Shares of Meituan Dianping, the Chinese food delivery and lifestyle platform, surged more than 8% on Friday after the company posted a second consecutive quarterly profit on Thursday.
Why it matters: The profits further boosted market confidence in the Chinese super app, which has unseated Baidu as the third-largest publicly held Chinese internet company after Alibaba and Tencent.
“With our ‘Food + Platform’ strategy, we will continue to leverage our insights on the consumers and merchants to further boost innovation and improve efficiency. As always, we will keep investing in our long-term growth and focusing on business opportunities that will generate value for both consumers and merchants in the long run.”
–Xing Wang, Meituan chairman and CEO, in a statement
Details: The company’s total revenues increased 44.1% year over year to RMB 27.5 billion (around $3.91 billion) in Q3 this year from RMB 19.1 billion for the same period of 2018. Revenues increased across all business segments, according to the company.
- Revenue from food delivery, which accounts for 56.7% of the total, increased 39.4% to RMB 15.6 billion in Q3 from RMB 11.2 billion for the same period in 2018, primarily driven by higher average purchase frequency and increase in average value per order.
- The company reported RMB 1.33 billion in profit during the period against analyst estimates of RMB 502 million in losses, according to data cited by Bloomberg.
- Selling and marketing expenses as a percentage of total revenues decreased to 20.4% from 24.2% for the same period of 2018, and increased from 18.3% for Q2 2019.
- Revenue contribution from newer businesses such as bike rental and on-demand grocery delivery service Meituan Instashopping increased to 20.8% in Q3 from 18.1% in the same period a year ago.
Context: Meituan went public on the Hong Kong stock exchange in September 2018, raising $4.2 billion.
- The company’s market cap hit a historical high in October of HK$500 billion ($71 billion), boosted by consumption demands during the seven-day national holiday.