Meals supply couriers for Meituan stand with insulated luggage throughout a morning briefing in Beijing, China, on Wednesday, April 21, 2021.
Yan Cong | Bloomberg | Getty Pictures
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 meals supply, we anticipate the third quarter or the quantity will decelerate, however nonetheless be extra resilient than different consumption-related sectors,” Wang stated through the earnings name on Thursday.
On Thursday, Meituan posted robust second-quarter outcomes.
Income was 67.96 billion Chinese language 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 language yuan for the second quarter, in comparison with a lack of 1.11 billion Chinese language yuan a 12 months in the past.
“We have now seen some short-term headwinds resulting from macro financial system and excessive climate situations.”
Areas reminiscent of Beijing, Tianjin and the provinces of Hebei, Shanxi and Henan skilled excessive rain in July, inflicting widespread flooding. Storm Doksuri swept north after ravaging southern Chinese language provinces.
Shoppers’ pent-up demand for offline consumption is additional launched, and it will result in a short lived squeeze on meals supply transactions as folks exit extra typically.
“Excessive climate brings challenges to our enterprise. Many retailers needed to droop their enterprise, whereas shoppers selected to inventory packaged meals as an alternative of ordering contemporary meals supply. In some cities, meals supply was even suspended as a way to guarantee security,” stated Wang.
Meituan leads China’s meals supply market, holding virtually 70% of the market share within the mainland, in line with a 2022 report on Meituan.
In addition to meals supply, the tech agency additionally operates numerous 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 worth goal of 205 Hong Kong {dollars} ($26.14) on the inventory, which represents a 35.2% upside from the present worth of HK$132.80.
“They actually gained loads of market share throughout [the pandemic]. They managed to seize decrease tier cities and I imagine [that] type of market share will turn into sticky with them,” Chen advised CNBC’s “Squawk Field Asia” on Friday.
Wang stated shoppers will probably dine out extra because the financial system recovers, which might result in a decrease demand for meals supply.
“Up to now in third quarter, offline visitors and journey demand proceed to recuperate quickly. Shoppers’ pent-up demand for offline consumption is additional launched, and it will result in a short lived squeeze on meals supply transactions as folks exit extra typically,” stated Wang.
China’s weak 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 weak consumption development final 12 months, in line with a July report. That is barely increased than the Chinese language authorities’s development goal of round 5%.
Meituan’s CEO stated he stays assured of long-term development in its meals supply enterprise.
“Order quantity in Q3 final 12 months was a comparatively excessive base, however we predict a short lived slowdown so as quantity development is because of exterior elements,” stated Wang. “We’ll proceed to activate our product and operational technique to higher seize the demand and stimulate the restoration.”
Meituan can also be deploying autonomous supply autos which have been “extra broadly utilized in additional eventualities,” stated Wang.
Chinese language self-driving automobile agency Pony.ai introduced in March that it’s partnering Meituan to construct unmanned autos for meals supply companies.
Chen stated that leveraging synthetic intelligence tech in meals supply is vital to “enhancing prices and companies for purchasers.”
“We’ll leverage our proprietary analysis and exterior funding to discover the usage of AI and autonomous supply and different leading edge applied sciences,” stated Wang.
In Might, Meituan rolled out a sister app in Hong Kong, because it seems for brand new markets exterior of mainland China.
