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Analysis of DiDi Global Inc.

Analysis of DiDi Global Inc.

27 April 2022

DiDi is a mobile technology platform that provides taxi services and other services in the People’s Republic of China, Brazil, Mexico and other countries. It offers:
— taxi services;
— chauffeur services, as well as corporate solutions for business trips;
— automotive solutions, including leasing, refueling, maintenance and repair;
— own network of charging stations for electric vehicles;
— bike sharing, food delivery and financial services.
Previously, the company was called Xiaoju Kuaizhi Inc., and in June 2021 changed its name to DiDi Global Inc.
DiDi Global Inc. was founded in 2012 and is headquartered in Beijing, China.
DiDi is a mid-cap company, $8 billion. The company has had a loss and negative free cash flow for the last 4 years. At the same time, revenue increased by almost 30%, however not within a year, but within all 4 years. In addition, the company has $6.8 billion in accounts, since there were large additional emissions in 2018 and 2019.

P/E is missing due to loss
P/B 0.5 (industry average 8.7)
P/S 0.2 (industry average 10.5)
Debt of 10.6 billion yuan with current operating cash flow of -13 billion yuan
No dividends
Share Price: $1.7

The cash flow discounting model shows a fair price of $3.8.
One analyst gives an estimate of $6.2 per share.

DiDi was listed on the stock market in June 2021, the shares began trading at $16.65. Then problems began with the Chinese IT business listed in the United States, and the relations between China and the United States themselves scare off Western investors. As a result, the shares fell by 90%!

The stock is trading below the 20, 50 and 200-day moving averages. The 50-day MA is at 3.2, which gives a 90% increase to the current price. The current rate repeats the bottom that was reached in March and from which the price then increased by more than 100%. There is a chance of a repeat of this scenario, especially in the case of positive reporting for the 1st quarter.

Such shares as DiDi can be taken only in the hope of growth after a severe fall. The company’s business is certainly competitive, and the money that is in the accounts will be enough for more than one year. The shares are traded very cheaply, a reversal of the chart is possible at any time. At the same time, it should be borne in mind that the company is definitely not facing bankruptcy, and they were able to surpass Uber in China, after which Uber transferred its entire Chinese business to DiDi in exchange for a share in the company. But DiDi is growing slowly, losing money, and in the long run is not a project worth investing a lot of money in.

27 April 2022
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