Core Viewpoint - The Chinese ride-hailing market is transitioning from "wild growth" to "compliance and intelligence," with the core conflict shifting from capital subsidies to the institutional reconstruction of automated driving and human-vehicle relationships. The market is expected to reach nearly 1 trillion yuan by 2030, with opportunities arising for second-tier platforms due to the rise of aggregation platforms and Robotaxi technology breakthroughs [2][5]. Group 1: Industry Overview - The ride-hailing market is experiencing internal flow decentralization, with aggregation platforms capturing approximately 25%-30% of order share, creating structural opportunities for second-tier platforms [2]. - The Robotaxi, leveraging L4 autonomous driving technology, is seen as a key breakthrough, significantly reducing accident rates compared to human drivers by over 80% [2]. - The market is projected to grow to nearly 1 trillion yuan by 2030, with a compound annual growth rate (CAGR) exceeding 20% [35]. Group 2: Company Performance - The company is actively expanding its market share through partnerships with aggregation platforms, achieving a 53.5% year-on-year increase in active drivers to 544,000 and a 57.4% increase in active users to 38 million in the first half of 2025 [3]. - The company’s revenue is expected to grow significantly, with projected revenues of 206.7 billion yuan in 2025, 262.4 billion yuan in 2026, and 323.7 billion yuan in 2027, reflecting a strong growth trajectory [5]. - The company has developed a fleet of 37,000 customized vehicles, leading the industry and enhancing the standardization of travel experiences [3][15]. Group 3: Technological Integration - The company is integrating vehicle manufacturing, operational services, and technology research and development into a unified Robotaxi platform, aiming to replicate the success of its ride-hailing business [4]. - The launch of "Cao Cao Smart Travel" and the introduction of customized vehicles are part of the strategy to enhance user experience and operational efficiency [4][15]. - The company is leveraging its parent group’s resources to enhance research and development efficiency, which is expected to accelerate the commercialization of L4 technology [4]. Group 4: Financial Projections - The company’s revenue for 2024 is projected to be 146.6 billion yuan, a 37.4% year-on-year increase, driven by a significant rise in order volume and average order value [24]. - The gross profit margin is expected to improve from -4.4% in 2022 to 8.4% in the first half of 2025, reflecting effective cost control and increased customer spending [29]. - The company’s operational revenue is primarily derived from ride-hailing services, which accounted for 90.9% of total revenue in the first half of 2025 [27].

Investment Rating - The report assigns an "Outperform" rating to the company for the first time, with a target price range of HKD 98.00 to HKD 108.00, indicating a potential upside of 25% to 39% from the current price of HKD 81.25 [6][4]. Core Insights - The company is positioned to reach a profitability inflection point through its customized vehicle strategy and is expected to benefit from the Robotaxi model, which will enhance its mid-term growth prospects [3][4]. - The report highlights the company's strategic shift from a B2C model to a focus on customized vehicles and partnerships with aggregation platforms, which is anticipated to improve operational efficiency and market penetration [2][3][31]. Company Overview - The company, Cao Cao Travel, is a leading ride-hailing platform backed by Geely Group, with a market share of 5.4% and a projected total transaction volume of RMB 17 billion in 2024 [1][16]. - The company has undergone a strategic transformation since 2021, shifting its management team from traditional automotive backgrounds to professionals with experience in the ride-hailing industry [18][20]. Industry Development - The ride-hailing industry in China is experiencing stable growth, with daily orders expected to reach 31.5 million in 2024, reflecting a penetration rate increase from 10% in 2015 to 41% in 2022 [2][52]. - The industry is characterized by a few dominant players, with the top player, Didi, expected to achieve an adjusted EBITA margin of 3.0% in 2024 [2]. Financial Analysis - The company is projected to achieve revenues of RMB 20.9 billion, RMB 27.5 billion, and RMB 34.6 billion for the years 2025, 2026, and 2027, respectively, representing year-on-year growth rates of 43%, 32%, and 26% [4][5]. - The adjusted net profit is expected to improve from a loss of RMB 4.9 billion in 2025 to a profit of RMB 5.1 billion in 2027, indicating a significant turnaround in profitability [4][5]. Business Model - The company's core business is centered around ride-hailing services, which accounted for 92.6% of its revenue in 2024, with vehicle leasing and sales contributing marginally [23][24]. - The shift towards a light-asset model is expected to alleviate cost pressures and improve profitability, with a focus on customized vehicles and partnerships with local operators [29][30]. Growth Outlook - The company aims to expand its operations to 136 cities by the end of 2024, with a fleet of 34,000 customized vehicles, indicating a strong growth trajectory [16][18]. - The introduction of Robotaxi services is anticipated to further enhance the company's growth potential, with plans to launch a dedicated L4 Robotaxi model by the end of 2026 [3][4].

Investment Rating - The report maintains a cautious recommendation for the transportation industry, indicating a potential increase in stock prices relative to the benchmark index within the next 12 months [5]. Core Insights - The China Air Transport Association has released a self-discipline convention aimed at regulating market order and reducing chaotic price competition in the aviation industry, which is expected to enhance the core competitiveness and sustainable development of the air passenger transport sector [2][15]. - Major ride-hailing platforms, including Didi and Cao Cao, have collectively reduced their commission rates, which is anticipated to stabilize the market and benefit leading platforms in the long term [3][21]. - The report suggests that the recovery of business travel demand is crucial for the aviation sector, with a strong likelihood of price increases in the fourth quarter if there are signs of improvement in this area [3][18]. Summary by Sections Market Review - From August 1 to August 15, 2025, the A-share transportation index rose by 1.49%, with the aviation sector leading at 3.3%, while the overall market performance ranked 20th out of 28 industries [1][8]. Event Commentary - The self-discipline convention by the China Air Transport Association aims to adapt pricing to changing passenger structures and longer booking cycles, which is expected to improve pricing dynamics during the off-peak season [2][15]. - The collective reduction of commission rates by ride-hailing platforms is seen as a move towards a healthier industry development and market share concentration, particularly benefiting Cao Cao, which is leveraging its relationship with Geely Group for technological and manufacturing advantages [3][21][25]. Investment Recommendations - The report emphasizes the importance of monitoring business travel demand recovery and suggests that the aviation sector has a solid foundation for price increases, particularly in the fourth quarter, contingent on improvements in demand [3][18]. - Companies such as Huaxia Airlines, Juneyao Airlines, Spring Airlines, and the three major state-owned airlines are highlighted as potential investment opportunities [3].