Dadas IPO is successful, with a loss of 5 billion yuan in three years. Why is it expected by Liu qiangdong and others

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 Dadas IPO is successful, with a loss of 5 billion yuan in three years. Why is it expected by Liu qiangdong and others


From a child to a teenager. This is how he describes dada today. And hope that dada, with a great sense of awe and mission to create, to develop, everything is just beginning.

It has been established for six years, and reaches a leading local real-time retail and distribution platform in China. It has two core business platforms, dada express and Jingdong home, and its market share in both fields is leading.

At 9:30 p.m. on Friday, dada Group officially listed on NASDAQ. Dada group announced an IPO price of $16 / ads (American Depository stock), stock code dada. The issuance scale increased from 16.5 million ads previously announced to 20 million ads, with each ads representing 4 ordinary shares. The IPO of dada group is about US $368 million.

The total market value of dada group is USD 3.499 billion based on the issuance price of USD 16. As of the closing, dada shares closed at $15.99, down 0.06%, with a market value of $3.497 billion.

According to the prospectus information, about 35% of the funds raised will be used for technology research and development, about 40% for marketing and expansion of users, and the remaining funds will be used for general purposes of the company, including working capital and potential strategic investment and acquisition.

Listed under heavy load, with accumulated loss of 5 billion in three years

In the first quarter of 2020, dada express and jingdongjiajia accounted for 53.8% and 46.2% of the total net income respectively, and the proportion of the two main business lines in the total net income of the group is becoming more and more balanced.

From 2017 to 2019, the groups net losses were rmb1449 million, rmb1878 million and rmb1669.8 million, respectively.

Dadas explanation for this is that its continuous loss may be related to the cost paid by the rider. We expect rider costs and operating costs to increase as the business expands.

In the first 12 months as of March 31, 2020, dada had more than 634000 active riders, accumulating 822 million riders. Dada express business has covered more than 2400 counties, districts and cities in China, with a daily peak of about 10 million orders.

In the prospectus, dada group said: whether it can achieve profitability depends on whether it can improve its market position and image, expand its online platform, maintain competitive prices, improve operating efficiency and access to financing, which may be affected by many factors beyond its control.

According to the prospectus, the existing shareholders Jingdong and Wal Mart intend to become the cornerstone investors of dada, subscribing US $60 million and US $30 million respectively.

According to the prospectus, from 2017 to 2019, dada groups revenue from JD, a major shareholder, accounted for 56.7%, 49.1% and 50.5% respectively, and its related party transactions were about 50%. From August 2018 to the end of the year, the whole year of 2019 and the first three months of 2020, Wal Mart accounted for 4.6%, 13% and 14.9% of the revenue respectively, with the increase of connected transactions.

In addition, the company has little interest bearing debt. As of March 2020, cash equivalents and short-term investment totaled 1.93 billion yuan.

Three powerful and multi hegemonic enterprises, fierce competition in instant delivery market

First of all, the two giants, meituan and hungry, have already left.

Meituan launched its online running business in 2017 and launched meituan distribution in 2019. Recently, at the first anniversary of meituan distribution, meituan announced that the platform has 3.99 million active riders, covering 2800 cities at or above the county level, including more than 6.2 million categories of merchants such as catering, fresh food, supermarket, bookstore, flowers, etc.

In the first quarter of this years financial report, the new business increased by 4.85% to 4.168 billion yuan in the first quarter, including flash purchase and other new retail home business. It is not hard to find that non take out real-time delivery orders have become the growth engine of meituans new business.

Another giant is hungry. In June 2019, it announced the independence of hummingbird, a real-time logistics brand. On the same day, it announced that it will build 20000 full digital ready to use stations in the next three years to expand its services to more industries and regions. With the help of Alis local ecological potential, as of last September, hungry has established cooperation with 10000 large supermarkets such as RT mart, Bailian, Cr vanguard, and nearly 200000 chain supermarkets.

At the same time, dadas competitors include flash delivery, UU running errands, Zhongtong, Yuantong, Shunfeng, danniao and other cross-border competitions of logistics distribution companies, as well as other local fresh food distribution platforms.

According to the Research Report on Chinas real-time logistics industry in 2019 released by iResearch report, it is estimated that the order volume of real-time logistics industry in 2019 will reach 18.5 billion units, the scale will exceed 131.2 billion yuan, and it will reach 170 billion yuan in 2020. Under the temptation of a hundred billion market, the competition in the field of instant delivery is bound to be more fierce in the future.

Even if it has been successfully listed, the industry competition for dada is still huge. Whether it can stand firm and get enough cake is still unknown.