CiDi Sets IPO Course With Its Self-Driving Trucks

Key Takeaways:

• The company’s revenues surged 472% to 260 million yuan in the first half of this year
• Income from autonomous driving products rocketed to 60% of overall revenue in the half-year period

By Lee Shih Ta

In the increasingly crowded self-driving space, one company is taking a less travelled route to success.

While many developers of automated driving systems are targeting the passenger market, CiDi Inc. is making inroads into the commercial transport sector via the mining industry.

Based in the Hunan city of Changsha, CiDi supplies automated truck fleets for excavation sites and is now taking the proposition to the stock market, filing for an IPO at the Hong Kong Stock Exchange, sponsored by CICC, China Securities and Ping An of China Capital (Hong Kong).

Celebrated Founder

The company was founded in 2017 by a team including Li Zexiang, one of the driving forces behind the drone powerhouse DJI Technology. The former professor and his student prodigy Frank Wang were the brains behind DJI, where Li provided early financing and served as board chairman before setting up his new automotive technology venture, CiDi.

Formerly known as Changsha Intelligent Driving Research Institute, the company has become a leading provider of autonomous driving technology for commercial vehicles in China. It focuses on developing driverless trucks for mining and logistics, as well as providing V2X automotive communications systems and perception solutions.

According to the IPO filing, CiDi is the second-biggest provider of autonomous driving technology for commercial vehicles in China with around 8.2% of the market, and it leads the way in self-driving mining trucks with a 36.5% share.

The company supplies driverless vehicles to support mining processes such as drilling, blasting, excavation and haulage, as well as fleet management systems and technology to remotely operate excavators.

Data cited in the prospectus said self-driving trucks vastly outperformed those operated by mine workers, boosting relative mining efficiency by 104%.

By the end of September this year, CiDi had delivered 123 autonomous mining trucks to various quarries and coal mines in Henan, Jiangsu and Hunan, the prospectus said. Meanwhile, indicative orders had been received for 320 autonomous mining trucks and 206 standalone autonomous truck systems.

Aside from mining transportation, the company supplies driverless trucks for other haulage purposes that can navigate between points in closed environments such as industrial sites and logistics parks.

The self-driving automotive business, including mining and logistics trucks,  made up just over 60% of total CiDi revenue in the first half of the year.

The company has enjoyed spectacular turnover growth as its autonomated trucking business began to take off. Revenues came in at 77.39 million yuan ($10.70 million) in 2021, dipping to 31.06 million yuan the following year before surging to 130 million yuan in 2023, with a compound annual growth rate of 30.9%.

In the first half of 2024, revenue rocketed 472% to 260 million yuan, propelled by a surge in the autonomous driving business. Revenue from the self-driving segment soared to 160 million yuan from 17.53 million yuan in the same period of last year, taking the share of total turnover to just over 60%.

Despite the healthy top line, the company is still stuck in the red, although losses have lately narrowed. Between 2021 and 2023, its annual non-GAAP adjusted net losses came in at 110 million yuan, 160 million yuan and 140 million yuan. In the first half of this year the loss shrank 9.2% to 59.44 million yuan from 65.43 million yuan in the same period of 2023.

Heavyweight Backers

The company has secured eight rounds of financing up to this point, with investors including HongShan, Baidu Venture, Legend Holdings and Hunan Xiangjiang New Area State Owned Capital Investment. CiDi completed a C+ series this February, raising 24 million yuan and obtaining a post-financing valuation above 9 billion yuan. Going into the IPO, the company’s founding father, Li Zexiang, still controls 43.63% of the shares.

A focus on the mining industry has proven to be an effective value proposition for CiDi, but this degree of specialization has its downsides. The company faces issues such as a concentrated customer base and limited gross margins.

Between 2021 and 2023, revenue from autonomous driving surged from 6.8 million yuan to 74.42 million yuan, but its gross margin fell from 22.5% to 19.5%. The gross margin for the driverless business only edged up to 16.1% in the first half from 15.6% in the same period of last year.

The latest revenue spurt came largely from within a narrow customer base. In the past three years the autonomous driving customers numbered 14, 8 and 12, with average value per client rising from 486,000 yuan to 3.5 million yuan and 6.2 million yuan. And in the first half of 2024, the average customer value leapt to 39.01 million yuan.

Over the last three financial years, the biggest customers contributed 82.9%, 78.4% and 31.2% of revenue, with the proportion rising back to 58.9% in the first half of this year.

CiDi is the fourth company to file for a Hong Kong IPO under revised rules that widen the admission critera to include loss-making high-tech companies. The other three to take advantage of this Chapter 18C pathway are QuantumPharm (2228.HK), Black Sesame (2533.HK) and Dobot Robotics.

Autonomous driving is still an emerging industry but CiDi seems to have got off to a solid start. From here, investors will be looking for evidence of sustained progress towards the destination of profitability.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.