BEIJING/SHANGHAI (Reuters) - China’s Meituan Dianping (3690.HK), an online food delivery-to-ticketing company, posted its first quarterly profit as a listed firm as a surge in summer food delivery orders helped it beat competition from rivals including Alibaba-backed Ele.me.
Meituan, backed by Chinese gaming giant Tencent Holdings Ltd (0700.HK), said profit increased to 875.8 million yuan ($123.66 million) in the three months ending June 30, compared with a loss of 7.72 billion yuan in the year-ago period, its first profit since listing last September.
Analysts on average expected the company to report a quarterly loss of 1.45 billion yuan, according to I/B/E/S data from Refinitiv.
The results were driven by the company’s food delivery segment, which accounts for more than half of its revenue, as it also achieved positive adjusted operating profit for the first time, said chairman and chief executive Wang Xing. Meituan is a so-called super app, offering travel bookings, restaurant recommendations, movie ticketing, ride-hailing, bike sharing and mapping as well as food delivery.
Its platform has pitted it against powerful rivals such as Alibaba’s delivery platform Ele.me and ride-hailing firm Didi Chuxing, backed by Japan’s SoftBank Group Corp (9984.T).
The stock, which dropped to its lowest earlier this year, has rebounded to trade around its IPO price of HK$69. Its market capitalisation makes it the third-largest Chinese technology company behind Alibaba Group Holding Ltd (BABA.N) and Tencent.
David Dai, an analyst at Bernstein Research, said he believed the results were mainly driven by an increase in take-rate, the commission it gets from each order, and lower subsidies in the food delivery business.
“We’re still on the beginning of the journey,” Wang Xing, chairman and Chief Executive of Meituan, said in an earnings briefing, adding the company would stay “highly alert to new opportunities and explore new areas with discipline.”
Meituan’s Chief Financial Officer Shaohui Chen told the briefing profitability was seasonal, adding that the company’s long-term strategy was to still prioritize growth over profit for its food delivery business.
Total revenue rose 50.6% to 22.7 billion yuan for the second quarter, from 15.07 billion yuan a year earlier, beating I/B/E/S forecasts of 21.87 billion yuan.
Second-quarter gross transaction volumes grew 28.7% to 159.2 billion yuan, with the number of users reaching 422.6 million. Food delivery reported a gross profit of 2.86 billion yuan, more than double the 1.41 billion yuan for the year-earlier period.
Revenue from Meituan’s in-store, hotel booking, and travel sector businesses rose 42.8% to 5.2 billion yuan.
Reporting by Yingzhi Yang in Beijing and Brenda Goh in Shanghai; Editing by Muralikumar Anantharaman, Mike Harrison and David Evans