Meituan’s revenue jumps 20% in a boost for global expansion
The company’s outperformance suggests the restaurant delivery business remains resilient as Beijing rolls out stimulus to boost consumer confidence
[BEIJING] Meituan’s quarterly revenue climbed 20 per cent, suggesting the Chinese meal delivery leader is successfully fending off new domestic competition while expanding abroad.
The company posted sales of 88.5 billion yuan (S$16.3 billion) in the December quarter, versus the 87.9 billion-yuan average projection. Net income was 6.2 billion yuan.
Meituan’s outperformance suggests the restaurant delivery business remains resilient as Beijing rolls out stimulus to boost consumer confidence and revive spending power across the world’s second largest economy.
The Beijing-based company has been exploring overseas markets in part because of a slowdown at home. Last year, billionaire founder Wang Xing took over the company’s overseas businesses, which for now are centred on the fledgling Keeta app. That division has shown initial success in Hong Kong, squeezing out Deliveroo.
As the Chinese app expands further afield, it’s deploying similar tactics in other new markets. The company launched in Saudi Arabia last September and has been attacking the market through similar measures. It reached one million weekly active users in January, according to Sensor Tower data, matching Delivery Hero’s Hungerstation.
Executives said this year that it’s considering the feasibility of other markets from Europe to South-east Asia.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“Meituan can offset the impact of new social security costs for couriers, due in 2Q, on its China-based core local commerce margins as the unit profits more from economies of scale,” said Bloomberg Intelligence analysts Catherine Lim and Trini Tan. “This led CLC operating profit to exceed consensus estimates by 11 per cent in 4Q. Keeta’s growing presence in Saudi Arabia, which drew 85 per cent as many monthly active users as on Hungerstation and Talabat by Delivery Hero as at Feb28, could spur stronger-than-expected revenue from new initiatives.”
In China, Meituan is spending heavily to protect its user base from new entrants, potentially pressuring margins. JD.com launched its JD Takeaway platform in February, adding to an already crowded space.
Meituan has been relying on its traditionally subsidy-heavy strategy to draw in merchants and users despite the economic malaise. It’s also ramped up investments in past years in newer initiatives such as grocery retailing, group-buying and live-streaming.
It’s also experimenting with technology. Keeta Drones, a subsidiary of Meituan, received an operation licence in the United Arab Emirates late last year. It’s exploring the feasibility of drone delivery in Hong Kong as well. BLOOMBERG
Share with us your feedback on BT's products and services
