Behind the HK$1.42 billion acquisition of 'China’s first ride-pooling stock,' who is really hitching whose industry express train?

$TONGCHENGTRAVEL (00780.HK)$$DIDA INC (02559.HK)$

On the evening of June 29, 2026, two synchronized joint announcements were filed with the Hong Kong Stock Exchange. Tongcheng Travel Holdings Limited (hereinafter referred to as Tongcheng Travel, 0780.HK) announced that through its wholly owned subsidiary eLong, Inc., it has launched a voluntary, conditional, full cash tender offer to acquire all equity interests in Dida Chuxing (02559.HK), whose domestic operating entity is Beijing Changxing Information Technology Co., Ltd., for a total equity consideration of HK$1.424 billion. In addition, Dida Chuxing will concurrently distribute a special cash dividend totaling HK$1.205 billion to all shareholders, funded entirely from Dida’s own cash reserves and not drawn from Tongcheng’s acquisition funds.

This transaction constitutes a full cash tender offer but will not result in the privatization or delisting of Dida Chuxing. Following closing, Dida Chuxing will remain an independent listed entity on the Hong Kong Stock Exchange and will be consolidated into Tongcheng Travel’s financial statements as an indirectly controlled subsidiary. Five founding shareholders and core institutional investors of Dida Chuxing have irrevocably committed to tendering a combined 53.7% of shares. Tongcheng Travel therefore needs only to acquire a small additional portion of freely traded shares to secure absolute control. The tender offer covers all ordinary shares of Dida Chuxing, unexercised employee stock options, and restricted share units, thereby achieving a comprehensive acquisition of all equity interests in the company.

On the first trading day following the announcement, secondary market reactions were sharply divergent. Dida Chuxing’s share price surged 88.19% in a single day, with intraday gains approaching 97%—a long-overdue rebound for a stock that had been deeply underwater for years, as if passengers waiting for years had finally boarded a train packed with new momentum. Meanwhile, Tongcheng Travel’s stock closed slightly lower, clearly reflecting investor skepticism about integration costs and the difficulty of realizing synergies. The market is also quietly wondering whether this borrowed ride-pooling vehicle might add unexpected weight to Tongcheng Travel’s long-haul journey.

As of July 7, 2026, the transaction has not yet closed and remains subject to three key conditions precedent: antitrust merger clearance in mainland China, compliance verification by the Hong Kong Stock Exchange, and acceptance of the offer by shareholders holding over 50% of voting rights. However, Dida Chuxing’s five founding major shareholders have already signed irrevocable commitments to tender 53.70% of the total issued shares, placing the likelihood of deal completion at a high level.

Dida Chuxing endured a difficult path to IPO, but its roller-coaster operations ultimately proved unsustainable.

As the only listed platform in China’s ride-sharing sector, Dida Chuxing’s protracted four-year journey—marked by five attempts to launch a Hong Kong IPO—had long signaled underlying weaknesses in its independent growth capacity. Each expiration of its prospectus reflected a convergence of pressures from regulatory scrutiny, fundamental business challenges, and unfavorable capital market conditions, ultimately driving its decision to accept Tongcheng Travel’s comprehensive takeover offer.

On October 8, 2020, Dida Chuxing filed its initial Hong Kong IPO prospectus. At that time, nationwide safety regulations for ride-sharing services were significantly tightened. Six months later, the prospectus automatically expired, marking the failure of its first listing attempt.

On April 13, 2021, the company refiled with updated compliance documentation and materials related to its taxi business but still failed to enter the Hong Kong Stock Exchange’s hearing process, resulting in another invalidation of its filing.

Nearly two years later, on February 20, 2023, Dida Chuxing relaunched its IPO bid for the third time, aiming to alleviate market concerns about losses by highlighting consecutive profitability. However, China had implemented a new filing-based system for overseas listings that year, requiring companies to first complete filings with the China Securities Regulatory Commission (CSRC) before proceeding with Hong Kong IPO processes. The lengthy filing timeline once again caused the prospectus to expire.

On August 30 of the same year, the company submitted its fourth filing, supplementing operational licenses issued by local transport authorities and driver risk-control compliance documents. Nevertheless, it never received the CSRC’s approval notice for overseas listing, halting its fourth IPO effort.

Not until February 7, 2024, did Dida Chuxing finally obtain the CSRC’s filing confirmation for overseas issuance, clearing all policy-related hurdles. It filed its fifth prospectus on March 19, passed the Hong Kong Stock Exchange’s hearing on June 12, and officially listed on June 28 with an issue price of HK$6, raising net proceeds of just RMB 182 million, becoming the first ‘shared mobility’ stock on the Hong Kong exchange.

The prolonged IPO process consumed substantial compliance, human, and financial resources. Yet, going public failed to reverse its operational decline: the stock price broke below its offering price on its debut day. By the time of the acquisition announcement, its market capitalization had shrunk by over 70% from its peak. Persistent lack of secondary-market confidence in the company’s growth narrative kept its share price stuck in a low trading range, effectively cutting off access to follow-on financing through rights issues or placements to replenish cash flow.

Financial statements from 2023 to 2025 clearly illustrate Dida Chuxing’s escalating financial stress. Its revenue for the periods amounted to RMB 815 million, RMB 787 million, and RMB 502 million, representing year-over-year changes of +43.23%, -3.42%, and -36.18%, respectively. Net profit attributable to shareholders was RMB 300 million, RMB 10.04 billion, and RMB 1.3 billion, with year-over-year changes of +260.09%, +234.35%, and -87.07%. Weighted average return on equity stood at -8.55%, -101.24%, and 9.31%, while gross margins were 74.27%, 72.03%, and 66.26%, respectively.

Notably, Dida Chuxing’s net profit attributable to shareholders declined by 87.1% from RMB 10.04 billion in 2024 to RMB 1.3 billion in 2025, primarily due to one-time accounting adjustments visible on the balance sheet. In 2024, upon its Hong Kong listing, previously outstanding preferred shares were converted into ordinary shares, generating a non-cash gain of RMB 8.70 billion from the revaluation of preferred shares. This significant paper profit artificially inflated the prior-year profit base. With no comparable accounting gain in 2025, a massive profit gap emerged.

Additionally, weakening core operations materially dragged down earnings. Amid cutthroat price competition in the ride-hailing market, the platform could not raise its commission rates, while fixed operating costs continued to erode margins, leading to a decline in overall gross margin. Growth momentum in its core carpooling business has markedly weakened, with sluggish macro consumption and intensifying sector competition remaining key constraints on the platform’s medium- to long-term performance.

Asset-side financial metrics have also continued to weaken, with total asset turnover declining from 0.57x to 0.25x, indicating steadily deteriorating asset utilization efficiency. The debt-to-asset ratio reached a staggering 310.35% in 2023, highlighting significant insolvency risk. Although the company subsequently optimized its debt structure through IPO fundraising, bringing the debt-to-asset ratio down to 27.88% by 2025, its net asset value stood at only RMB 1.464 billion, reflecting a weak buffer against financial risks.

Net cash flow from operating activities has declined for three consecutive years, amounting to RMB 230 million, RMB 109 million, and RMB 78.39 million, respectively. Net cash inflow from investing activities stood at -RMB 200 million, RMB 58.74 million, and -RMB 169 million over the same period. Cash and cash equivalents totaled RMB 686 million, RMB 1.057 billion, and RMB 967 million, respectively—sufficient only to cover basic short-term operational expenses and insufficient to support large-scale marketing campaigns, driver subsidies, or business expansion.

Financial line items related to labor costs provide direct evidence of the company’s strategic retreat and cost-cutting measures, indirectly revealing the current pressure it faces in meeting payroll obligations.

From 2023 to 2025, the company’s sales and marketing expenses declined annually from RMB 234 million to RMB 122 million. The company acknowledged that this reduction stemmed from a more cautious promotional strategy and algorithm-driven precision marketing, which lowered user subsidies, incentives, and general marketing expenditures. Additionally, customer service outsourcing costs decreased due to fewer orders. Moreover, R&D expenses fell from RMB 122 million to RMB 105 million, with the financial statements explicitly attributing this decline to workforce reductions in research and development.

Over the three-year period, administrative expenses amounted to RMB 319.8 million, RMB 378.6 million, and RMB 736.9 million, respectively. The primary driver of the increase was one-time severance compensation resulting from large-scale organizational streamlining. By implementing layoffs to reduce long-term fixed personnel costs, the company indirectly signaled forced cost contraction following declining revenues.

From a business structure perspective, Dida Chuxing’s heavy reliance on a single revenue stream further amplifies its operational risks. Over 97% of its income derives solely from carpooling services, while digital taxi services and value-added mobility offerings have yet to generate meaningful scale. Competitors within the sector continue to erode its market share, intercity carpooling growth potential in lower-tier markets is plateauing, and customer acquisition costs remain persistently high. Independently developing new businesses and breaking through growth ceilings would require sustained, substantial capital investment—yet the company’s internal cash flow and external financing channels are insufficient to support such long-term commitments.

Zhang Xiang, adjunct professor at Huanghe University of Science and Technology, explained that Dida Chuxing’s acceptance of Tongcheng Travel’s comprehensive takeover offer fundamentally reflects its inability to sustain independent growth amid severe funding constraints. Intense competition in China’s carpooling sector, coupled with prolonged high-cost investment and insufficient core business cash generation, means the company risks a liquidity crisis if it cannot secure continuous financing. Selling to an industrial investor thus represents a pragmatic choice for the founding team.

Zhang Xiang stated,From a synergy standpoint, Tongcheng Travel primarily operates long-haul travel services such as flights and hotels, while Dida Chuxing specializes in intercity carpooling—making their business scenarios highly complementary. The acquisition could integrate end-to-end travel demand, enable shared user data, and scale order volume, theoretically achieving a synergistic effect greater than the sum of its parts. Meanwhile, as competition intensifies within the online travel agency (OTA) sector—with platforms like Meituan and Douyin continuously diverting customers—Tongcheng Travel’s acquisition of Dida Chuxing also aims to broaden its business scope. This diversified portfolio would mitigate competitive pressures, expand platform scale, and enhance overall valuation.

Will the perennial ‘number two’ in the OTA sector finally overtake its rivals by leveraging carpooling to address its weaknesses?

In contrast to Dida Chuxing’s passive position of seeking a floor, Tongcheng Travel’s initiation of this acquisition represents a proactive strategic move—equipping its long-haul ‘aircraft’ with ground shuttle ‘wheels’ and leveraging Dida Chuxing’s intercity express service to fill a critical gap in its portfolio.

According to industry monitoring data from multiple brokerages for 2024–2025, the overall GMV landscape of China’s online travel agencies (OTAs) remains stable over the long term. Trip.com Group (09961.HK) firmly holds the dominant market position with a 55%–56% share; Tongcheng Travel maintains a consistent second place with a 14%–15% market share, earning it the market nickname of the OTA ‘perpetual runner-up’; Meituan follows closely behind with a 13% share, forming the third tier. For Tongcheng, this competitive environment presents dual pressures: ahead looms a vastly larger industry leader exerting constant dominance, while behind, Meituan—a nimble short-haul speedboat—continues to divert passengers, creating persistent competitive strain that is difficult to alleviate.

Moreover, capital constraints have further narrowed Tongcheng Travel’s room for maneuver. To date, Trip.com Group still holds approximately 19.85% of Tongcheng Travel’s total shares through several overseas investment entities, making it the second-largest shareholder after Tencent.

Tracing the capital relationship: in 2014, Trip.com Group invested USD 200 million to acquire a stake in Tongcheng Travel; in 2017, it spearheaded the merger between Tongcheng Travel and eLong; at the time of Tongcheng Travel’s Hong Kong IPO in 2018, Trip.com held approximately 24.31% of shares. Since then, its stake has only undergone minor dilution without any large-scale divestments, maintaining a stable holding of nearly 20% over the years and previously appointing a director to participate in board decisions. In 2025, Tongcheng Travel received RMB 3.21 billion in hotel inventory commissions from Trip.com Group, accounting for 16.50% of its total annual revenue. The two companies maintain deep supply-chain collaboration, with both equity and business ties creating an objective potential for conflicts of interest arising from intra-industry competition.

From 2023 through 2025 and into Q1 2026, Tongcheng Travel’s core business growth momentum has continued to weaken. Revenue during these periods amounted to RMB 11.9 billion, RMB 17.34 billion, RMB 19.4 billion, and RMB 5.006 billion, representing year-over-year growth of 80.67%, 45.77%, 11.85%, and 14.35%, respectively. Net profit attributable to shareholders was RMB 1.554 billion, RMB 1.708 billion, RMB 2.025 billion, and RMB 780 million, with year-over-year increases of 1,164.41%, 27.04%, 20.1%, and 16.51%, respectively. Gross margins stood at 73.45%, 64.09%, 66.29%, and 69.84%, respectively.

Breaking down revenue segments, according to Tongcheng Travel’s 2025 annual report, the core driver of company revenue remains its primary online travel platform business, which generated approximately RMB 14.199 billion in 2024 and RMB 16.471 billion in 2025, reflecting a 16.0% year-over-year increase. Within this segment, accommodation reservation services contributed approximately RMB 4.668 billion in 2024 and RMB 5.451 billion in 2025, up 16.8% year-over-year; the largest component—transportation ticketing services—generated RMB 7.229 billion in 2024 and RMB 7.925 billion in 2025, growing 9.6% year-over-year.

Other value-added services under the core platform reported revenue of approximately RMB 3.095 billion in 2025, a significant 34.4% increase from RMB 2.302 billion in 2024. Meanwhile, the vacation segment was the only business line to experience a revenue decline, falling from RMB 3.141 billion in 2024 to RMB 2.924 billion in 2025, a 6.9% year-over-year drop. Overall, the company’s growth momentum is concentrated in standardized flight and hotel bookings and platform value-added services, while long-haul vacation offerings are contracting, signaling a clear deceleration in overall core business growth.

Balance sheet indicators also reveal underlying medium- to long-term operational pressures. Total assets during the periods were RMB 31.72 billion, RMB 37.78 billion, RMB 41.95 billion, and RMB 43.31 billion; current liabilities stood at RMB 11.89 billion, RMB 11.6 billion, RMB 14.74 billion, and RMB 15.87 billion; total liabilities were RMB 13.17 billion, RMB 16.81 billion, RMB 18.37 billion, and RMB 19.39 billion; debt-to-asset ratios were 41.52%, 44.51%, 43.8%, and 44.76%; and current ratios were 1.25, 1.57, 1.38, and 1.38, respectively.

Following the completion of this acquisition, the company will incur up to HKD 1.5 billion in new credit liabilities to finance the HKD 1.424 billion equity purchase price, leading to sustained increases in long-term interest expenses and heightened debt-servicing pressure.

On the cash flow front, net cash from operating activities amounted to RMB 4.003 billion, RMB 2.97 billion, RMB 4.311 billion, and RMB 1.469 billion; net cash used in investing activities was -RMB 1.762 billion, -RMB 834 million, -RMB 4.698 billion, and -RMB 1.777 billion; and cash and cash equivalents at period-end stood at RMB 5.192 billion, RMB 8.02 billion, RMB 6.506 billion, and RMB 6.075 billion. The company continues to significantly ramp up external industrial M&A activity, substantially increasing its long-term capital deployment.

Beyond external competition and slowing financial growth, Tongcheng Travel’s inherent structural weaknesses further cap its growth ceiling. The company is heavily reliant on Tencent’s WeChat Mini Program ecosystem for traffic—approximately 80% of its monthly active users and 71% of new paying users originate from WeChat channels. Its standalone app suffers from weak organic user acquisition capabilities, and both user profiling and traffic distribution rules are entirely subject to third-party platform policies. Any adjustment by WeChat—such as reducing support for travel-related traffic or increasing its commission rate—would directly drive up the platform’s customer acquisition costs. Additionally, its user base remains confined to lower-tier markets, primarily concentrated in tier-three and tier-four cities and county-level regions. With limited offerings in premium business travel and long-haul outbound vacation products, it faces significant difficulty in achieving a breakthrough increase in average customer spending per order.

Zhan Junhao, a renowned strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, commented on this acquisition, noting that the deal will enable Tongcheng Travel to rapidly build an integrated one-stop travel ecosystem encompassing 'major transportation + accommodation + local ride-sharing.' This significantly narrows the gap with Trip.com in terms of end-to-end service capabilities. Overlapping user bases in lower-tier markets—where more than 70% of users overlap—could generate substantial cross-selling opportunities. However, challenges remain in algorithmic alignment between ride-sharing scenarios and travel itineraries, as well as business synergy between the two teams. Full ecosystem integration is unlikely to be achieved in the short term.

Behind this business synergy, can integration truly deliver a result greater than the sum of its parts?

Tongcheng Travel’s HK$1.23 billion cash tender offer to acquire Dida Chuxing represents a precise strategic move to fill an ecosystem gap amid an industry-wide growth plateau. For Dida Chuxing, which has faced consecutive years of declining revenue and limited independent fundraising options, the deal offers a pragmatic path to secure stable traffic backing and enables its founding team to achieve a capital exit. This cross-sector merger between tourism and mobility opens new horizons for convergence in two traditionally rigid industries—but also introduces multiple long-term risks related to finance, integration, and regulatory compliance.

The most immediate and certain risk is the mounting financial pressure Tongcheng Travel cannot avoid. The acquisition is primarily financed through a HK$1.5 billion merger loan from China CITIC Bank (International), adding significant long-term interest-bearing debt. Annual fixed interest expenses will continuously erode Tongcheng Travel’s consolidated net profit. Even if Dida Chuxing achieves a financial turnaround, any incremental earnings would first need to cover loan servicing costs, substantially limiting the actual profit contribution to the parent company.

Significant goodwill impairment also poses a risk. As of the end of 2025, Tongcheng Travel’s balance sheet carried nearly HK$6.8 billion in goodwill, with RMB 453 million already impaired in 2025. The acquisition of Dida Chuxing will add substantial new goodwill. Should post-merger integration underperform or Dida Chuxing’s revenue and profits continue to decline, the company may be forced to recognize another large goodwill impairment charge, directly impacting its total asset quality and annual profitability.

Simultaneously, Dida Chuxing announced a special dividend of HK$1.205 billion. This large-scale payout will deplete Dida Chuxing’s existing cash reserves, concurrently shrinking its internal liquidity available for future business expansion, driver subsidies, and compliance-related improvements, thereby further weakening its risk resilience.

Cross-industry integration also faces inherent barriers due to fundamentally divergent operational logics. Online travel agency (OTA) bookings involve planned, low-frequency consumer behavior, whereas ride-sharing is a high-frequency, real-time, and stochastic matching service. The underlying technical architectures, dispatch algorithms, user segmentation strategies, and pricing systems are entirely distinct. Integrating the two backend systems and enabling data interoperability would require massive technology overhaul investments and a prolonged implementation timeline.

At the organizational and cultural level, Dida Chuxing has focused on ride safety and offline driver operations, while Tongcheng Travel excels in online traffic distribution and standardized travel product management. The two teams differ significantly in performance evaluation frameworks and management styles. Leadership transitions and structural reorganizations during integration could easily trigger the loss of core operational talent. Given Dida Chuxing’s history of multiple large-scale layoffs, employee stability was already fragile—further amplifying human capital risks during the integration phase.

There is also a natural ceiling on business conversion: travel-related ride orders only cover intercity routes and scenic area shuttles, and cannot tap into urban commuting or daily short-distance trips—the core demand sources for Dida Chuxing. Consequently, the incremental boost from Tongcheng Travel’s tourism traffic to Dida Chuxing’s order volume has a clear upper limit and is unlikely to fully overcome Dida Chuxing’s growth bottleneck rooted in its reliance on a single ride-sharing business model.

Moreover, both parties also face multi-tiered, dual-track regulatory and compliance risks. Pre-closing conditions for the transaction include antitrust merger review by mainland Chinese authorities. Given that this involves a merger between leading enterprises in the cultural tourism and mobility sectors, regulators may scrutinize market concentration levels, potential bundling practices, and whether the deal squeezes out smaller platforms—raising the possibility of extended review timelines, mandated revisions to transaction terms, or even rejection of the offer. Additionally, regulatory standards for ride-sharing services vary significantly across regions. Post-integration, Tongcheng Travel is expected to channel a large volume of travel-derived orders into Dida’s platform, which could easily cause private carpooling operations to deviate from their intended shared-mobility policy framework and instead be classified by local transport authorities as professionalized commercial operations—triggering on-site inspections, mandatory business rectifications, fines, or other penalties.

On the data compliance front, Tongcheng Travel holds vast amounts of personally identifiable information related to travel users, including accommodation and itinerary details, while Dida Chuxing possesses highly sensitive mobility-related data such as vehicle registration details, facial verification records, and real-time location tracking. Integrating these two categories of high-sensitivity user data—and merging their systems—requires rigorous data security assessments and comprehensive personal information protection compliance upgrades. The cost of such remediation efforts is substantial, and any incident involving data leakage or unauthorized data sharing could result in severe financial penalties and significant reputational damage.

Furthermore, both Tongcheng Travel and Dida Chuxing still have room for improvement in terms of consumer sentiment. As of July 7, 2026, a search for 'Tongcheng Mobility Services' on Heimao Complaints Platform yielded 115,249 complaints, of which 95,957 had been resolved; a search for 'Dida Chuxing' returned 27,213 complaints, with 21,395 resolved. Complaints against Tongcheng Travel primarily concern default-bundled value-added services, stringent refund policies, and algorithmic price discrimination (so-called 'big data price gouging'). Dida Chuxing’s complaints mainly involve safety disputes in ride-sharing, grievances from drivers, and passenger-related travel incidents. Following Tongcheng Travel’s acquisition of Dida Chuxing, the combined platform will need to manage an entirely new wave of customer service demands, effectively doubling costs for dual-channel after-sales support and compliance oversight. (Produced by Harbor Financial)

Harbor Business Observer, Xiao Xiuni

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