China’s Meituan clocks up 33.4% profit rise

Shanghai — Chinese food delivery giant Meituan on Thursday posted a bigger-than-expected 33.4% rise in second-quarter revenue, defying Chinese economic slowdown.

Meituan, which offers an app that provides services such as bike-sharing, ticket-booking and maps, reported April-June revenue of 67.9bn yuan ($9.33bn), up from 50.9bn yuan a year earlier.

That beat the 66.7bn expected by 15 analysts in estimates compiled by Refinitiv Eikon. The company posted a net profit of 4.7bn yuan versus a loss of 1.1bn yuan a year earlier.

 2022’s April-June quarterly results were hit by China’s Covid containment measures, which included a strict two-month lockdown in Shanghai that made the city largely inaccessible to delivery services.

China’s post-pandemic recovery has lost steam in recent months as demand remained lacklustre at home and weakened abroad, giving rise to a trend that has seen low-cost and discounted products become the focus for platforms and shoppers.

Revenue from core local commerce, which includes food delivery and non-food delivery service Meituan Instashopping, rose 39.2% to 51.2bn yuan.

Sales from new initiatives grew 18.4% to 16.7bn yuan.

Quarterly revenue from Meituan’s in-store, hotel booking, and travel sector businesses “grew robustly” in the quarter as China’s domestic travel sector rebounds, the company said in its earnings report.

Since last reporting earnings in June, Meituan announced it was buying Light Year, an artificial intelligence (AI) startup established by Meituan co-founder Wang Huiwen, for $281m. The purchase comes as major tech firms in China increase their bets on AI in the wake of excitement created by ChatGPT.

Earlier this year, Meituan expanded to Hong Kong with new food delivery business KeeTa. It initially launched in Mong Kok and Tai Kok Tsui, but this week flagged its expansion to more districts. The company has previously said it intends to have KeeTa available across all of Hong Kong by the end of 2023.

The business marks Meituan’s first foray outside of mainland China and could serve as a stepping stone to further international expansion, according to comments by CEO Wang Xing on a call with analysts in March.

The expansion comes as Meituan faces competition from long-time competitor Ele.me, owned by Alibaba Group, as well as ByteDance, the owner of TikTok and Chinese sister platform Douyin, which branched out into food delivery in February.

Meituan remains China’s biggest delivery platform, with a 69% market share of the 1-trillion yuan market, data from researcher ChinaIRN showed.

Reuters