Core Viewpoint - Cao Cao Travel is attempting to adapt to the competitive landscape of the ride-hailing market, facing challenges in profitability and market positioning while preparing for its IPO to raise funds for expansion and debt repayment [3][4][48]. Financial Performance - Cao Cao Travel's revenue has shown improvement over the past three years, with projected revenues of 7.631 billion RMB, 10.668 billion RMB, and 14.657 billion RMB for 2022, 2023, and 2024 respectively [8][9]. - The gross profit has turned positive in 2023, reaching 5.8%, and is expected to increase to 8.1% in 2024, although it still lags behind competitors like Didi [16][10]. - The company has accumulated a total net loss of 5.234 billion RMB over the past three years, with expectations of continued losses in 2025 [21][25]. Market Positioning - Cao Cao Travel holds a market share of only 5.4%, significantly trailing behind Didi, which commands 70.4% of the market [10][35]. - The company has shifted its strategy to focus on cost control and profitability, aiming for nationwide profitability by August 2023 [29][30]. Business Model - The company operates on a heavy asset B2C model, which incurs higher costs compared to the platform model used by competitors [12][11]. - Cao Cao Travel has increasingly relied on aggregation platforms for orders, with the proportion of GTV from these platforms rising from 49.9% in 2022 to 85.4% in 2024 [18][45]. Debt and Financing - As of the end of 2024, Cao Cao Travel's debt reached 11.283 billion RMB, with a significant portion being short-term liabilities, raising concerns about liquidity [23][24]. - The company last raised funds in 2021, and the current IPO aims to address urgent financial needs, including debt repayment [25][48]. Strategic Adaptation - The company is focusing on expanding into lower-tier cities, with plans to enter 178 new markets, which could enhance its growth potential [42][43]. - The shift towards a "parasitic" model, relying on aggregation platforms, has both advantages in terms of rapid expansion and disadvantages in terms of brand autonomy and pricing power [40][45]. Future Outlook - The upcoming IPO is seen as a critical opportunity for Cao Cao Travel to secure necessary funding and clarify its competitive advantages in the market [49][50].

Core Viewpoint - The ride-hailing industry is experiencing a dichotomy, with second-tier platforms rushing to IPO while facing market saturation and profitability challenges [3][4][5]. Group 1: IPO Activity - On April 30, Cao Cao Mobility updated its prospectus for an IPO on the Hong Kong Stock Exchange, having received approval from the China Securities Regulatory Commission [4]. - On May 9, Xiangdao Mobility announced a C-round financing of 1.3 billion yuan, marking the largest single financing in the industry in nearly three years, and has initiated its IPO process [4]. - The IPO rush is characterized by a competitive landscape where major players like Didi hold over 70% market share, while second-tier platforms are struggling to differentiate themselves [7][11]. Group 2: Market Saturation and Profitability Issues - The market is facing saturation, as evidenced by the failed IPO of Shengwei Times due to continuous losses and regulatory penalties [5]. - Platforms like GAC's Ruqi Mobility have seen their market value plummet from 8 billion HKD to 2.3 billion HKD due to poor financial performance and slow progress in Robotaxi commercialization [6]. - The dependency on third-party aggregation platforms has led to a "flow trap," where platforms pay high commissions to acquire orders, squeezing already thin profit margins [9][31]. Group 3: Financial Performance - Cao Cao Mobility's total revenue is projected to grow from 7.63 billion yuan in 2022 to 14.66 billion yuan in 2024, but its net losses remain significant, with a projected loss of 1.25 billion yuan in 2024 [16][32]. - The share of orders from third-party platforms for Cao Cao increased from 49.9% in 2022 to 85.4% in 2024, indicating a growing reliance on these platforms [17][22]. - Ruqi Mobility's revenue from third-party platforms rose from 28% in 2022 to 59% in 2023, highlighting a similar trend across the industry [20]. Group 4: Competitive Landscape - The ride-hailing market is structured in a pyramid, with Didi at the top, followed by strong players from traditional automotive companies, and smaller niche players [7][11]. - The aggregation model has fundamentally changed the competitive rules of the ride-hailing industry, with platforms increasingly dependent on major aggregators like Gaode and Meituan for order distribution [24][30]. - The shift towards aggregation has diminished brand recognition and user loyalty for second-tier platforms, as they struggle to retain customers and collect valuable user data [31][39]. Group 5: Future Strategies - To achieve higher valuations in the capital market, second-tier platforms are attempting to tell differentiated stories, such as Cao Cao's focus on customized vehicles and Ruqi's emphasis on autonomous driving [41][43]. - Cao Cao Mobility is leveraging its parent company Geely's resources to produce customized vehicles, which has contributed to a significant increase in its gross transaction volume (GTV) from 4.5% to 25.3% [45]. - Ruqi Mobility is betting on the future of Robotaxi services, although its revenue from this segment remains negligible, and it faces high barriers to entry in terms of technology and capital [48][49].

Core Viewpoint - The ride-hailing industry in China is experiencing a bifurcation, with second-tier platforms pushing for IPOs while facing market saturation and profitability challenges [1][3]. Group 1: IPO Activity - On April 30, Cao Cao Travel updated its prospectus for an IPO on the Hong Kong Stock Exchange, having received approval from the China Securities Regulatory Commission [2]. - On May 9, Enjoy Travel, a subsidiary of SAIC Group, announced it had completed a C-round financing of 1.3 billion yuan, marking the largest single financing in the industry in nearly three years, and is accelerating its IPO process [2]. - Other second-tier platforms, such as T3 Travel and Shengwei Times, are also at critical junctures in their IPO plans, with T3's CEO indicating that the IPO timeline is imminent [5]. Group 2: Market Saturation and Profitability Issues - Shengwei Times' IPO prospectus became invalid due to ongoing losses and regulatory penalties, highlighting the profitability struggles within the industry [3]. - The market is characterized by a "pyramid" competition structure, with Didi holding over 70% market share, while other players are fragmented into four distinct factions [3][7]. - Cao Cao Travel's reliance on third-party platforms for 85% of its orders indicates a shift from self-sourced to aggregated orders, raising concerns about profitability [5][12]. Group 3: Dependency on Aggregation Platforms - The increasing dependency on aggregation platforms has led to a significant rise in commission payments, with Cao Cao's commission expenses growing from 322 million yuan in 2022 to 1.046 billion yuan in 2024 [17][18]. - The share of orders from third-party platforms for Cao Cao has increased from 49.9% in 2022 to 85.4% in 2024, indicating a shift in the operational model [14][15]. - User retention rates are declining, with Cao Cao reporting a drop in user retention to below 28% in 2023 due to increased reliance on third-party platforms [19][21]. Group 4: Differentiation Strategies - To achieve higher valuations, second-tier platforms are attempting to tell differentiated stories, such as Cao Cao's focus on customized vehicles leveraging its parent company, Geely's resources [22][23]. - Enjoy Travel is pursuing a mixed operation model that includes Robotaxi services, although its commercial progress has been slow [24][25]. - The competition in the autonomous driving sector is intense, with significant barriers to entry, and the success of these strategies remains uncertain [25][28].