Geely-backed ride-hailing app CaoCao is nearing the completion of its IPO journey after receiving approval from China’s securities regulator. The company’s revenue surged by 25% in the first half of last year, surpassing its competitors, as it expanded into 32 new cities, growing its footprint by over 60%.
Geely, known for its delayed entry into cutting-edge technologies, is making strides with CaoCao, its response to Uber. CaoCao initially filed for a Hong Kong listing a year ago but faced delays. The recent approval from the Chinese securities regulator marks a significant milestone. The next step involves a listing hearing with the Hong Kong Stock Exchange, expected to happen in the coming months, paving the way for CaoCao’s public debut.
The ride-hailing market in China is becoming increasingly crowded, with companies like Dida and Chenqi already listed. Industry behemoth DiDi Global is also eyeing a Hong Kong listing soon. CaoCao’s IPO, underwritten by mid-sized Chinese investment banks, is anticipated to raise substantial funds, possibly in the hundreds of millions of dollars.
CaoCao, founded in 2015, stands out in the ride-hailing sector with its unique business model. The company, largely owned by Geely’s founder, leverages its association with Geely’s automotive assets to provide purpose-built vehicles to its drivers. This strategy, introduced in 2022, has gained traction, with purpose-built vehicles contributing significantly to CaoCao’s revenue.
In addition to its vehicle strategy, CaoCao has embraced aggregator apps to broaden its service offerings. By utilizing these apps, CaoCao has expanded its customer base and reduced user acquisition costs. The company’s aggressive expansion into new cities has bolstered its revenue growth, outpacing its competitors in the market.
Despite the growth, CaoCao faced increased marketing expenses in the first half of last year, offset by lower administrative and R&D costs. The company achieved its first gross profit in 2023, with a promising outlook for further improvement as it solidifies its position as a key player in the market.
When it comes to valuation, CaoCao is expected to command a competitive price-to-sales ratio, potentially reaching a valuation of around 40 billion yuan. With its distinctive business strategies and exponential growth, CaoCao is set to make a significant impact in the ride-hailing industry, positioning itself as a strong contender in the market.