Zhike | Aiming to Replace Mine Truck Drivers, CIDI Autonomous Driving Is Still Struggling on the Verge of Going Public.
Author | Fan Liang
Editor | Ding Mao
In November 2024, CiDi Autonomous Driving, led by "DJI Godfather" Li Zexiang, officially submitted an application to the Hong Kong Stock Exchange. This commercial vehicle autonomous driving company, established only seven years ago, is attempting to open the door to the capital market with a valuation of over HK$8 billion.
As an iconic figure in the domestic hard-tech field, Li Zexiang not only holds a 43.64% controlling stake in CiDi Autonomous Driving but also actually controls the A-share listed company GoogolTech. If this IPO is successful, he will own two listed platforms: "Intelligent Driving + Motion Control".
It is worth noting that both companies exhibit typical characteristics of high valuation: The price-to-sales ratio (PS) of GoogolTech at the initial stage of its listing was as high as a hundred times. Its 2023 revenue of 400 million yuan corresponded to a maximum market value of 40 billion yuan, and its market value is still over 10 billion yuan to this day. Meanwhile, the PS corresponding to the valuation of CiDi Autonomous Driving's Series C+ financing in 2023 is also over 50 times.
The high valuation of GoogolTech is supported by the robot concept. In the context of the intelligent driving industry gradually entering the elimination stage, how CiDi Autonomous Driving can continue the narrative logic of high valuation will perhaps become the biggest highlight of this IPO.
The Leading Company in Autonomous Driving for Mining Trucks
CiDi Autonomous Driving belongs to the commercial vehicle autonomous driving industry. Currently, it mainly has three business directions and five types of products, namely Autonomous Driving (mining truck solutions, logistics vehicle solutions), V2X (intelligent transportation V2X products and solutions), High-Performance Perception (train autonomous perception system, vehicle intelligent safety management solution).
Among them, Autonomous Driving is mainly a TO B business, while V2X and High-Performance Perception are mainly TO G businesses. If the above businesses are described in more understandable terms, they are solutions composed of hardware and software as a whole. Specifically, Autonomous Driving mainly sells mining trucks and logistics vehicles equipped with an autonomous driving system, V2X is mainly the software and hardware system related to traffic monitoring, and High-Performance Perception is the driving monitoring system for trains and commercial vehicles.
According to CIC's disclosure, in the first half of 2024, CiDi Autonomous Driving's total revenue was 258 million yuan, ranking first in the commercial vehicle autonomous driving market, with a market share of 12.9%. Among them, the revenue of the autonomous driving mining truck market was approximately 150 million yuan, with a market share of approximately 36.5% in the autonomous driving mining truck market.
Figure: Main Products of CiDi Autonomous Driving Source: Prospectus, 36Kr
From the perspective of revenue growth, CiDi Autonomous Driving has been in a stage of rapid expansion of revenue scale in the past two years. From 2021 to the first half of 2024, the company's total revenue was 77 million yuan, 31 million yuan, 133 million yuan, and 258 million yuan respectively, with year-on-year growth rates of -59.7%, 329%, and 470% in 2022 - 2024H1. The decline in revenue in 2022 was mainly due to a 95% significant drop in V2X revenue that year. Although the Autonomous Driving business began mass production with a 300% increase in revenue, it failed to effectively compensate for the decline in the V2X business.
From the perspective of the revenue structure, the proportion of the three major businesses in CiDi Autonomous Driving's revenue is very unstable, but overall, it shows a trend of an increasing proportion of Autonomous Driving revenue and a decreasing proportion of V2X revenue. From 2021 to the first half of 2024, the proportion of the company's V2X business was 91.2%, 9.8%, 27.8%, and 28.7% respectively; during the same period, the Autonomous Driving business was 8.8%, 90.2%, 56.1%, and 60.4% respectively; in addition, after the company's High-Performance Perception business began mass production in 2023, the proportion of this business in 2023 - 2024H1 was 16.1% and 10.9% respectively.
In general, due to the fact that CiDi Autonomous Driving's current revenue volume and business scale are still in the initial stage, it has not yet formed a stable business structure, but Autonomous Driving, especially the intelligent driving mining truck, is likely to become the company's core business in the future. The prospectus discloses that from 2021 to September 30, 2024, CiDi Autonomous Driving has cumulatively delivered 123 autonomous driving mining trucks and received intention orders for 320 autonomous driving mining trucks and 206 sets of autonomous driving truck systems.
In terms of policy trends, both the "Guiding Opinions on Further Promoting the Intelligent Construction of Mines to Promote the Safe Development of Mines" and the "Upgraded Plan for the 'Sailing' Action for Large-Scale Application of 5G" published in 2024 pointed out the need to accelerate the large-scale promotion of scenarios such as unmanned mining trucks. Therefore, there is no need to worry about the sustainability of CiDi Autonomous Driving's mining truck business and the industry prospects.
Figure: Revenue Structure of CiDi Autonomous Driving Source: Prospectus, 36Kr
Profit Constraints Affect R & D Expenditure
As mentioned earlier, from 2021 to the first half of 2024, CiDi Autonomous Driving's operating income increased from 77 million yuan to 258 million yuan. However, from the perspective of gross profit, its corresponding gross profit only increased from 26 million yuan to 45 million yuan during the same period.
The revenue growth rate is much higher than the gross profit growth rate. The reason for this is naturally the decline in the gross profit margin. CiDi Autonomous Driving's comprehensive gross profit margin was 33.11% in 2021, but only 17.17% in the first half of 2024.
Then, why does the company's revenue scale expand, but the gross profit margin declines instead?
One reason is that the gross profit margin of the Autonomous Driving business, which accounts for a relatively high proportion of the company's revenue, is relatively low. The gross profit margins in 2023 and the first half of 2024 were 19.5% and 16.1% respectively, pulling down the overall gross profit margin level.
Another reason is that the gross profit margin level of the V2X business continues to decline significantly. In 2021, the gross profit margin of this business was as high as 34.1%, but it had dropped to 17.7% in 2023 and further declined to 7.7% in the first half of 2024.
Figure: Gross Profit Margin of Each Business of CiDi Autonomous Driving Source: Prospectus, 36Kr
This situation of increasing revenue without increasing profit has caused CiDi Autonomous Driving to be in a continuous loss state for many years. For example, its adjusted loss from 2021 to 2023 was in the range of 100 - 150 million yuan, and the net cash flow from operating activities was around -200 million yuan. As of the third quarter of 2024, CiDi Autonomous Driving's cumulative monetary funds and time deposits are approximately 360 million yuan, while the company has short-term borrowings of 140 million yuan on its books. The company's existing liquidity level is also difficult to support long-term high-intensity R & D.
Therefore, the continuous losses have also affected CiDi Autonomous Driving's R & D expenditure. Despite the expansion of CiDi Autonomous Driving's revenue scale, its R & D expenditure has instead declined. From 2021 to 2023, the company's R & D expenditures were 110 million yuan, 100 million yuan, and 90 million yuan respectively, and 35 million yuan in the first half of 2024, showing a continuous decline.
Figure: Profit Situation of CiDi Autonomous Driving Source: Prospectus, 36Kr
According to the company's prospectus, CiDi Autonomous Driving currently holds 135 invention patents, 107 utility model patents, and 83 design patents. The core patents mainly focus on vehicle control, mixed operation, obstacle avoidance, automatic parking, vehicle communication and other aspects, covering multiple dimensions such as perception, decision-making, control, and positioning, showing a diverse and comprehensive feature.
Compared with Tage Zhixing and Huituo Intelligence, which have similar businesses to CiDi Autonomous Driving, according to Tianyancha data, Tage Zhixing has approximately 70 invention patents, and Huituo Intelligence has approximately 100 invention patents. From the perspective of the number of patents and the coverage dimension, although the current R & D investment amount of CiDi Autonomous Driving has declined, the cumulative number of patents and the coverage degree are still at a relatively high level in the industry.
Of course, if CiDi Autonomous Driving wants to maintain its technological advantage in the long term, maintaining a high R & D investment is still necessary. In the fundraising destinations disclosed in the prospectus, the first and second major categories are for the R & D of the autonomous driving platform, V2X, and intelligent perception.
Why Is the Gross Profit Margin Low?
According to the analysis, it is not difficult to find that the gross profit margins of the two core businesses of CiDi Autonomous Driving, Autonomous Driving and V2X, are both relatively low.
Regarding the reason for the significant decline in the gross profit margin of V2X, CiDi Autonomous Driving's explanation in the prospectus is that, first, it actively reduces prices to improve market penetration, and second, the acceptance period of some V2X projects is extended, resulting in an increase in the cost included in the project.
This explanation is not without reason. After all, the company's V2X revenue dropped sharply in 2022, which actually reflects the debt pressure of G-end customers. It indeed needs to make concessions in price to maintain its market share. In addition, from the perspective of industry competition, the market share gap among the top five participants in the entire commercial vehicle autonomous driving industry is very small. When terminal demand declines, CiDi Autonomous Driving does not have a strong bargaining power either.
Next, let's look at why the gross profit margin of CiDi Autonomous Driving's Autonomous Driving business is low. In the first half of 2024, the delivery scale of CiDi Autonomous Driving's mining trucks reached an all-time high, but the gross profit margin level was only 16.1%, which is not in line with people's impression of autonomous driving as a "high-tech" product. The reasons may come from the following two aspects:
First, the product delivery method is mainly in the form of the entire vehicle, with a high cost base.
The product of CiDi Autonomous Driving's Autonomous Driving business is mainly an intelligent driving truck, rather than a simple intelligent driving system. Its intelligent driving trucks are mainly developed in collaboration with the vehicle manufacturers and produced by them. In addition, for key components such as radars and cameras, CiDi Autonomous Driving mainly outsources the production.
The delivery of the entire vehicle + outsourced production naturally dilutes the gross profit margin level of CiDi Autonomous Driving. In addition, since the entire industry is still in the initial stage of development, CiDi Autonomous Driving has only cumulatively delivered more than a hundred vehicles at present and has not yet formed a scale purchasing advantage, which has affected the cost structure. Of course, this relatively asset-light operation model has also largely reduced the cash flow pressure of CiDi Autonomous Driving, allowing it to focus on market expansion.
Second, the autonomous driving truck needs to be cost-effective compared to the ordinary truck in terms of price.
The advantages of the autonomous driving mining truck compared to the ordinary mining truck are that it can save the labor cost of the mining truck driver, reduce the labor safety risk, and can work continuously to improve the mining efficiency. Just from the perspective of replacing the driver, the current autonomous driving mining truck is already quite attractive.
According to CIC, the average selling price of an ordinary mining truck in China in 2023 was 1.5 million yuan, while the average selling price of an autonomous driving mining truck was 2.5 million yuan, with a price difference of 1 million yuan. Since an ordinary mining truck generally requires two drivers, the cumulative annual salary expenditure for the drivers is about 200,000 - 300,000 yuan. Therefore, the driver cost savings of the autonomous driving mining truck in 3 - 5 years can make up for the price difference with the ordinary mining truck. According to the disclosure of the depreciation period of transportation tools by some mining listed companies, the service life of a mining truck is generally 8 - 15 years. Just calculating the economic account from the entire life cycle of the mining truck, the autonomous driving mining truck is undoubtedly attractive.
However, from the perspective of mining enterprises and other customers, they also need to consider various factors such as the scenario applicability, operational stability, and potential operation and maintenance costs of the autonomous driving mining truck. Therefore, the autonomous driving mining truck needs to make concessions in price to compensate for the above-mentioned concerns of the mining enterprises, which has suppressed the selling price of the autonomous driving mining truck.
In addition, from the perspective of CiDi Autonomous Driving's customer structure, between 2021 and the first half of 2024, the customer structure of the company's Autonomous Driving business is not stable and changes almost every year, which also reflects that terminal mining enterprises and other customers are still in the trial stage for autonomous driving trucks, which also affects CiDi Autonomous Driving's bargaining power.