Food delivery giant Meituan’s sales beat estimates

The world’s largest meal delivery service reported sales climbed to $3.6bn in the June quarter

Management of China's Meituan Dianping, an online food delivery-to-ticketing services platform, attending a news conference in Hong Kong. Reuters

Meituan Dianping’s quarterly revenue beat analysts’ estimates as demand for takeout services bounced back from the disruptions caused by the coronavirus pandemic in China.

The world’s largest meal delivery service reported sales climbed 8.9 per cent to 24.7 billion Chinese yuan ($3.6bn / Dh13.2bn) in the June quarter, compared with the 23.6bn yuan average of analysts’ estimates.

The company reported surprise net income of 2.2bn yuan, compared with the 643 million yuan loss projected by analysts.

Backed by Tencent Holdings, Meituan has seen a gradual pick-up in its core food delivery business after the company posted its first ever quarterly revenue decline in the three months ended March during the Covid-19 shutdowns.

Still, consumers remain wary amid sluggish economic growth and the possibility of a resurgence in virus cases, denting appetite for restaurant dining, hotels and other hospitality services.

Daily delivery orders topped the 40 million milestone earlier this month, Jefferies said in an August 9 note. It had taken the company about a year to grow orders by the latest 10 million, accelerating from the 14 months it took to increase daily orders from 20 million to 30 million, analysts led by Thomas Chong wrote, adding that they are “positive about daily delivery order volume in the long run”.

Shares of Meituan have more than doubled this year, lifting the value of the company to more than $160bn.

Amid increasing competition in its core takeout business from rivals including Ant and SF Express - both supported by Alibaba Group - Meituan had expanded into a wide array of services including online travel, groceries delivery and ride-hailing.

Alibaba’s food-delivery arm Ele.me is also engaging in a subsidy battle with the start-up for market leadership.

In the longer run, Meituan is investing in technologies like self-driving vehicles to help cope with surging delivery demands.