Meituan cautious as profit triples

Agencies and staff reporter

Meituan (3690) nearly tripled its net profit to 3.59 billion yuan (HK$3.93 billion) in the third quarter from a year ago, as the country's largest food delivery firm extended its recovery from the impact of the Covid pandemic last year.

However, Meituan warned that growth in its main meal delivery business should slow this quarter and spending on promotions rise.

Chief financial officer Chen Shaohui expects diners to take advantage of atypically warm weather to dine out, even as the macroeconomic environment remains weak.

The adjusted profit for the June-September period surged 62.4 percent to 5.73 billion yuan, beating a forecast of 5.29 billion yuan.

Sales rose 22 percent to 76.5 billion yuan in the quarter ended September, compared to an average projection of 76.01 billion yuan.

Last year's third-quarter earnings were affected by Covid containment measures, which included restrictions on movement in major cities that curtailed delivery services.

Chief executive Wang Xing previously flagged a tougher third quarter for the food delivery business due to macroeconomic headwinds.

Quarterly revenue from core local commerce, which includes food delivery as well as non-food delivery service Meituan Instashopping, rose 24.5 percent to 57.69 billion yuan. The daily order volume at its peak reached a new record of 78 million.

Revenue from in-store, hotel booking, and travel sector businesses benefited from a domestic travel rebound over the summer with transaction volume rising 90 percent year-on-year.

Meituan competes at home with long-time rival Ele.me, owned by Alibaba (9988), as well as ByteDance, the owner of TikTok and Chinese sister platform Douyin, which branched out into food delivery in February.

It remains China's biggest delivery platform, with a 69 percent share of the 1 trillion yuan market, according to data from researcher ChinaIRN.

In May, it expanded beyond mainland China to Hong Kong with new food delivery business KeeTa, and is reportedly eyeing further international expansion, possibly to Southeast Asia.

Meituan held talks with Delivery Hero about potentially acquiring the business in Southeast Asia that runs under the Foodpanda brand, Bloomberg reported earlier.

The company has also joined Chinese rivals in the generative artificial intelligence craze as well.

In October, Meituan took part in a 2.5 billion yuan funding round for one of the country's most promising AI startups, Zhipu. That follows its earlier acquisition of its co-founder's startup Light Year, in a deal valued at almost US$234 million (HK$1.83 billion).