Food supply couriers for Meituan stand with insulated baggage throughout a morning briefing in Beijing, China, on Wednesday, April 21, 2021.
Yan Cong | Bloomberg | Getty Images
Meituan‘s Hong Kong-listed shares fell greater than 5% on Friday after CEO Wang Xing warned of a meals supply slowdown within the subsequent quarter.
“For our food delivery, we expect the third quarter or the volume will slow down, but still be more resilient than other consumption-related sectors,” Wang mentioned through the earnings name on Thursday.
On Thursday, Meituan posted robust second-quarter outcomes.
Revenue was 67.96 billion Chinese yuan ($9.33 billion), up 33.4% from 50.93 billion yuan posted in the identical interval a 12 months in the past. The agency additionally swung to revenue of 4.69 billion Chinese yuan for the second quarter, in comparison with a lack of 1.11 billion Chinese yuan a 12 months in the past.
“We have seen some short-term headwinds due to macro economy and extreme weather conditions.”
Regions resembling Beijing, Tianjin and the provinces of Hebei, Shanxi and Henan skilled excessive rain in July, inflicting widespread flooding. Typhoon Doksuri swept north after ravaging southern Chinese provinces.
Consumers’ pent-up demand for offline consumption is additional launched, and this may result in a brief squeeze on meals supply transactions as individuals exit extra typically.
“Extreme weather brings challenges to our business. Many merchants had to suspend their business, while consumers chose to stock packaged food instead of ordering fresh food delivery. In some cities, food delivery was even suspended in order to ensure safety,” mentioned Wang.
Meituan leads China’s meals supply market, holding nearly 70% of the market share within the mainland, based on a 2022 report on Meituan.
Besides meals supply, the tech agency additionally operates varied companies together with ride-hailing, on-demand supply, resort and journey reserving, film ticketing, leisure and way of life companies.
Xiaolin Chen, head of worldwide at KraneShares, is bullish on Meituan.
The funding agency has a value goal of 205 Hong Kong {dollars} ($26.14) on the inventory, which represents a 35.2% upside from the present value of HK$132.80.
“They literally gained a lot of market share during [the pandemic]. They managed to grab lower tier cities and I believe [that] kind of market share will become sticky with them,” Chen informed CNBC’s “Squawk Box Asia” on Friday.
Wang mentioned shoppers will probably dine out extra because the financial system recovers, which may result in a decrease demand for meals supply.
“So far in third quarter, offline traffic and travel demand continue to recover rapidly. Consumers’ pent-up demand for offline consumption is further released, and this will lead to a temporary squeeze on food delivery transactions as people go out more often,” mentioned Wang.
China’s weak restoration
Credit score company Fitch Ratings nonetheless expects China’s gross home product to develop 5.6% in 2023 because the financial system normalizes following very weak consumption development final 12 months, based on a July report. This is barely increased than the Chinese authorities’s development goal of round 5%.
Meituan’s CEO mentioned he stays assured of long-term development in its meals supply enterprise.
“Order volume in Q3 last year was a relatively high base, but we think a temporary slowdown in order volume growth is due to external factors,” mentioned Wang. “We will continue to activate our product and operational strategy to better capture the demand and stimulate the recovery.”
Meituan can also be deploying autonomous supply automobiles which have been “more widely applied in more scenarios,” mentioned Wang.
Chinese self-driving automobile agency Pony.ai introduced in March that it’s partnering Meituan to construct unmanned automobiles for meals supply companies.
Chen mentioned that leveraging synthetic intelligence tech in meals supply is essential to “improving costs and services for clients.”
“We will leverage our proprietary research and external investment to explore the use of AI and autonomous delivery and other cutting edge technologies,” mentioned Wang.
In May, Meituan rolled out a sister app in Hong Kong, because it appears for brand spanking new markets exterior of mainland China.
Source: www.cnbc.com”