Chinese e-commerce giant Meituan on Nov. 30 released its unaudited financial results for the third quarter of 2020 ended Sept. 30, with share price falling about 7% in Hong Kong before its third-quarter results were published.
In the past quarter, Meituan generated a total revenue of 35.4 billion yuan, an increase of 28.8% compared to the same period last year and a rise by 43.2% on a quarter-over-quarter basis. The operating profit of last quarter rose to 6.7 billion yuan, including 5.8 billion in fair value gain on the investment in Nasdaq-listed electric vehicle manufacturer Li Auto Inc.
The stock price of Meituan had continued to rise since May 2020. As of Nov. 30, the company’s share price was HK$290 per share with a total market value of HK$1.71 trillion. In August this year, Meituan became the fourth-largest company by market capitalization on the Hong Kong markets, only second to Alibaba, Tencent, and Commercial Bank of China.
The third quarter financial report also represents the revival of Meituan’s hotel and travel businesses as the domestic economy gradually recovered from the Covid-19 pandemic. The surging consumption demand helped Meituan’s revenue of this sector increase by 4.8% year-on-year to 6.5 billion yuan while its operating profit increased to 2.8 billion yuan, becoming the company’s most profitable unit.
The food delivery sector also thrived as restaurants reopened, which boosted the revival of this segment. The gross transaction value (GTV) in the last quarter increased by 36% year-over-year to 152.2 billion yuan. The daily average number of food delivery transactions surged by 30.1% year-on-year to 34.9 million yuan. Revenue for the quarter reached 20.7 billion yuan, witnessing a year-on-year increase of 32.8%.
In response to the previous backlash on the safety concerns over the Meituan riders (literally, the food deliverers), the company stated in its financial report that “the safety and social well-being” of the riders remained of “paramount importance”, listing out modified rider assessment models as well as favorable policies including healthcare and education support for riders’ families.
The company in the last quarter also ramped up investments in new initiatives, including its online grocery shopping unit “Meituan Grocery.” “Grocery retail is a huge market opportunity,” said Meituan chief executive Wang Xing. The company said it would continue to expand its warehouse network as well as logistics capabilities to enhance its grocery retail unit, expecting to extend to more than 1,000 cities and counties before the end of 2020.
However, the company’s stock price plummeted before the financial report came out, with the closing price down 7.05% and the market value plunged to HK$1.71 trillion, losing nearly HK$130 billion.