Key Takeaways:
Meituan reported a 1Q non-IFRS adjusted loss of RMB4.97 billion, beating the consensus estimate for a loss of RMB6.83 billion.
Revenue reached RMB91.04 billion in the three months ended March, up 5.6% from a year earlier and in line with the RMB90.79 billion consensus, according to the company's filing. The net loss for the period was RMB6.83 billion, compared with a net profit of RMB10.06 billion a year earlier. Operating loss came in at RMB6.47 billion, narrower than the RMB9.01 billion analysts had expected.
The core local commerce segment, which includes food delivery and in-store services, generated RMB64.1 billion in revenue, essentially flat from a year earlier. Its operating loss narrowed significantly quarter over quarter to RMB2 billion, driven by a substantial reduction in losses from the instant delivery business. Operating margin for the segment declined year over year but improved sequentially to negative 3.2%.
Revenue from the new initiatives segment rose 21.3% to RMB27 billion, with the operating loss narrowing to RMB2.1 billion. Operating margin improved to negative 7.8% from a year earlier, reflecting better cost control in areas such as Meituan Select and community e-commerce.
Shares of Meituan rose 6.5% to HK$78.25 on the day, with total turnover of HK$5.62 billion. A bearish block trade of 5.8 million shares at HK$78.25, worth HK$453.85 million, was executed near the close. Short selling accounted for HK$1.21 billion, or 21.6% of total trading volume.
The narrower-than-expected losses suggest Meituan's cost-cutting measures in its instant delivery business are gaining traction, even as the broader local commerce market faces pressure from China's uneven economic recovery. Investors will watch the second-quarter results for further evidence of margin recovery in the core business and continued progress toward profitability in the new initiatives segment.
This article is for informational purposes only and does not constitute investment advice.
