Activity Sheet 1 Comparing Companies Across The Same Industry Answers: Fill & Download for Free

First and foremost, a very important concept that one needs to understand before we can dive into this question: GDP and per capita GDP are flow measures while wealth (a.k.a. “net worth”) is a stock measure.GDP captures economic output over a period of time (e.g.“the month of April 2018”); wealth is the measure of net worth at a specific point in time (e.g. “August 31st, 2018”).In accounting, GDP is analogous to income statement or cashflow while wealth is analogous to the balance sheet.For an individual, GDP is analogous to salary and/or income while wealth is the sum total of a person’s assets (cash, investments, real estate, assets) minus liabilities (mortgage, student loans, car loans, credit card balances).GDP is relatively easier to measure than wealth.Economists have come up with fairly standardized ways to measure GDP that make comparing GDP between different economies fairly accurate. They are even pretty good at estimating GDP for things that are not easy to count like the informal sector or the black market.Wealth is much harder to measure on a standardized basis. Let’s take equities as an example. It is pretty easy to calculate the market capitalization for all of the companies in a country. But economies can vary greatly in the proportion of companies that are listed vs. private and it is much harder to capture “market value” of a private company.Economies can also vary greatly in terms of the public/government sector vs. private sector.Do we count priceless artwork, culture, societal manners as part of “wealth”?Wealth can also fluctuate based on the collective “mood” of the population as it is effectively a measure of future productivity. If a population suddenly becomes pessimistic about the future, this can have a massive impact on the wealth calculation.In some cases, you can have higher per capita GDP but still be less wealthy, depending on how you define “wealth”.This goes back to the stock and flow concepts. For an economy to build up wealth, you need to sustain high per capita GDP over a long period of time.For example, Taiwan and South Korea are now just as productive (similar PPP-adjusted per capita GDP[1] ) as Japan but since Japan has had a productive economy for a longer period of time, Japan is still on balance wealthier (although this is converging as well).By the late 19th century, the United States had caught up and surpassed Europe in terms of per capita GDP output but some still considered Europe to be “wealthier” at least from the perspective of certain types of assets e.g. beautifully designed cities, artwork, treasures, “class” etc.GDP measures economic activity but does not necessarily differentiate between the quality of that economic activity.The period of measurement may be one in which there was a burst of economic activity that is not sustainable.The economic activity may have also generated liabilities that are not counted by traditional ways of measuring GDP. For example, if a country’s industrial sector generates a lot of pollution that is not counted in GDP, this will show up as a liability down the line when the environment needs to be cleaned up.The destruction of wealth can paradoxically lead to higher GDP in ensuing years.For example, much of Europe’s wealth was destroyed during World War I and World War II. The process of re-building Europe generated significant economic activity (i.e. GDP) but took many years to get Europe back to the same levels of wealth as before.Another example would be a hurricane that destroys a small coastal region. Recovering and rebuilding after a natural disaster creates significant GDP but wealth has been destroyed in aggregate.GDP and wealth are not always 100% correlated with the happiness or quality of life of a broad population.Extreme income and wealth inequality could result in countries with extremely high GDP but lower across-the-board happiness or quality-of-life metrics.Examples would be resource-rich countries where a small minority of the population has control over most of the wealth, resulting in a tiny ultra-rich elite, a small middle class and a large underclass.Footnotes[1] Glenn Luk's answer to Why isn't Taiwan as rich as Hong Kong, Singapore, or South Korea?

Photos and flyover video montages of these “bicycle graveyards” — which, to be honest, are beautiful in a terrifying and haunting way — are merely another share-worthy meme in a long line of Chinese memes, following the trail of “ghost cities”, the rise of an ominous-sounding “shadow banking” sector, “building roads and bridges (and high-speed rail) to nowhere” and my personal favorite, the “treadmill to hell”:Are the ghost cities in China just Western propaganda?Why does China have 64 million unoccupied homes?How did China use more cement in the past three years than the US in the entire 20th century?Is China over-investing in high-speed rail?Is China's credit bubble really a problem?Could China's shadow banking create a similar situation as the 2008 US financial crisis?The common thread with these memes is an overly simplified narrative that does not scratch much below the surface, consider the wider context, and often conforms to the pre-existing notion that economic development in China is generally unsustainable, to a large extent fake, and carried to its natural conclusion, will end in tears — accompanied with a healthy serving of schadenfreude piled on thick and heavy.It is very tempting to read about these meme-worthy mangled mountains of multi-chromatic mass-transit mobility machines — say that three times fast! — and conclude that this is yet another example of China’s propensity to waste, and another sign of the impending apocalypse. But if you take the time to scratch below the surface and dig one or two levels deeper, you’ll realize that truth and reality are a lot more nuanced and very different from the simple memes that dominate your various news and social media feeds.First of all, it’s an extremely young industry — a veritable toddler that a mere four years ago existed only in the minds of a couple of recent college graduates. It is a shame (or perhaps laziness) that some can scan a few photos, skim a few articles or even come across a mass of unused bicycles on a random Chinese city street, and think they have enough ammunition to draw a firm conclusion about how this toddler of a business model is a “failure”. When a drooling three-year old stumbles on the sidewalk or runs into a lamp post, do adults roll their eyes and come to the conclusion that “this kid will just never make it”? Of course not. So why are we doing that here?Even more significantly, by deciding at this early stage that you already know how the story ends, you close yourself off from diving deeper and considering alternate endings. And by doing that, you might just be missing out on a chance to gain a deeper and better understanding of the complex, rapidly evolving, and not black/white place that is China.You see, when I started to see these multi-colored bicycles rapidly clog the streets of Shenzhen and Shanghai and other cities in China, I made a conscious decision to dig deeper. And what I found was a story that was absolutely fascinating in the way that it touched on so many important themes about China’s rapidly changing economy — from the role of mobile payments as an enabling platform technology, to the “Game of Thrones”-like battle being played out by Alibaba, Tencent and up-and-comers like Meituan — which as I will delve into below, now owns Mobike, one of the two companies that dominate the space today.You can read a lot more about those specific ancillary themes here (What does the bike-sharing mania say about the Chinese economy?) but for now let’s turn our attention back to our drooling toddler, starting from the very beginning with a key protagonist in the story, the Bicycle.The Amazing BicycleAnyone who has ever owned a bike knows that they are not the easiest things to maintain. Like the brawny Leafcutter Ant[1][1][1][1], bicycles carry loads that are multiples of their own weight — perhaps one turn too many, in my case! — while having to travel at high speeds on paths of varying quality under all sorts of weather conditions. To keep these faithful machines in good working condition, its gears need to stay lubricated, its tires inflated, its brakes aligned, etc.This is my trusty made-in-Taiwan Giant FCR1 city bike. It’s a good-looking bike with something like twenty-one different gear-speed combinations, fast tires, really strong brakes and an aluminum-alloy frame that makes it super light but still sturdy.I store it in a bicycle rack in the basement of my building, protected from Mother Nature. I only ride occasionally, taking it out maybe once every few weeks when the weather is nice. Because I do not ride that often, I usually need to check that the tires are fully inflated before riding. Once, I forgot to pump up the tires and I ended up blowing out the front tire when I hit a pothole and had to replace the inner tube at typical NYC extortionary pricing.There is a lot of maintenance involved and I do not even ride it that often and despite the care and attention of its owner — i.e. someone who actually cares about the well-being of the bicycle — it still breaks down every so often.Now imagine a bike that is used multiple times per day, by riders that don’t care about its well-being, and typically sits outside exposed to the elements. As you are probably beginning to imagine, shared bikes get old rather quickly, especially when they are used heavily.The financial term for “getting old” is “depreciation” and this is an important point that we will come back to later. So let it stew for a bit while we jump into our time machine and make a quick stop in late 2014 in Beijing, when a handful of recent graduates from Peking University who loved cycling decided that they wanted to start a business together.The “Little Yellow Bike”At the 2014 World Economic Forum in Davos, Li Keqiang (China’s second-in-command) formally introduced the notion of “mass entrepreneurship” (大众创业万众创新[2][2][2][2]) — a concept that had already been broadcast informally for some time. Answering the call, five members of Peking University’s cycling club decided they wanted to focus on bicycle tourism and called their business “[math]ofo[/math]” due its resemblance to a cyclist hunched over on his/her bike, not to mention its easy pronunciation.The bicycle tourism idea didn’t pan out and neither did many subsequent follow-on ideas. By April 2015, according to the account given by then 24-year old principal co-founder Dai Wei (戴威)[3][3][3][3], ofo was down to its last 400 yuan (around $60)[4][4][4][4] and struggling to pay suppliers. Things were getting a bit desperate.That is when they stumbled upon the idea of shared bikes. Over the May 1st “Worker’s Holiday” (Chinese equivalent of Labor Day), Dai Wei thought long and hard about the pain points of owning a bicycle for college students. Having lost five bicycles in four years of college, he had firsthand experience with the pitfalls of bicycle ownership. They began to develop the idea of sharing and renting out bicycles on Peking University’s campus and wanted to be ready for the students when they returned in the fall.At 8 am on the morning of September 7th, 2015, the six ofo employees stood in front of a row of yellow bicycles marking the first official day of operations of its shared bicycle service at Peking University. The team had somehow convinced 500 students to register for the initial launch.By the second day after launch, there were 300 rides ordered. After ten days, 1,500 rides were being ordered daily. By the end of October, ofo was providing over 4,000 rides per day to the university students. The team knew that they had finally hit upon a viable business idea. Like Facebook a decade earlier — which had begun at Harvard — ofo began expanding its business model to other college campuses.A Simple Narrative of the Spectacular Rise and Fall of Shared Bikes in ChinaIn China, good ideas do not stay hidden for long. Or even for a short time.By late 2016 — less than a year after initial conception — dozens of companies had been funded in the space and the industry had already entered the “land grab” phase[5][5][5][5]. With 60,000 bicycles, ofo was serving over half a million rides per day and was on the verge of expanding outside of college campuses into cities with plans to increase the number of bicycles one hundred fold. To do this, it had recently raised $130 million in funding and was in the process of raising another $450 million (in a round that closed in early 2017).The speed of adoption and the very visible impact on people’s lives in such a short time period was breathtaking. With so much going on, Chinese people proudly annointed bike-sharing as one of the “Four New Inventions” alongside mobile payments, high-speed rail and e-commerce.The problem was that everyone else was pursuing the same strategy. Another startup with a seasoned entrepreneurial team, Mobike, had launched in Beijing and was about to announce a $100 million funding round from well-known investors like Hillhouse, Qiming, Sequoia and Tencent.The race — pun intended — was on. Over the course of the next two years, on the back of billions of dollars in largely VC-backed equity, over 20 million bicycles would enter the streets and alleyways of large and small cities across the nation.Shared bicycles in Shenzhen, early 20172017 is when the problems of rapid scale began show up in the news reports, especially in Tier I cities where the front lines of the “land grab” war were taking place. At some point in Shanghai there were around 1.7 million shared bikes ,[6][6][6][6] which comes out to one shared bike for every 15 residents. Experts thought the optimal number was around 500,000 shared bicycles, or one for every 50 residents.A brutally competitive environment led to rumors and allegations of companies sabotaging competitors’ bicycles, and users abusing the system by parking bicycles inside their own private property, throwing bikes into the river and other anti-social behaviors. City residents complained of crowded, messy sidewalks where many of the bicycles did not even work properly. Local officials began taking measures to curb the amount of bikes on the street and soon thereafter, pictures of these massive “bicycle graveyards” began to show up.Source: MediumBike-sharing companies began to drop like flies, many merging their operations in an effort to stay afloat while others were shut down or acquired out of effective bankruptcy[7][7][7][7], sometimes refusing to refund deposits that had been paid by users when they signed up to their apps. Even ofo, the original dockless (or station-less) shared-bike company with all of its funding, ran into expansion issues and announced that it had to massively scale back its once-promising international operations and cut back on bicycle orders.With all this going on, were the naysayers right all along? Was dockless bike-sharing on its way to a quick demise and yet another example of “credit-fueled inefficient capital spending” in China? Were the photos and flyover videos of spectacular “bicycle graveyards” accurate metaphors for the prospects of the industry?Not so fast. Let’s step back for a moment and think about what we are looking at in these pictures in the context of the much bigger picture.Thinking about the Big Picture, SlowlyLet’s face it, China is a big place. You’ve heard it all before. 1.4 billion people! Miles and miles of seemingly endless high rises! The world’s largest consumer of steel, cement, coal and luxury goods! The list goes on.It is the level of scale that is hard to truly comprehend for the human brain.Let me explain what I mean by “truly comprehend”. We can easily tell the difference between two cookies and three cookies. We might even be able to tell the difference between fifteen and sixteen cookies. But unless you are Rain Man, there is almost nobody on the planet that can instantly process and count the 246 toothpicks that I just spilled on the ground[8][8][8][8].The brain’s physical limitation shows up in other areas of study, like anthropology with the concept of Dunbar’s number[9][9][9][9] i.e. the cognitive limit on the number of real relationships humans can have (around 150 to 200).And this all kind of makes sense. When we were figuring out how to survive on the African savanna, there was really no need for our brains to figure out how to count more than a few dozen of anything. “I see five apples, everyone in the family gets one apple tonight. I see two lions, I better run.” To comprehend numbers past a couple hundred, the human brain had to start abstracting (and fortunately for human civilization, it had the capability of doing exactly that).By now you’re probably thinking … how is any of this relevant?Quick! Take a look at this picture and within ten seconds, tell me how many bikes you think there are in that pile? Definitely more than a hundred. Probably more than a thousand. Five thousand? Twenty thousand? Half a million?The answer is around 10,000 bicycles — this was a picture taken on January 13, 2018 in the city of Xiamen as you may have noticed in The Atlantic article[10][10][10][10] referenced at the top in the question link.If you had more than ten seconds, many people might have been able to get close … perhaps by estimating the cubic volume of that pile and doing some basic arithmetic based the space taken up by a haphazardly placed bicycle … or perhaps by running a “how many jellybeans are in this jar?” style poll and averaging out the responses from a few dozen people to get a pretty good approximation.But in a snap judgment type situation (like skimming through a news article), the best the human brain can probably come up with is … “a lot”.And yes, 10,000 bikes is definitely “a lot” … in certain contexts. Is it “a lot” in comparison to the number of total shared bikes in Xiamen? Is the beautifully documented existence of this pile and even many others significant in the context of all of the shared bikes being utilized across the country? How long did it take to accumulate this pile of bike — a day, a month, the past year?If my (often drooling) toddler saw a pile of say 1 million bikes next to that pile of 10,000 bikes and was asked “how many?”, he’d probably answer, “a lot a lot?”. And frankly, for the numbers we are talking about, that response would about as accurate as any adult’s, including Rain Man himself.The point is, as much of an impression these photos make on your “fast” brain, until you start to process everything with your “slow” brain, you really can’t begin to answer this question of “failure” on the basis of looking at some photos and watching some videos.So let’s move away from “thinking fast” and making snap judgments. As former Nobel Prize in Economics winner Daniel Kahneman might say[11][11][11][11], let’s “slow down” and really think about this question with the rational part of our brain. This means diving into the actual numbers that are coming in from the field in real-time.From Rapid, Iterative Design Cycles to Bicycle GraveyardsLooking at those massive piles of mangled bicycles, many naturally assumed that most of those bicycles should never have been manufactured in the first place. These assumptions were certainly egged on in many cases (implicitly or explicitly) by the authors of these articles themselves. In other words, “bicycle graveyards” fit perfectly in the “China is wasteful and over-invests in capacity” theme.And while there was certainly some truth to this (i.e. the “land grab frenzy” I described above) it’s really a lot more complicated than this simple narrative. This is the point at which the idea of bicycle depreciation re-enters the story.As with any early-stage venture, as ofo began to scale in 2016, the company began to realize that you could not just use any old off-the-shelf bike as part of its shared bike fleet. First, because it was a dockless system, you had to install a GPS-enabled box that could lock and unlock the bike remotely. But more importantly, you had to design a bike that could withstand the rigors of being used (and frequently abused) by the general public. For instance, regular bike tires with an inner tube pop all of the time, so perhaps using solid rubber tires made more sense. Steel bikes rust easily when exposed to the elements, so maybe it made more sense to go with more expensive aluminum-alloy bikes.As detailed excellently in this podcast[12][12][12][12], the shared bike companies had to essentially re-design the bicycle from the ground up for this new use case. One implication of this is that the first couple generations of shared bicycles had design problems which led to a high percentage of them having to be discarded. In other words the depreciation rate was very high for the first couple iterations of bicycles as the entrepreneurs figured things out and learned from their mistakes.Source: Hackernoon: Evolution of Dockless Bike/Bikesharing Designs and Thoughts on the IndustryOn top of this, the bikes were actually being used in a big way. Low fees (1 RMB, 15 cents for a typical ride), widespread availability, and smartphone-enabled ease-of-use led to tens of millions of urban residents signing on and using the service in the first 18 months. Shared bikes were incorporated into the rapidly developing local delivery networks that were driven by China’s e-commerce boom.So what happens when you have millions of bicycles on city streets that are being used fairly heavily, a large portion of which were not designed for this type of usage? You end up with a lot of broken bicycles.The original goal was to design bicycles that could last four years. This means that if there were, say, 10 million active bicycles out there, the natural rate of depreciation would mean upwards of 208,000 bicycles per month having to be replaced. That is twenty piles like the one you see above created every single month based on normal usage. And since we know the real-world depreciation rate was much faster than 4 years, this further increases the rate at which discarded bicycles are generated.The point here is that the mere existence of massive “bicycle graveyards”, taken out of context, could mean multiple things, not necessarily just the “waste” thesis that many naturally assumed or were led to assume. Indeed, one of the major reasons why there were so many discarded bikes is because they were actually being used out there in the real world! And isn’t that the whole point?Even the over-building issue itself is likely a one-time, non-recurring effect of China’s “scale fast and fail fast” entrepreneurial mentality. It took a mere three years for the industry to go through Gartner’s “hype cycle”[13][13][13][13], and after about two years of “disillusionment”, the industry has effectively shrunk down to only a handful of players that are no longer focused on “growth at all costs” but figuring out how to compete with each other for market share in other ways (like improving the service).In other words, China’s shared-bike industry is settling into a less chaotic and more rational market equilibrium, which means the wastefulness of the frenzied “land grab” phase is unlikely to repeat itself again in the same way … at least in the bike-sharing industry (although in other new industries, this cycle is very likely to repeat itself).Capital Efficiency: Docked vs. DocklessOn April 4, 2018, Meituan, an O2O (online-to-offline) powerhouse that is part of the next generation of Chinese mega-unicorns, announced the acquisition of Mobike, ofo’s key competitor, for a total consideration of $2.5 billion. As the leading player in the local on-demand delivery sector (primarily for restaurants), the acquisition of Mobike was seen as a strategic acquisition ahead of its impending initial public offering.From Mobike’s perspective, this was a chance to bolster its balance sheet resources in the cutthroat battle for dominance in the shared bicycle industry, and partnering with a fellow Tencent equity investee made a lot of sense. A few months later, Meituan completed its initial public offering in Hong Kong, raising over $4 billion to replenish its war chest to continue its own brutally competitive fight with Alibaba, Didi and others.One of the side effects of Meituan’s acquisition of Mobike and the subsequent listing is that we now have some more insight into the numbers behind the bike-sharing industry. Up to this point, the public had to rely primarily on patchy, selective, sometimes-inflated[14][14][14][14] disclosure from private companies or leaked, often-stale information from previous fundraisings.For example, on page 23 of Meituan’s listing prospectus[15][15][15][15], we catch an audited glimpse into the operational performance of Mobike through the first four months of 2018:“48.1 million active bike users”“7.1 million active bikes”“1.0 billion rides completed in the four months ended April 30, 2018” which annualizes out to 3 billion rides per year, or 8.2 million rides per day. I will note that these include two of the coldest, least bike-friendly months of the year, especially in the frigid Northeast.We already knew how much capital had been invested in Mobike to get them to that point, approximately $825 million during that frenzied “land grab” phase from August 2016 to June 2017.Doing some simple arithmetic, we can start to see some interesting operating metrics:Mobike “spent” about $117 of equity capital per active bike. I put “spent” in parenthesis because they also collected refundable deposits, revenue from paying customers, while also having to run operations, account for broken bikes etc.The average Mobike active user uses the service about 5 times per month.Each active bike is used on average 423 times per year (about 1.2 times per day).Now how do we judge whether these operational metrics signal any sort of capital efficiency? Looking at its financials for signs of operating profit is one way but Mobike’s financials are not broken out and in any case, a good case can be made for why at this stage in the market when the industry is still growing rapidly and there are still fierce competitors out there, it makes sense to prioritize market share growth over accounting profitability (in addition to other strategic considerations).But one way of benchmarking how Mobike’s capital efficiency is by comparing to alternative systems.So let’s take a look at Citibike, a well-known docked bike-sharing system in New York City that is now owned by Lyft:Total cumulative funding for Citibike has been around $200 million[16].Citibike’s total system capacity is around 12,000 bicycles and ridership (during the good weather months) is around 50,000 per day[17].There are around 150,000 active Citibike users. So the average Citibike user rides around 10 times per month and the average Citibike is used 1,500 times per year (roughly 4 times per day).Citibike invested approximately $16,700 of capital per bike. The main reason why this is so high is because of the need to build the docking station.Citibike is still unprofitable as the system operator.The averaged-out cost of a Citibike ride is around $1.82 — compared to 15 cents for a typical Chinese ride.Nice an orderly … but there’s a steep price to pay …Now some rough comparison numbers:Mobike took in around 4 times the invested capital of Citibike and is providing 165 times the number of daily rides.Over its lifetime (since May 2013), Citibike has cumulatively served around 70 million rides. Mobike serves this number every eight days.Individual Citibikes are used more intensively (four times per day vs. Mobike’s once per day) but for the same cost of putting out one docked Citibike on the street, you can deploy more than one hundred dockless ones.While this comparison is not necessarily indicative that Mobike is capital efficient (it is still losing money, after all), it is pretty convincing that at the very least, Mobike has been significantly more capital efficient than Citibike.The Drooling ToddlerFrom 2014 to 2015, I was living in Taiwan. We were renovating our place and I was enjoying some time off after working hard in the investment industry straight through since graduating from college. I distinctly remember using a docked bike-share service called U-Bike in Taipei and thought it was comparable to the first year of using Citibike service in Manhattan. I had generally satisfactory experiences with both.With the renovations completed, we moved back to States in the fall of 2015. This was around the time that Dai Wei and his ofo co-founders were first launching their bicycle sharing service on the campus of Peking University. I had boxed up all of my papers and personal effects into around forty banker boxes and remember sitting in my office trying to figure out how to deal with everything … should I keep it, scan it, file it, throw it away, etc.I am proud to report that I have finally finished organizing these boxes! It only took a little over three years! Sigh …Where am I going with this? Okay, I have to admit that this little vignette has zero relevance to the dockless, bike-sharing story in China, except to highlight one thing:In the time it took me to organize a few dozen banker boxes here in Lower Manhattan, an entirely new industry was created from scratch in China that today collectively serves billions of rides per year and has had a massive impact on urban development, mass transit patterns and the lives of hundreds of millions of Chinese people. It is an industry that is almost undoubtedly going to be permanently ingrained in the fabric of urban China — possibly with electric upgrades[18][18][18][18][19][19][19][19] by more or less the same players that have survived the frenzied competition environment of the last two years.At the 5-year college reunion:Glenn: So, what have you been up to?!Wei: Oh … I just … you know … nothing crazy … started a company … revolutionized urban transport in China … you?Glenn: Hmmm. Well … I did finally clear out some boxes.This is an industry that is literally younger than my toddler — who I am also happy to report, is finally starting to drool less. I am not even going to get into the carbon-saving potential or all of the knock-on effects of collecting trillions of heretofore inaccessible data points and how they can be used to inform future urban development, allocate resources and help optimize consumer habits.If after getting through all of this, you still think that the three-year old dockless, bike-sharing model in China is a failure … on the basis of some anecdotal, totally-removed-from-context-but-striking-in-an-admittedly-beautiful-yet-haunting-way photos and videos … the only thing I have left to say is that your standards for what qualifies as a “success” must be higher than two hippies riding a hot air balloon at a Grateful Dead concert.Footnotes[1] Leafcutter ant - Wikipedia[1] Leafcutter ant - Wikipedia[1] Leafcutter ant - Wikipedia[1] Leafcutter ant - Wikipedia[2] 大众创业、万众创新 - 维基百科，自由的百科全书[2] 大众创业、万众创新 - 维基百科，自由的百科全书[2] 大众创业、万众创新 - 维基百科，自由的百科全书[2] 大众创业、万众创新 - 维基百科，自由的百科全书[3] 戴威（ofo共享单车创始人）_百度百科[3] 戴威（ofo共享单车创始人）_百度百科[3] 戴威（ofo共享单车创始人）_百度百科[3] 戴威（ofo共享单车创始人）_百度百科[4] https://www.xuehua.us/2018/06/22/%E6%A1%88%E4%BE%8B-%E8%B6%85600%E4%B8%87%E8%BE%86%E5%B0%8F%E9%BB%84%E8%BD%A6%E8%83%8C%E5%90%8E%E7%9A%84%E5%88%9B%E4%B8%9A%E6%95%85%E4%BA%8B/[4] https://www.xuehua.us/2018/06/22/%E6%A1%88%E4%BE%8B-%E8%B6%85600%E4%B8%87%E8%BE%86%E5%B0%8F%E9%BB%84%E8%BD%A6%E8%83%8C%E5%90%8E%E7%9A%84%E5%88%9B%E4%B8%9A%E6%95%85%E4%BA%8B/[4] https://www.xuehua.us/2018/06/22/%E6%A1%88%E4%BE%8B-%E8%B6%85600%E4%B8%87%E8%BE%86%E5%B0%8F%E9%BB%84%E8%BD%A6%E8%83%8C%E5%90%8E%E7%9A%84%E5%88%9B%E4%B8%9A%E6%95%85%E4%BA%8B/[4] https://www.xuehua.us/2018/06/22/%E6%A1%88%E4%BE%8B-%E8%B6%85600%E4%B8%87%E8%BE%86%E5%B0%8F%E9%BB%84%E8%BD%A6%E8%83%8C%E5%90%8E%E7%9A%84%E5%88%9B%E4%B8%9A%E6%95%85%E4%BA%8B/[5] Glenn Luk's answer to What happened to the shared bicycle economy in China?[5] Glenn Luk's answer to What happened to the shared bicycle economy in China?[5] Glenn Luk's answer to What happened to the shared bicycle economy in China?[5] Glenn Luk's answer to What happened to the shared bicycle economy in China?[6] 上海共享单车40%以上的有故障，谁来管？--上观[6] 上海共享单车40%以上的有故障，谁来管？--上观[6] 上海共享单车40%以上的有故障，谁来管？--上观[6] 上海共享单车40%以上的有故障，谁来管？--上观[7] Subscribe to read | Financial Times[7] Subscribe to read | Financial Times[7] Subscribe to read | Financial Times[7] Subscribe to read | Financial Times[8] Rain Man (4/11) Movie CLIP - 246 Toothpicks (1988) HD[8] Rain Man (4/11) Movie CLIP - 246 Toothpicks (1988) HD[8] Rain Man (4/11) Movie CLIP - 246 Toothpicks (1988) HD[8] Rain Man (4/11) Movie CLIP - 246 Toothpicks (1988) HD[9] Dunbar's number - Wikipedia[9] Dunbar's number - Wikipedia[9] Dunbar's number - Wikipedia[9] Dunbar's number - Wikipedia[10] The Bike-Share Oversupply in China: Huge Piles of Abandoned and Broken Bicycles[10] The Bike-Share Oversupply in China: Huge Piles of Abandoned and Broken Bicycles[10] The Bike-Share Oversupply in China: Huge Piles of Abandoned and Broken Bicycles[10] The Bike-Share Oversupply in China: Huge Piles of Abandoned and Broken Bicycles[11] Thinking, Fast and Slow: Daniel Kahneman: 9780374533557: Amazon.com: Books[11] Thinking, Fast and Slow: Daniel Kahneman: 9780374533557: Amazon.com: Books[11] Thinking, Fast and Slow: Daniel Kahneman: 9780374533557: Amazon.com: Books[11] Thinking, Fast and Slow: Daniel Kahneman: 9780374533557: Amazon.com: Books[12] Ep. 16: Bike-sharing in China, Part 2: Mobike and the Future of Personal Transportation - Pandaily[12] Ep. 16: Bike-sharing in China, Part 2: Mobike and the Future of Personal Transportation - Pandaily[12] Ep. 16: Bike-sharing in China, Part 2: Mobike and the Future of Personal Transportation - Pandaily[12] Ep. 16: Bike-sharing in China, Part 2: Mobike and the Future of Personal Transportation - Pandaily[13] Glenn Luk's answer to What happened to the shared bicycle economy in China?[13] Glenn Luk's answer to What happened to the shared bicycle economy in China?[13] Glenn Luk's answer to What happened to the shared bicycle economy in China?[13] Glenn Luk's answer to What happened to the shared bicycle economy in China?[14] Mobike responds to claims of inflated numbers · TechNode[14] Mobike responds to claims of inflated numbers · TechNode[14] Mobike responds to claims of inflated numbers · TechNode[14] Mobike responds to claims of inflated numbers · TechNode[15] http://www3.hkexnews.hk/listedco/listconews/sehk/2018/0907/ltn20180907011.pdf[15] http://www3.hkexnews.hk/listedco/listconews/sehk/2018/0907/ltn20180907011.pdf[15] http://www3.hkexnews.hk/listedco/listconews/sehk/2018/0907/ltn20180907011.pdf[15] http://www3.hkexnews.hk/listedco/listconews/sehk/2018/0907/ltn20180907011.pdf[16] Citi Bike - Wikipedia[17] Citi Bike System Data | Citi Bike NYC[18] Are you a robot?[18] Are you a robot?[18] Are you a robot?[18] Are you a robot?[19] Mobike launches electric bike for dockless sharing[19] Mobike launches electric bike for dockless sharing[19] Mobike launches electric bike for dockless sharing[19] Mobike launches electric bike for dockless sharing

Thanks for the A2A.Lets look at all the factors of this IPO.Introduction: [1][1][1][1]“Incorporated in 1969, Cochin Shipyard Limited is one of the largest public sector shipyard in India in terms of dock capacity. They operates a shipyard that provides shipbuilding and ships/offshore structures repair services.Cochin Shipyard's shipbuilding activities include the construction of vessels for clients operating in the defense and in the commercial sector shipping industry. In addition to shipbuilding and ship repair, they also offers marine engineering training programs as well as offer additional courses, including six months practical training for marine engineering students from colleges affiliated to universities, fire prevention and firefighting, and elementary first aid training through its marine engineering training institute; and chemical, mechanical, and non-destructive testing services of metals, welds, and alloys.They have built and delivered vessels across broad class ifications including bulk carriers, tankers, Platform Supply Vessels (“PSVs”), Anchor Handling Tug Supply vessels (“AHTSs”), barges, bollard pull tugs, passenger vessels and Fast Patrol Vessels (“FPVs ”). They are currently building India's first Indigenous Aircraft Carrier (“IAC”) for the Indian Navy.”IPO Information (Date , Objects of Issue and Issue Details)[2][2][2][2]Issue Timetable:Issue Price Band:Kindly note that a Discount of Rs 21 is offered to Retail Investors and Employees. Discounted price band is therefore Rs 403 - Rs 411 for Retail and Employee.Issue Objects:Issue objects look good , no repayment of debt or filling the pockets of exiting investors with all the proceeds (some proceeds will go to government since President of India is 100% owner of this PSU). Note that this issue is a combination of OFS + Fresh issue.What does Cochin Shipyard do? What are it’s products & services?[3][3][3][3]Clients of Cochin Shipyard:[4][4][4][4]Indian clients include the Indian Navy, the Indian Coast Guard, SCI, ONGC, DGLL and DCI.Key foreign clients include NPCC, the Clipper Group, Vroon and SIGBA AS.Strengths of this company:[5][5][5][5]One of India's leading public-sector shipyards catering to both commercial clients as well as clients engaged in the defence sector with a multitude of offerings for a broad range of vessels across life cycles.Modern facilities and infrastructure and integrated capabilities to deliver quality products and servicesOrder book with a strong customer base of reputable ship owners and marquee clientsCompetitive cost structure and efficient operationsLed by a dedicated board, long serving and experienced senior management backed by a strong pool of experienced professionalsContinuous profits leading to robust financial performanceStrategies Ahead:[6][6][6][6]Expand their capabilities through the proposed Dry Dock and International Ship Repair Facility.Build a strong order book by bidding vigorously for projects to be awarded by the Indian PSUs and defence sector pursuant to ‘Make in India’ initiative.Continue to enhance their construction quality and delivery time and enhance the price competitiveness in order to increase market share.Strengthen market leadership by continuously adding upgraded and new vessel models to their offerings and expanding customer servicesContinue to leverage their market position and relationships with customers, suppliers and other business partners to support growth and improve competitivenessBalance Sheet:[7][7][7][7]Observations from Balance sheet:Trade receivables(current assets) has been coming down consistently from 582.5 crores in 2015 to 306.9 crores in 2017. This is a good thing as company is getting paid on time.Inventories has also come down consistently from 303.3 crores in 2015 to 186.4 crores in 2017. This shows company’s products are not staying with them for long. This is a favorable indicator since company is not producing small goods , they are producing ships and other ultra heavy and ultra large goods which require additional costs to store and maintain.Non Current Liabilities has stayed almost same for the years 2015–2017 which is very good. Finances are being managed well and thus no additional funding is being required.Current Liabilities did spike in 2016 but they again reduced by about 11% in 2017 which again shows good financial management.Debt to Equity Ratio:Debt to Equity has consistently come down from 0.86 to 0.63 in 2017. This augurs well for a capital expensive company like Cochin Shipyard. They can borrow more in the future if they wish to.Profit & Loss Statement:[8][8][8][8]Observations from P&L Statement:Profit quadrupled in 2016 from 68.835 crores to 290.7 cores. Profit increased 10% in 2017 from 2016. Nevertheless the profit trajectory is upward.Employee benefit expenses , other expenses have been the same throughout the three years which shows firms control over these costs.Other Income has also doubled in 2 years.Cash Flow Statement:[9][9][9][9]The above Cash flow statement shows that there has been a good amount of capital being retained as positive cash flow. This augurs well for this company since the retained amount can be used back in the business.Price to Earnings:The Earnings per share figure as per March 31 , 2017 is 27.56. Therefore at the upper price band P/E ratio comes out to be 14.9 (with discount) and 15.6(without discount). Nevertheless looking at Price to earnings, IPO pricing shows evidence of ample money left on table for investors.Peer Analysis and Book Value:[10][10][10][10]The book value of 180 rupees depicts price to book value of 2.28 (with discount at upper band) and 2.4 (without discount at upper band).Also looking at its peers , one thing gets clear that other companies in the same industry are having bad financial position.This also shows this company is excellently managed when compared to others.Risks:[11][11][11][11]Worldwide demand and pricing in the commercial shipbuilding industry are highly dependent upon global economic conditions. If the global economy fails to grow at an adequate pace, it may adversely impact the commercial shipbuilding industry which may negatively affect the business, financial condition and growth prospects.The cost estimates by the Dry Dock Project Consultant and the ISRF Project Consultant have been derived from and benchmarked against similar maritime and dry dock/shipyard projects carried out by the Dry Dock Project Consultant and the ISRF Project Consultant respectively in recent years and may not be accurate.The entire business operations are based out of a single shipyard at Kochi. The loss of, or shutdown of, our operations at the shipyard in Kochi will have a material adverse effect on the business, financial condition and results of operations.Company may be unable to attract and retain sufficient skilled or qualified personnel. The business, financial condition and results of operations could be adversely affected if they are unable to recruit and retain suitable staff for our operationsPending Tax Litigation:The sea channel adjacent to their shipyard suffers from siltation which requires incurring additional expenditure.Industry Outlook:[12][12][12][12]According to a 2016 UNCTAD report, global seaborne trade increased by 2.1% to 10,048 million tonnes in 2015. Dry bulk cargo comprised the largest share at 54%. Developing economies accounted for the largest share of seaborne trade, in volume terms, at an estimated 60%. Developing countries have become global manufacturing centres with growing demand for capital and consumer goods, and are no longer viewed as only suppliers of raw materials. In terms of a regional comparison, Asia was the largest loading and unloading region, followed by the Americas, Europe, Oceania and Africa. As of January 2016, the global commercial fleet stood at 90,917 vessels, totalling 1.8 billion DWT. Dry bulk carriers comprised the largest share at 43.1% followed by the oil tanker segment with a share of approximately 27.9%.The respective shares of oil tankers and general cargo vessels in the global fleet have declined over the years, while those of dry bulk carriers and container ships have increased. As of January 2016, the dry bulk carriers, with a 43% contribution in terms of gross registered tonnage (GRT), was the largest vessel category in the global fleet. The share of oil tankers, which made up for 50% of the global fleet in 1980, has declined to 28% in 2016. Over this period, the share of container vessels’ increased from 2% to 14%, following China’s manufacturing-led growth as well as the shipping industry’s strategy to reduce costs using economies of scale. The fall in the oil tanker share was due to a change in the pattern of trade and demand, primarily due to a decline in the refining capacity in Europe and a corresponding increase in Asia and the Middle EastAccording to the Indian Ministry of Shipping, the total overseas cargo handled at Indian ports was approximately 879.6 million tonnes in 2014-15. The vessels carrying Indian flags contributed approximately 7.5% of overseas cargo tonnage. Even as the total overseas cargo handled at Indian ports increased, the contribution of vessels carrying Indian flags in terms of tonnage declined in absolute terms as well as in percentage terms. Meanwhile, ships above the age of 20 years comprised over 40% of the Indian fleet, as ship owners preferred to maintain the existing fleet due to uncertainty in global trade. However, approximately 20% of the ships in the Indian fleet are below the age of five years, indicating that new vessels have been added during the recent past.Here is Porinju Veliyath[13][13][13][13] checking out Cochin shipyard , perhaps he is investing too[14][14][14][14] ?Disclosure: This article has also been published on my website after writing the answer on Quora. Most of the information and images published in this answer have been taken from the Prospectus filed with SEBI, the footnotes have been given for the same. I have mentioned the advantages and disadvantages surrounding this issue. Also note that we are in the midst of a Bull Run and many IPOs usually pop up during this time. Kindly read the Prospectus filed with SEBI before taking up a position in this IPO.Hope this helps,.Thanks.-ASLNKFootnotes[1] Cochin Shipyard IPO Details[1] Cochin Shipyard IPO Details[1] Cochin Shipyard IPO Details[1] Cochin Shipyard IPO Details[2] Cochin Shipyard IPO Details[2] Cochin Shipyard IPO Details[2] Cochin Shipyard IPO Details[2] Cochin Shipyard IPO Details[3] Welcome to Cochin Shipyard : ISO 9001 Certified[3] Welcome to Cochin Shipyard : ISO 9001 Certified[3] Welcome to Cochin Shipyard : ISO 9001 Certified[3] Welcome to Cochin Shipyard : ISO 9001 Certified[4] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[4] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[4] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[4] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[5] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[5] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[5] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[5] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[6] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[6] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[6] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[6] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[7] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[7] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[7] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[7] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[8] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[8] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[8] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[8] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[9] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[9] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[9] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[9] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[10] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[10] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[10] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[10] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[11] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[11] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[11] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[11] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[12] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[12] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[12] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[12] http://www.sebi.gov.in/sebi_data/attachdocs/jul-2017/1500963436435.pdf[13] Porinju Veliyath - Wikipedia[13] Porinju Veliyath - Wikipedia[13] Porinju Veliyath - Wikipedia[13] Porinju Veliyath - Wikipedia[14] Porinju Veliyath on Twitter[14] Porinju Veliyath on Twitter[14] Porinju Veliyath on Twitter[14] Porinju Veliyath on Twitter