To The Moon

$DiDi Global Inc.(DIDIY)$ has released its second performance report since its relisting. From the trend of Didi continuously disclosing its performance, the company intends to return to the main board for listing.

Financial Highlights

Didi's total revenue for the second quarter reached 488.5 billion yuan, a year-on-year increase of 52.6%. Of course, there were special circumstances last year, and the base was very low, resulting in a 1% year-on-year increase compared to 2021.

Among them, the revenue from Didi's China mobility services (ride-hailing, taxis, chauffeur service, and Hitch) was 44.5 billion yuan, a year-on-year increase of 57%, with an adjusted EBITA profit of 1.44 billion yuan. International business revenue was 1.9 billion yuan, a year-on-year increase of 35.3%, with an adjusted EBITA loss of 240 million yuan.

The core platform's total Gross Transaction Value (GTV) reached 84 billion yuan, a 54.8% increase compared to the second quarter of 2022. The daily average order volume in the second quarter reached 29.4 million orders, with June's daily average order volume surpassing 30 million orders.

Adjusted EBITDA loss is now only 9 million yuan, nearing profitability, with a turnaround in sight.

Among them, the domestic mobility business, due to scale effects, saw an increase in EBITA of about 400 million yuan compared to the previous quarter. However, the profit margin was 3.2%.

The EBITDA loss for overseas business slightly expanded to 240 million yuan compared to the previous quarter.

Innovation business incurred a loss of 1.21 billion yuan.

Investment Highlights

Although total revenue growth is less than 1% compared to 2021, the trough of "under the impact of the pandemic and regulation" has passed. The main reason for the limited growth is market regulation and rationalization of competition. In the long term, Didi should not be measured as a growth stock but should aim for continuous profit improvement through economies of scale.

The most significant highlight is the reduction in losses. Looking closely at the source of the reduction in losses, innovation business remains the main drag, but losses narrowed by 220 million yuan, mainly due to overseas and innovation business. The core domestic business has matured.

The recovery of domestic travel demand is the biggest positive factor. With the overall prosperity of cultural and tourism demand, there has been a noticeable recovery in taxi demand for commuting and travel within the country in the second quarter. Compared to the same period in 2021, the number of single trips has increased by about 4%, while the average fare has increased by less than 1%. It can be seen that demand has returned to normal levels, and it may be difficult to raise prices. On the one hand, overall CPI is relatively low, and on the other hand, competition has intensified, with various platforms competing for users through subsidies.

In the domestic business from 2021 to 2023, there is only recovery without incremental growth, while international business during the same period has seen a GTV growth of 90%. The total international transaction volume is approximately 16.4 billion, a year-on-year increase of 35%, with stable and rising growth rates.

With the decline in oil prices, the average fare for overseas business has seen zero growth year-on-year, and growth is driven entirely by order volume, resulting in a healthier structure. However, the stagnant average fare has also led to a slight decrease in the profit margin of overseas business.

In addition, due to the relatively small absolute scale and the inability to achieve profitability at the EBITDA level, the market is unlikely to value this part of the business in the short term.