Meituan swings to a net loss of 16 b yuan in Q3

Meituan (3690) swung to a loss in the third quarter, posting an adjusted net loss of 16 billion yuan (HK$17.6 billion), while it warned of a persistent loss in the next quarter amid overheated market competition.

The Chinese on-demand delivery giant's adjusted net loss plunged 2.25 times from a profit of 12.8 billion yuan a year ago, below the negative 13.9 billion yuan in market expectations.

Operating profit of its core local commerce significantly declined and turned to negative 14.1 billion yuan, which also missed market estimates of 12.6 billion yuan, primarily dragged down by the increases in expenses related to promotion, advertising, and user incentives amid intensified competition.

Revenues inched up 2 percent year-on-year to 95.5 billion yuan during the period.

Its core local commerce business saw a decline of 2.8 percent to 67.4 billion, due to the significantly increased incentives deducted from delivery services revenue to convert new users and enhance user stickiness.

Income from the new Initiatives segment rose 15.9 percent to 28 billion yuan, thanks to the expansion of its grocery retail businesses and overseas business.

Its shares have slumped over 30 percent so far this year.