China’s ride-hailing giant Didi files IPO in US with an actual profit

11 Jun, 2021 02:36
source: Singularity Financial

Singularity Financial Hong Kong June 11, 2021 – China’s ride-hailing giant Didi Chuxing has dropped its Hong Kong initial public offering plan and aims to go public in New York as soon as the third quarter, mainland media reported, citing people familiar with the matter.

Unlike Uber and Lyft, Didi reported a profit in first quarter of 2021 after years of large losses, though a one-time windfall was the main reason. The Beijing-based company has filed confidentially with the US SEC for an IPO, Bloomberg reported in April. Didi was considering a second listing in Hong Kong after the IPO in the US, the report said.

Didi did not state a targeted amount to raise, nor name which exchange it intends to trade on, information that could come with updated filings with the SEC. It expects to list under the ticker symbol DIDI. The Wall Street Journal reported Thursday afternoon that the company could receive a $70 billion valuation through the offering, and will seek to raise up to 10% of that amount, citing anonymous sources.

The company — which filed under a parent company’s name, Xiaoju Kuaizhi Inc. — did reveal in Thursday’s filing that it turned a profit in the first quarter after years of large losses, with financial records showing GAAP net income of 5.49 billion rembini ($837 million) on revenue of RMB 42.16 billion ($6.44 billion), up from a loss of RMB 3.97 billion on sales of RMB 20.47 billion the year before.

The profit stemmed from Didi investments that added more than RMB 12 billion to the bottom line in the quarter, “primarily due to the deconsolidation of Chengxin Technology Inc., or Chengxin, the entity engaged in the community group buying business, from which we recognized an unrealized gain of RMB 9.1 billion,” the company stated. Prior to that, Didi reported annual losses of RMB 10.6 billion, 9.7 billion and 15 billion in the past three full years.

According to an IPO report from Marketwatch, Didi’s U.S. counterparts Uber Technologies Inc. nd Lyft Inc. have not produced a quarterly profit since going public in 2019. In their most recent quarters, which mirrored the time period of Didi’s first quarter, Uber reported a loss of $108 million — its smallest quarterly loss as a public company — on sales of $2.9 billion, while Lyft lost $427 million on sales of $609 million. Uber did report a quarterly profit before going public, in the first quarter of 2018, as a result of revaluing its investment in Didi; the company reported a quarterly loss of more than $3 billion last May as a result of lowering the valuation of its Didi stake.