(Yicai Global) Sept. 11 -- Mobike Technology ran up a loss of almost CNY500 million (USD73 million) in April, though the result may not have been representative of the leading bike-sharer's overall performance but been due to seasonal factors instead, a former shareholder told Yicai Global in an interview.

"The April earnings numbers are not representative," Li Lun, a partner at Panda Capital said, adding that marketing campaigns such as the five yuan monthly package and free ride promotions weighed heavy on the Beijing-based firm's price per ride ratio.

April is also cold in most northern regions, which explains the decline in overall ride count, Li added. This led to a trough in Mobike's financial model, and it also holds true for bike-sharing businesses in general. The fall in the profit per ride and trip count has translated into a slump in Mobike's total profit.

The bike-sharer's owner Meituan-Dianping posted a net loss of some CNY2 billion for the first four months of this year, mainly due to its Mobike acquisition in April. From the takeover date of April 4 to the last day of the month, Mobike reported revenue of CNY147 million, but asset depreciation and operating costs came in at CNY396 million and CNY158 million, respectively, resulting in an overall loss of CNY480 million.

Company data shows that the average revenue per half-hour ride is about CNY0.56 (USD0.08), while market observations indicate that the normal average spending per ride is around CNY1.09, as consumers usually ride a bicycle longer than 30 minutes.

Regarding the seasonality of the business, Li noted that sunny weather was rare in winter in some northern cities, so solar panels on some bikes went undercharged. The situation is worsened by the fact that bicycles tend to be used at a reduced frequency in winter, and riding is one of the sources of electricity generation. Some bikes were also lost due to positioning issues caused by undercharging incurring further costs.

Similarly, the withdrawal of two-wheelers before winter starts also leads to extra costs

Around 15 percent of the company's seven million bicycles are out of use due to maintenance issues, Li said, adding that if every bike is used four to five times per day on average, the company earns hundreds of millions of yuan or even more each month during the peak season.

"With new-generation bikes gradually replacing old models, the company will reduce the losses nearly CNY400 million depreciation costs in April will go down in future," Li predicted, adding that first-generation Mobikes are durable and maintenance-free with a service life of four years, so the depreciation cost is relatively small. However, as competition intensified, the firm rolled out some lite models in the second half of 2016 to boost market share. They are not designed for the bike-sharing business and did not perform as well in terms of durability and service life. Lite models entail relatively high maintenance costs and their life cycle is shorter too.

All Mobike models in the latest generation feature a maintenance-free design and are far more durable than the older generations. The volume of lite bikes will decrease proportionally as more and more older models are replaced, and depreciation costs will also fall accordingly, Li added.

Editor: William Clegg