Meituan’s adjusted net profit climbs 270% to record high in second quarter, but stiffer competition looms
- The Beijing-based company reported a 33.4 per cent year-on-year jump in revenue to US$9 billion in the June quarter
- Peak daily orders for its on-demand local services crossed 11 million, thanks to a growing user base and more frequent purchases
Chinese food delivery giant Meituan said its adjusted net profit in the second quarter more than tripled from a year ago to an all-time high, thanks to a surge in orders as more Chinese consumers were enticed by deals offered by the platform.
The Beijing-based company reported a 33.4 per cent year-on-year jump in revenue to 68 billion yuan (US$9 billion) in the June quarter. Revenue in the first half reached 126.5 billion yuan, up 30.2 per cent.
Adjusted net profit for the three months ended June 30 jumped 272.2 per cent from the same period last year, while net profit in the first six months reached 13.2 billion yuan.
Meituan was one of the biggest beneficiaries of the post-pandemic recovery in sectors such as tourism and restaurants, according to Li Chengdong, founder and chief analyst at e-commerce consultancy Dolphin.
The strong growth comes on the back of a surge in order volume, driven by a mix of factors including a robust rebound in store openings after the pandemic, the solid performance of merchants on the platform, and Meituan’s successful experiments with e-commerce live-streaming, according to a note on Thursday by Jamie Chen, analyst with investment research firm Third Bridge.
Meituan’s instant shopping business, which provides on-demand delivery for a wide range of items from groceries and medicine to home appliances, has potential to grow further as many bricks-and-mortar stores have yet to bring their businesses online, Chen said.
Meituan said in its earnings statement that peak daily orders for its on-demand service crossed 11 million in the June quarter, thanks to a growing user base and more frequent purchases.
The company’s core local e-commerce business – which includes food and other on-demand deliveries, hotel and travel bookings, and services that help merchants engage with consumers – saw operating profit rise by almost 35 per cent year on year to 11.1 billion yuan, as revenue in the segment grew by almost 40 per cent.
Meituan’s growth in this area comes as a raft of rivals, including short-video apps like Kuaishou and ByteDance’s Douyin, as well as lifestyle social media platform Xiaohongshu, have been eyeing further inroads into Meituan’s core market.
Looking forward, Meituan faces rising pressure in lower-tier markets, as first-tier markets become saturated. Douyin, with more than 600 million daily active users, poses a serious threat with its better reach in China’s hinterland, according to Dolphin’s Li.
“In the long run, [competition] could erode Meituan’s business,” he said. “With the entrance of Douyin, Kuaishou and Xiaohongshu in the local services sector, it is inevitable that they will take up some parts of the market that used to belong to Meituan.”
