Yahoo Finance Didi Posts First Profit Since 2021 Ahead of Landmark HK IPO
(Bloomberg) -- Didi Global Inc. posted its first profit since 2021, sustaining the Chinese ride-hailing leader’s gradual recovery ahead of a 2024 Hong Kong listing.
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China’s answer to Uber Technologies Inc. posted a net income of 107 million yuan ($14.7 million) in the third quarter, after it resumed registering new users in January. Revenue in the September quarter rose 25% to 51.4 billion yuan, the company said in a statement on Monday.
The results suggest Didi is making headway in an effort to regain market share lost since 2021, when regulators launched a probe into its data handling and forced it to delist from the New York Stock Exchange. That chilled business expansion, drove co-founder Cheng Wei from the public spotlight and allowed rivals such as Meituan to encroach on its turf. In a signal to investors, Didi said it’s authorized a $1 billion share-buyback program that will take place over the next 24 months.
“In the future, we expect to continue expanding our core businesses while enhancing our product and service capabilities,” Cheng, also Didi’s chief executive officer said in a rare statement since resolving the investigation.
Once hailed as a national champion that drove Uber out of China, Didi’s rapid downfall during Beijing’s tech crackdown of 2021 and 2022 has come to encapsulate the uncertainty of private-sector entrepreneurship during Xi Jinping’s reign.
Didi’s comeback and eventual re-listing would offer a strong signal of Beijing’s renewed support for the tech sector, which is needed more than ever to revive a sputtering Chinese economy. It would shore up confidence for private enterprise after years of regulatory scrutiny humbled corporate leaders from Tencent Holdings Ltd. to Alibaba Group Holding Ltd., both Didi backers.
The company is planning a public re-listing in Hong Kong next year, propelled by growing signs that its business is recovering since it restored its main apps to mobile stores earlier this year. Didi narrowed net losses and grew sales more than 52% in the June quarter. In its core Chinese business, average daily transactions reached 31.3 million in the September quarter despite weaker-than-expected consumer sentiment in a sluggish post-pandemic recovery.
Didi now trades only on the highly illiquid pink-sheets market reserved for small enterprises, but has confounded expectations with a 40% gain since a May trough that grants it a market value close to $17 billion.
In August, Didi announced the sale of its electric-vehicle development arm to Xpeng Inc., a move that saw the ride-hailing firm emerge with a 3.25% stake in the EV maker.
--With assistance from Zheping Huang.
(Updates with details of share buyback program from the third paragraph)
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