Hong Kong and 39.76 million shares internationally, at an issue price of HKD 41.94 per share, aiming to raise HKD 1.853 billion [1] - The final allocation resulted in 13.25 million shares sold in Hong Kong and 30.93 million shares internationally, with the Hong Kong offering receiving 25,000 valid applications, oversubscribed by 21.14 times [1] - Despite the high demand, the stock price fell over 30% in dark trading, closing at HKD 36.00, a 14.2% drop from the initial market valuation [1] Group 2: Investor Losses - Key cornerstone investors, including Korea's Mirae Asset Securities and Hong Kong's Infinity Capital, faced losses exceeding 14% on their investments of HKD 275 million and HKD 251 million, respectively [2] - Other investors, such as Guoxuan High-Tech, lost approximately HKD 26.69 million on an investment of HKD 164 million, reflecting a significant drop in value [2] - The overall market sentiment was negative, with several institutional investors experiencing substantial unrealized losses on their holdings [2][3] Group 3: Financial Performance - The company is projected to incur cumulative operating losses of HKD 7.043 billion from 2021 to 2024, averaging a monthly burn rate of HKD 147 million [5] - As of December 31, 2024, Cao Cao Travel's current liabilities are expected to reach HKD 9.682 billion, with over 80% being interest-bearing debt, while cash reserves are only HKD 159 million [5] - The IPO proceeds of HKD 1.853 billion will only partially address the company's debt issues, indicating a significant liquidity gap [5] Group 4: Business Model Concerns - The sustainability of the business model is questioned due to high fixed costs associated with owning a fleet of vehicles, which leads to substantial depreciation and operational expenses [5] - The company's reliance on aggregation platforms like Gaode and Baidu has resulted in a dramatic increase in commission expenses, from HKD 137 million in 2021 to HKD 1.046 billion in 2024, with a compound annual growth rate exceeding 66% [5] - The low gross margin and challenges in retaining proprietary traffic further complicate the company's financial outlook [5] Group 5: Industry Sentiment - The overall market sentiment towards ride-hailing platforms in Hong Kong is pessimistic, as evidenced by the poor performance of other recent listings like Dida Chuxing and Ruqi Mobility, which also experienced significant declines on their debut days [6] - Investors appear to have lost patience with the "burn cash for scale" model prevalent in the ride-hailing industry, leading to a cautious approach towards new entrants [6]