Meituan, operator of China’s largest e-commerce platform for services, expects “reinforced regulation” to promote more innovation and balance of interests in China’s internet industry, following Beijing’s release of a draft antitrust guideline in November.
“We think the new antitrust consultation paper is supportive of the healthy development of the internet … and helps promote fair competition within the industry,” said Wang Xing, co-founder and chief executive of Meituan, in a conference call with analysts after the market closed on Monday. “As internet platforms become bigger and more important to the economy, regulatory frameworks will also evolve.”
His comments come after Meituan reported third-quarter financial results that beat market estimates, as the domestic economy continued to recover amid increased consumer spending and the steady growth of the company’s food delivery business across the country.
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“We are currently in constructive dialogue with the regulatory authority to better understand the spirit of the consultation paper,” Wang said.
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Beijing-based Meituan reported a 28.8 per cent surge in revenue to 35.4 billion yuan (US$5.4 billion) in the quarter ended September 30, up from 27.5 billion yuan in the same period last year, after the market closed on Monday. That was ahead of the market consensus of 34 billion yuan from a survey of analysts’ estimates compiled by Bloomberg.
That growth was made primarily on the back of the strong performance of its food delivery business, which typically has its peak season in terms of order volume during the summer, according to the company.
Net profit jumped 374.1 per cent to 6.3 billion yuan, from 1.3 billion yuan a year ago, as margins improved on greater marketing efficiency. That was ahead of the 435 million yuan consensus estimate.
Meituan’s net profit last quarter received a boost from investment gains of 5.8 billion yuan, compared with 163.6 million yuan in the same period last year, according to Chen Shaohui, the company’s chief financial officer.
“Overall, with Covid-19 well-controlled and the economy firmly back on track in China, growth across all of our main businesses accelerated in the quarter,” Wang said in a statement on Monday.
“We remain confident that we will be able to drive the food delivery industry’s growth,” he said in the conference call with analysts later that day. “We’ll expand our delivery service from food to a wider range of goods to create more convenience for Chinese consumers.”
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The strong financial results showed Meituan’s success in bolstering its operations since posting its first quarterly revenue drop in the three months ended March 31, when the coronavirus pandemic disrupted its main food delivery business and other activities across the country.
Meituan had earlier committed to allocate sufficient amounts of resources towards helping merchants resume business, improve their efficiencies and digitise their operations.
“The local (coronavirus) outbreak has been quickly controlled … and this has boosted consumer confidence,” according to a Citic Securities report published ahead of Meituan’s third-quarter results.
Meituan, which changed its corporate name from Meituan Dianping on September 30, will become a major constituent of the Hang Seng Index from December 7, in a move that is expected to further raise the status of technology companies in Asia’s third-largest stock market.
The company’s share price closed down 7 per cent to HK$290 on Monday. Its shares have risen more than 180 per cent year to date.
Revenue from Meituan’s core food delivery business grew 32.8 per cent to 20.7 billion yuan in the third quarter, boosted by a 30.1 per cent increase in the daily average number of food delivery transactions to 34.9 million.
The company’s in-store, hotel and travel segment was up 4.8 per cent to 6.5 billion yuan, helped by promotional campaigns for local services during the summer holidays.
Its segment on new initiatives and others, which includes grocery retail and bike-sharing businesses, rose 43.5 per cent to 8.2 billion yuan.
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