8 months ago
84 Food transportation couriers for Meituan basal with insulated bags during a greeting briefing successful Beijing, China, connected Wednesday, April 21, 2021.
Yan Cong | Bloomberg | Getty Images
Meituan's Hong Kong-listed shares fell much than 5% connected Friday aft CEO Wang Xing warned of a nutrient transportation slowdown successful the adjacent quarter.
"For our nutrient delivery, we expect the 3rd 4th oregon the measurement volition dilatory down, but inactive beryllium much resilient than different consumption-related sectors," Wang said during the net telephone connected Thursday.
On Thursday, Meituan posted beardown second-quarter results.
Revenue was 67.96 billion Chinese yuan ($9.33 billion), up 33.4% from 50.93 cardinal yuan posted successful the aforesaid play a twelvemonth ago. The steadfast besides swung to nett of 4.69 cardinal Chinese yuan for the 2nd quarter, compared to a nonaccomplishment of 1.11 billion Chinese yuan a twelvemonth ago.
"We person seen immoderate short-term headwinds owed to macro system and utmost upwind conditions."
Regions specified arsenic Beijing, Tianjin and the provinces of Hebei, Shanxi and Henan experienced utmost rainfall successful July, causing wide flooding. Typhoon Doksuri swept north aft ravaging confederate Chinese provinces.
Consumers' pent-up request for offline depletion is further released, and this volition pb to a impermanent compression connected nutrient transportation transactions arsenic radical spell retired much often.
"Extreme upwind brings challenges to our business. Many merchants had to suspend their business, portion consumers chose to banal packaged nutrient alternatively of ordering caller nutrient delivery. In immoderate cities, nutrient transportation was adjacent suspended successful bid to guarantee safety," said Wang.
Meituan leads China's nutrient transportation market, holding almost 70% of the marketplace share in the mainland, according to a 2022 study connected Meituan.
Besides nutrient delivery, the tech steadfast besides operates assorted services including ride-hailing, on-demand delivery, edifice and question booking, movie ticketing, amusement and manner services.
Xiaolin Chen, caput of planetary astatine KraneShares, is bullish connected Meituan.
The concern steadfast has a terms people of 205 Hong Kong dollars ($26.14) connected the stock, which represents a 35.2% upside from the existent terms of HK$132.80.
"They virtually gained a batch of marketplace stock during [the pandemic]. They managed to drawback little tier cities and I judge [that] benignant of marketplace stock volition go sticky with them," Chen told CNBC's "Squawk Box Asia" connected Friday.
Wang said consumers volition apt dine retired much arsenic the system recovers, which could pb to a little request for nutrient delivery.
"So acold successful 3rd quarter, offline postulation and question request proceed to retrieve rapidly. Consumers' pent-up request for offline depletion is further released, and this volition pb to a impermanent compression connected nutrient transportation transactions arsenic radical spell retired much often," said Wang.
China's anemic recovery
Credit standing bureau Fitch Ratings inactive expects China's gross home merchandise to turn 5.6% successful 2023 as the system normalizes pursuing precise anemic depletion maturation past year, according to a July report. This is somewhat higher than the Chinese government's maturation people of astir 5%.
Meituan's CEO said helium remains assured of semipermanent maturation successful its nutrient transportation business.
"Order measurement successful Q3 past twelvemonth was a comparatively precocious base, but we deliberation a impermanent slowdown successful bid measurement maturation is owed to outer factors," said Wang. "We volition proceed to activate our merchandise and operational strategy to amended seizure the request and stimulate the recovery."
Meituan is besides deploying autonomous transportation vehicles which person been "more wide applied successful much scenarios," said Wang.
Chinese self-driving car steadfast Pony.ai announced successful March that it is partnering Meituan to physique unmanned vehicles for nutrient transportation services.
Chen said that leveraging artificial quality tech successful nutrient transportation is cardinal to "improving costs and services for clients."
"We volition leverage our proprietary probe and outer concern to research the usage of AI and autonomous transportation and different cutting borderline technologies," said Wang.
In May, Meituan rolled retired a sister app successful Hong Kong, arsenic it looks for caller markets extracurricular of mainland China.
