Didi Chuxing valuation could rise amid international expansion, analysts say

Global expansion is expected to help Didi ‘tell a better story’ when it comes time for the company to go public

Didi has set a target of serving 800 million monthly active users globally by 2022

Reading Time:3 minutes

Chinese ride-hailing giant Didi Chuxing started operations in Russia on August 25. The company launched its Didi Express service in Kazan, capital of the Republic of Tatarstan in the east-central part of European Russia. Photo: Handout

Published: 8:28pm, 3 Sep 2020Updated: 10:18pm, 3 Sep 2020

Chinese ride-hailing giant Didi Chuxing could potentially achieve a higher valuation when it goes public, according to analysts, following the company’s latest international expansion into Russia.

The Beijing-based company, which ranks as China’s second-biggest unicorn behind TikTok owner ByteDance, launched its Didi Express service on August 25 in Kazan, capital of the Republic of Tatarstan in the east-central part of European Russia. This marks the latest foreign-market foothold for Didi after Australia, Japan, Brazil, Mexico, Costa Rica, Chile, Colombia and Panama.

“Global expansion helps Didi tell a better story for its IPO and achieve higher valuation if it aims to list in Hong Kong or the US,” said Feng Linyan, a senior automotive analyst at investment research firm EqualOcean. “This is something Didi has to do, despite the steeper cost of operating in these new markets.”

Feng indicated that Didi’s strategy involved eking out profit from its core business in mainland China, as it continues to expand in overseas markets. Didi currently has a valuation of US$56 billion, according to a CB Insights report.

While Didi has denied media reports in July that it was seeking an initial public offering in Hong Kong, speculation has continued because of increased investor interest in corporate share sales after a pandemic-induced lull. China has been ratcheting up support for its local hi-tech companies by revamping listing and stock trading rules at a time when the US is threatening to cut off technology exports amid dialled-up tensions between the world’s two largest economies.

A screenshot of Didi Chuxing’s app in Russia, where its initial service coverage is in Kazan, capital of the Republic of Tatarstan. Photo: Handout

At present, private investments are keeping Didi well-funded to pursue its international expansion plans. As of March, Didi has raised about US$23.2 billion from various major investors including Japanese conglomerate SoftBank Group Corp, Tencent Holdings and Alibaba Group Holding, according to data from venture capital and private equity research firm PitchBook. Alibaba is the parent company of the South China Morning Post.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x