Meals supply couriers for Meituan stand with insulated baggage all the way through a morning briefing in Beijing, China, on Wednesday, April 21, 2021.
Yan Cong | Bloomberg | Getty Photographs
Meituan’s Hong Kong-listed stocks fell greater than 5% on Friday after CEO Wang Xing warned of a meals supply slowdown within the subsequent quarter.
“For our meals supply, we think the 3rd quarter or the amount will decelerate, however nonetheless be extra resilient than different consumption-related sectors,” Wang mentioned all the way through the profits name on Thursday.
On Thursday, Meituan posted robust second-quarter effects.
Income was once 67.96 billion Chinese language yuan ($9.33 billion), up 33.4% from 50.93 billion yuan posted in the similar duration a yr in the past. The company additionally swung to learn of four.69 billion Chinese language yuan for the second one quarter, in comparison to a lack of 1.11 billion Chinese language yuan a yr in the past.
“We’ve observed some non permanent headwinds because of macro financial system and excessive climate stipulations.”
Areas akin to Beijing, Tianjin and the provinces of Hebei, Shanxi and Henan skilled excessive rain in July, inflicting standard flooding. Hurricane Doksuri swept north after ravaging southern Chinese language provinces.
Customers’ pent-up call for for offline intake is additional launched, and this will likely result in a brief squeeze on meals supply transactions as other people cross out extra ceaselessly.
“Excessive climate brings demanding situations to our trade. Many traders needed to droop their trade, whilst customers selected to inventory packaged meals as an alternative of ordering contemporary meals supply. In some towns, meals supply was once even suspended with a view to make certain protection,” mentioned Wang.
Meituan leads China’s meals supply marketplace, conserving virtually 70% of the marketplace percentage within the mainland, consistent with a 2022 file on Meituan.
But even so meals supply, the tech company additionally operates more than a few services and products together with ride-hailing, on-demand supply, lodge and go back and forth reserving, film ticketing, leisure and way of life services and products.
Xiaolin Chen, head of world at KraneShares, is bullish on Meituan.
The funding company has a worth goal of 205 Hong Kong bucks ($26.14) at the inventory, which represents a 35.2% upside from the present worth of HK$132.80.
“They actually received numerous marketplace percentage all the way through [the pandemic]. They controlled to seize decrease tier towns and I imagine [that] more or less marketplace percentage will change into sticky with them,” Chen informed CNBC’s “Squawk Field Asia” on Friday.
Wang mentioned customers will most probably dine out extra because the financial system recovers, which might result in a decrease call for for meals supply.
“Up to now in 3rd quarter, offline visitors and go back and forth call for proceed to recuperate abruptly. Customers’ pent-up call for for offline intake is additional launched, and this will likely result in a brief squeeze on meals supply transactions as other people cross out extra ceaselessly,” mentioned Wang.
China’s susceptible restoration
Credit standing company Fitch Scores nonetheless expects China’s gross home product to develop 5.6% in 2023 because the financial system normalizes following very susceptible intake expansion final yr, consistent with a July file. That is quite upper than the Chinese language executive’s expansion goal of round 5%.
Meituan’s CEO mentioned he stays assured of long-term expansion in its meals supply trade.
“Order quantity in Q3 final yr was once a quite prime base, however we predict a brief slowdown so as quantity expansion is because of exterior components,” mentioned Wang. “We can proceed to turn on our product and operational solution to higher seize the call for and stimulate the restoration.”
Meituan may be deploying independent supply automobiles which were “extra extensively carried out in additional eventualities,” mentioned Wang.
Chinese language self-driving automotive company Pony.ai introduced in March that it’s partnering Meituan to construct unmanned automobiles for meals supply services and products.
Chen mentioned that leveraging synthetic intelligence tech in meals supply is essential to “making improvements to prices and services and products for purchasers.”
“We can leverage our proprietary analysis and exterior funding to discover the usage of AI and independent supply and different leading edge applied sciences,” mentioned Wang.
In Would possibly, Meituan rolled out a sister app in Hong Kong, because it seems to be for brand new markets outdoor of mainland China.