BEIJING :Chinese food delivery giant Meituan reported better than expected quarterly revenue growth of 28.2 per cent on Friday and swung back to profit as the company recovered from COVID-19 curbs.
Meituan, whose services also include restaurant reviews and bike-sharing, said total revenue rose to 62.62 billion yuan ($8.74 billion) in the three months ended September, compared with analysts' average estimate of 61.79 billion yuan, according to Refinitiv data.
The company swung to a quarterly profit of 1.22 billion yuan from a loss of 9.99 billion yuan a year earlier, as it pulled the brakes on heavily funding its new initiatives.
Sales from new initiatives, including its community e-commerce business Meituan Select, grew by 39.7 per cent year on year to 16.29 billion yuan.
Revenue from core local commerce, which includes food delivery, and non-food delivery service Meituan Instashopping, rose 24.6 per cent to 46.33 billion yuan.
In a first step outside mainland China, the company has recently been expanding in Hong Kong. The operations there are still small-scale pilot programs, chief executive Wang Xing said during a conference call on Friday, and Meituan sees the city as a testing ground for its global plans.
Investor Tencent Holdings, China’s social media and gaming giant which owns 17 per cent of Meituan, said last week it would return capital to shareholders through a dividend distribution of its $20 billion stake which represents roughly 15.5 per cent of the total shares issued.
Meituan said at the time it would maintain its mutually beneficial business relationship with Tencent after the divestment.
Meituan’s Hong Kong-listed shares have lost nearly half their value in the last 12 months.
As China sees a surge in COVID cases that are prompting lockdowns in several major cities, including Beijing and Guangzhou, analysts warned of a bigger negative impact on consumer demand for Meituan's businesses over the fourth quarter.
($1 = 7.1615 Chinese yuan renminbi)