CiDi drives toward IPO, powered by ‘godfather of drones’

The maker of commercial vehicle autonomous driving technology has updated its application to list in Hong Kong, boasting a market value of $1.2 billion

Key Takeaways:

• CiDi Inc. has applied for a Hong Kong IPO, boasting its status as China’s largest maker of autonomous driving technology for commercial vehicles
• The company has been drowning in red ink over the last three years, with combined losses of nearly 1.1 billion yuan

By Lau Chi Hang

DJI Technology is a household name in corporate China, soaring to fame as one of the country’s – and world’s – top drone makers. Valued at 120 billion yuan ($16.6 billion), the company is often considered the brainchild of founder Wang Tao, one of China’s best-known entrepreneurs.

Yet a more remarkable figure may be the man behind Wang. Here, we’re referring to Li Zexiang, Wang’s mentor at the Hong Kong University of Science and Technology, who not only inspired Wang intellectually but also provided him with hands-on support. Li also served a stint as DJI’s chairman, helping the company to cultivate new talent, providing management advice, and using his connections to help his protégé. It’s often said that “Without Li Zexiang, there would be no DJI.”

Now, Li, who could perhaps be considered the “godfather of DJI,” is looking for his own place in the spotlight, filing a new application this month to list his autonomous driving unicorn, CiDi Inc., on the Hong Kong Stock Exchange. That application followed an earlier one last November, which lapsed after the company failed to complete its listing within six months.

CiDi specializes in autonomous driving products and solutions for commercial vehicles, focusing on mining and big-rig trucks, as well as vehicle-to-everything (V2X) technology and intelligent perception solutions.

Its latest listing application shows its revenue has ramped up steadily over the last three years, growing more than tenfold from 31 million yuan in 2022 to 410 million yuan last year. Despite that rapid growth, the company is still bleeding red ink, like many of its peers in the autonomous driving industry. Its losses have totaled just over 1 billion yuan over the last three years, including a 581 million yuan loss in 2024.

Investors have high hopes for companies like CiDi, in no small part due to strong government policy support. Last year, Beijing issued a document directly tied to CiDi’s sweet spot, titled “Guidelines on Advancing Intelligent Mining Construction to Promote Mine Safety Development.” It emphasized the importance of mining safety, in a country known for its mining accidents, and thus the necessity of speeding up development of unmanned mining trucks. 

Such prioritization often results in the channeling of big government funds to targeted sectors, not to mention greasing the wheels of getting necessary permits for everything from vehicle testing to setting up new production facilities. That should give the entire intelligent mining truck sector a significant leg up in the form of not only government support, but also demand from mining companies that are mostly state-owned.

According to third-party market data in CiDi’s listing document, China’s autonomous driving mining truck solutions industry was already worth 1.9 billion yuan in 2024, and is expected to explode to 39.6 billion yuan by 2030, representing annual growth of 65.3% over that time.

Incubation maestro

In a sector with such big potential, technological prowess is a key factor in determining who will dominate. CiDi could be a player to watch in that regard, as founder Li Zexiang brings a wealth of ability, knowledge and experience in scientific research. Before CiDi, other companies that Li helped to nurture include not only DJI, but also QKM, Hai Robotics, ePropulsion, and Narwal. Similarly, he’s likely to spare no effort on CiDi, which, unlike the others that were started by others, is his only “true biological child.”

Notably, CiDi was the first company in China to deliver fully unmanned pure-electric mining trucks, and among the earliest autonomous driving companies to launch commercial V2X products. Its Train Autonomous Perception System (TAPS) is currently the only product with independently developed safety perception in the domestic market.

CiDi already heads certain segments of its class, ranking first in China’s autonomous driving mining truck solutions market by revenue in 2024.

The question for the company and most of its peers has always been about their big appetite for cash. While its growth has been impressive, its 410 million yuan in revenue last year was far less than its costs, including 310 million yuan in cost of sales; 300 million yuan in administrative expenses; 60 million yuan for sales and marketing; and 193 million yuan for R&D.

The company’s gross margins for the past two years have also been relatively low for a technology-driven company, at 20.2% and 24.7%. Becoming profitable will hinge on a combination of cost optimization and achieving economies of scale, which looks unlikely to happen in the short term.

Invest in the jockey

While the road to profits may be long, CiDi has found plenty of fans to help it along the way. Backed by Li Zexiang’s personal charisma, the company has raised 1.49 billion yuan over eight rounds of pre-IPO funding from backers that include industry giants such as HongShan, formerly known as Sequoia China, Xin Ding Capital, Baidu Ventures and Legend Holdings. And its latest valuation of 9 billion yuan gives it a hefty price-to-sales (P/S) ratio of 22 times.

In 2023, another company associated with Li Zexiang, Googol Technology (301510.SZ), came charging out of the gate in its Shenzhen IPO, with its stock rising nearly sixfold from a listing price of 12 yuan to close at 59.38 yuan on its first trading day. Googol currently enjoys a meteoric forward price-to-earnings (P/E) of 250 times, with a market valuation of 13.2 billion yuan. Such a rapid rise has led some to hope that CiDi could get a similarly high valuation and become a hot IPO if it makes it to market this time.

Li Zexiang’s star power could certainly help in that regard, proving a golden investing adage that people should “Invest in the jockey, not the horse.”

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