2Q26 Profit Significantly Beat Expectations; Maintain Buy/High Risk

Overview

DiDi's 2Q26 results were broadly solid: revenue was largely in line with expectations, while adjusted EBITA significantly exceeded expectations. China Mobility sustained strong profitability, and the international business continued to improve its loss rate amid rapid growth. Citigroup believes the scale benefits of the China core business and the expansion prospects of international operations, particularly Brazil food delivery, remain the key investment thesis, and therefore maintains its Buy/High Risk rating.

Core views

China Mobility has established a relatively stable earnings base. Management attributes the margin decline in the second half to planned peak-season investment in passengers, drivers, and operations, rather than deterioration in fundamentals. The international business maintains its high-growth target, while Brazil food delivery can improve unit economics through the reuse of users, riders, and infrastructure. On valuation, lower net cash offsets part of the earnings improvement, resulting in a modest target-price reduction.

Analysis framework

The report combines quarterly results versus consensus expectations, segment operating data, management guidance, and earnings forecast revisions, and uses a sum-of-the-parts valuation to determine the 12-month target price.

Methodology notes

• Valuation MethodologySum-of-the-Parts Valuation

  Value China Mobility, international operations, other businesses, and net cash separately, then aggregate them.

  China Mobility is valued at 9x expected 2027 EBITA; international operations at 2.0x expected 2027 platform sales; other businesses at 0.5x expected 2027 revenue, with discounted net cash included.

• Earnings AnalysisExpectation Gap Analysis

  Compare actual quarterly results with broker and market consensus expectations.

  Focus on deviations in revenue, platform sales, gross margin, expenses, and adjusted EBITA versus expectations to assess earnings quality and profitability trends.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• DIDIY.PK

  Equity security of DiDi Global

  Strengths

  Leading position in China's ride-hailing market, improving core business margins, high international growth, Brazil food delivery and mobility ecosystem synergies, and share repurchases.

  Weaknesses

  International operations remain in a loss-making expansion phase; the net cash assumption has declined; second-half margins may fall due to investment.

  Comparison

  China Mobility is valued at 9x expected 2027 EBITA, while international operations are valued at 2.0x expected 2027 platform sales; both are broadly in line with valuation levels of Chinese and global peers, respectively.

  Risks

  China ride-hailing competition, rising regulatory costs, Brazil food delivery competition and investment, autonomous-driving substitution risk, delayed main-board relisting, and liquidity risk.

Key data

• 2Q26 Total RevenueRmb62.5bn, up 10.8% YoYBroadly in line with Citigroup and market consensus expectations.
• 2Q26 Adjusted EBITARmb540mnSignificantly better than Citigroup's expected Rmb641mn loss and market consensus expectations of Rmb105mn profit.
• Core Platform GTVRmb133.9bn, up 22.2% YoYApproximately 1% above Citigroup and market consensus expectations.
• China Mobility Adjusted EBITARmb4.17bn2Q26 margin was 4.6%, above Citigroup's forecast.
• International Business GTVRmb43.6bn, up 61.1% YoY; up 52.8% YoY at constant currencyManagement maintained 2026 guidance for 40% to 50% constant-currency GTV growth.
• International Business Loss Rate6.6%Improved from 7.7% in 1Q26.
• 2026 China Mobility GuidanceTransaction volume growth of approximately 8%; adjusted EBITA of approximately Rmb15bnEquivalent to a margin of approximately 4.2%.
• Share RepurchaseApproximately US$450mn from 2026 through the earnings releaseThe company targets a net reduction in total share count after accounting for equity incentives.

Impact & implications

The quarterly profit beat reinforces the view of resilient China Mobility profitability. International operations are improving loss rates while sustaining high growth; if ecosystem synergies from Brazil food delivery materialize, this could become a medium- to long-term catalyst for valuation upside. In the near term, margin volatility from second-half investment for competition and peak season, as well as changes in net cash, will continue to affect market views on the target price and valuation.

Risks

• Intensifying competition in China's ride-hailing market could depress pricing and margins through higher subsidies and incentives.
• Changes in Chinese regulations, particularly rules related to driver insurance and social benefits, could raise operating costs.
• Competition in Brazil's food delivery market is intense; the expansion phase may require higher investment and delay profitability improvement.
• Advances in autonomous-driving technology and broader adoption of personally owned autonomous vehicles could affect ride-hailing demand over the long term.
• Failure to relist promptly on major exchanges such as Hong Kong could pressure liquidity, valuation, and financing capacity.
• International growth, profitability improvement, and the 2028 GTV target may not be achieved as management expects.

What to watch

• China Mobility transaction volume, GTV growth, and the trend in adjusted EBITA margin in the second half.
• Brazil food delivery city expansion, the pace of city-level maturation, and changes in international loss rates in 3Q26 and 4Q26.
• Whether international operations can achieve the 2026 target of 40% to 50% constant-currency GTV growth.
• Progress on local license approval for autonomous-driving vehicles and the start of operations in 2026.
• Share repurchase progress, changes in net cash, and relisting-related developments.