Meituan bucks slowdown, doubles earnings

Agencies and staff reporter

Chinese food delivery giant Meituan (3690) saw interim net profit more than double to 16.72 billion yuan (HK$18.3 billion) from a year ago as it posted a bigger-than-expected 21 percent rise in second-quarter revenue, defying a slowing Chinese economy.

Meituan, which has an app that provides services as varied as bike-sharing, ticket-booking, and maps, reported revenue in the three months to June 30 at 82.3 billion yuan, compared with an 80.4 billion yuan projection.

Its total segment operating profit for the second quarter increased from 5.9 billion yuan to 13.9 billion yuan, and the total segment operating margin increased from 8.7 percent to 16.9 percent.

"Our on-demand delivery business maintained steady growth in the second quarter and further improved its operation efficiency," the company said in a statement.

Meituan's outperformance stands out during a dismal earnings season for Chinese consumer-oriented companies.

PDD Holdings, long viewed as a major beneficiary of China's consumption downgrade, stunned markets with an unexpectedly gloomy business outlook this week, triggering a record selloff in its US shares. Like PDD, Meituan is considered a more resilient model during an economic downturn.

Revenue from core local commerce, which includes food delivery and non-food delivery service Meituan Instashopping, rose 18.5 percent to 60.7 billion yuan.

Sales from the new initiatives segment, which includes its community group-buying arm, grew by 28.7 percent year-over-year to 21.6 billion yuan, with the operating loss narrowing by 74.7 percent to 1.3 billion yuan from the previous year.

Investors are keeping an eye also on its international expansion - emblematic of a push by Chinese companies to seek growth abroad as competition at home intensifies. In February, billionaire founder Wang Xing took direct control of the company's overseas businesses, now centered on the Keeta app for Hong Kong.

It's now preparing for a potential Middle East entry, which would be its first expansion beyond the China region. It's even starting to consider the feasibility of other markets from Europe to Southeast Asia.