Aiden He
Mainland food delivery giant Meituan (3690) has come under investigation because of an earlier acquisition of bike-sharing company Mobike.
It reported a net loss of 8.2 billion yuan (HK$9.87 billion) for the first half, but continued to invest in various businesses that "will bring long-term value to the company."
Revenue nearly doubled to 80.78 billion yuan, but the cost of revenues also soared 1.21 times, resulting in a drop of 8.8 percentage points in gross profit margin to 24.4 percent.
Second-quarter revenues increased by 77 percent to 43.8 billion yuan, of which income from the segment of new initiatives and others increased by 1.13 times to 12 billion yuan.
It was primarily driven by the growth in retail business, B2B food distribution services and bike-sharing and moped services.
However, the operating loss for the segment increased to 9.2 billion yuan in the second quarter, while the operating margin improved 4.8 percentage points to negative 76.8 percent.
The Beijing-based company said its community e-commerce business, Meituan Select, remained its largest investment area in the second quarter and will continue to make substantial investments to improve its product offerings, supply chain and fulfillment capabilities.
The State Administration for Market Regulation announced yesterday that it has carried out investigations into Meituan's acquisition of Mobike because it failed to declare the deal according to law.
In 2018, Meituan acquired Mobike for US$2.7 billion (HK$21.06 billion), including 65 percent cash and 35 percent of its stock.
Meanwhile, another investigation by the administration on Meituan under the anti-monopoly law started in April and is ongoing. It is not able to predict the status or the results of the investigation at this stage.
The food delivery giant could be required to make changes to its business practices and/or be subject to a significant amount of fines, said an exchange filing.
