Chinese food delivery giant Meituan reported sales growth of 29 per cent in the third quarter, led by strong demand for deliveries after the pandemic pummelled the company in the first half of the year.
The Beijing-based company’s revenue hit Rmb35.4bn ($5.4bn) in the quarter, ahead of analysts’ expectations.
“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 on a sequential basis,” said chief executive Wang Xing.
Meituan aims to “deliver everything to customers’ homes”, he added.
Meituan’s stock is on a run, roughly tripling this year in Hong Kong, bringing its market value to about $220bn, though ahead of the results its share price fell 7 per cent in Hong Kong.
At the height of the pandemic in China, the food delivery giant’s business dried up, as restaurants closed and consumers shied away from food some feared could be contaminated with coronavirus. Its travel booking business was also hit hard.
But with the coronavirus now largely under control in China, eateries have reopened, helping sales at Meituan’s food delivery segment rise 33 per cent from a year earlier to Rmb20.7bn. Its take rate, however — the portion of orders it converts into revenues — fell to 13.6 per cent from 13.9 per cent a year earlier.
The results come as the commissions and advertising fees Meituan charges its 6.5m merchants have come under scrutiny, with Chinese regulators signalling they might finally crack down on practices that restaurants have criticised, such as forcing them to choose between listing on Meituan’s app or that of rival Ele.me from Alibaba.
Meituan’s net profit more than tripled in the quarter to Rmb6.3bn ($.96bn) but it included a Rmb5.8bn fair value gain on an investment in electric carmaker Li Auto, which listed in the US this summer. On an adjusted basis, net profit rose 6 per cent from a year earlier, but fell from the June quarter.
The company’s results were hit by higher rider costs for its delivery drivers as well as costly new initiatives like building out its grocery business.
During the pandemic, grocery has become an important growth engine for China’s ecommerce groups, with the sector becoming highly competitive. Alibaba spent $3.6bn to take over a top supermarket operator this autumn. Pinduoduo is raising as much as $6.1bn in new financing as it refocuses on selling farm goods online.
“Grocery retail is an enormous market opportunity,” said Mr Wang.
Meituan reported 476.5m users for the 12-month period ending on September 30, up from 435.8m the previous year.