Meituan reported a 29% rise in quarterly revenue after China’s economic recovery boosted restaurants and whetted consumers’ appetite for takeout.
The world’s largest meal delivery service posted sales of 35.4 billion yuan ($5.4 billion) during the July-September period, beating the average estimate of 34 billion yuan. It also logged net income of 6.3 billion yuan, versus a projected 435 million yuan. Profit was bolstered by 5.8 billion yuan in investment gains.
The strong results affirm Meituan’s bounce-back from the pandemic disruptions of past quarters and could assuage investors worried about the impact of a Chinese antitrust crackdown on the internet sector. China’s third-largest tech corporation is now benefiting from rising travel and restaurant spending as the country returns to normal. Meituan’s post-Covid recovery may drive a secondary listing in China as soon as next year, Bloomberg News reported.
Meituan, which controls an estimated two-thirds of China’s food delivery market, was among a raft of internet giants including Alibaba Group Holding Ltd and Tencent Holdings Ltd that got caught up in a $290 billion selloff this month after regulators published antitrust guidelines.
It’s still down about 13% from November 10, when Beijing detailed measures to
curb anti-competitive practices, widely regarded as an effort to rein in the growing influence of tech corporations throughout the world’s No. 2 economy.
Backed by Tencent, Meituan has seen a gradual pick-up in its core food delivery business after the company posted its first quarterly revenue decline in the three months ended March during Covid-19 lockdowns. Founder Wang Xing said in August the recovery was underway but areas such as travel remained anemic.
Food delivery continued to recover from the pandemic. Gross transaction values for food delivery increased 36% during the September quarter, helping operating profit for the business more than double, the company said on Monday.
Prodded by increasing competition in its core takeout business from Ele.me and other Alibaba-backed services, Meituan had expanded into a wide array of services including online travel, grocery delivery and ride-hailing. In the longer run, Meituan is investing in technologies like self-driving vehicles to help cope with surging delivery demands.
Meituan, with more than 200 services ranging from ticketing to bike-sharing, saw operating losses from new initiatives widen to 2 billion yuan from 1.2 billion yuan a year earlier, partly due to efforts to grow its recently added community buying business.
As its name suggests, the model entails a group of residents from the same community placing bulk orders for greater discounts. E-commerce companies then ship the orders in one go, reducing logistics costs significantly.