Meituan More Than Doubles Profit Despite Tough Competition — Update

By Tracy Qu

Meituan delivered another solid quarter, with profit more than doubling despite stiff competition in the Chinese delivery market.

The Beijing-based shopping-and-delivery platform on Wednesday said second-quarter net profit was 11.35 billion yuan, equivalent to $1.59 billion, up sharply from 4.69 billion yuan a year earlier. The result was better than the 8.77 billion yuan expected by analysts in a FactSet poll.

Adjusted for share-based compensation expenses, amortization of intangible assets and other items, profit was 13.61 billion yuan, compared with 7.66 billion yuan a year ago.

Revenue rose 21% to 82.25 billion yuan, beating a FactSet estimate of 80.36 billion yuan.

Quarterly revenue from its core local commerce segment rose 18.5% to 60.68 billion yuan. Meituan attributed the sales growth to favorable seasonality, resulting in more transactions and an increase in the number of online marketing active merchants as well as the average amount they spend.

The company's new initiatives segment, which includes its community group-buying unit, grew its revenue by 29% and narrowed its operating loss to 1.3 billion yuan.

"We improved the operational efficiency of [community group-buying business] Meituan Select by enhancing product quality and strengthening supplier collaborations, which led to increases in price per item and price markup ratios," the company said.

Meituan, a dominant player in the Chinese food-delivery market, has been facing fierce competition in its home market from the likes of Ele.me, the food-delivery service owned by Alibaba Group, and ByteDance's Douyin, TikTok's sister platform in China. It has been looking to expand overseas to bolster growth as its domestic business slows, with international platform Keeta gaining ground in Hong Kong.

Its shares in Hong Kong have risen about 25% this year, but the stock remains nearly 80% lower than its all-time high in early 2021.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

August 28, 2024 06:15 ET (10:15 GMT)

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