Meituan shares jump after revenue growth surprises

By Yifan Wang

Shares of Meituan rose in Hong Kong on Monday, the first trading day after the Chinese food delivery giant posted better-than-expected revenue growth for the first quarter.

The stock was up 7.1% at 192.90 Hong Kong dollars (US$24.59) at the midday break, trimming year-to-date losses to 14%.

“The worst is probably behind it,” Citi analysts said in a recent note. “Meituan is well positioned to reopen play in the near term and strong exposure to the local service ecosystem longer term, given its proven track record of execution.”

The bank maintained a buy call on the stock while raising its target price to HK$222 from HK$204.

Meituan said last Thursday it saw a 25% increase in quarterly revenue, driven by steady growth in its core food delivery business and a 47% increase in revenue from new initiatives, including food delivery and food delivery. group purchases. That exceeded the expectations of analysts polled by FactSet.

Net loss for the quarter widened to 5.70 billion yuan ($855.8 million) from a loss of 4.85 billion yuan a year earlier, slightly beating expectations according to the FactSet survey. But some analysts said the company’s adjusted net loss exceeded their previous estimates as home consumers turned to Meituan’s delivery services for daily necessities amid a resurgence of Covid-19 in China.

Bocom International also retained a buy rating on Meituan shares and raised its target to HK$234 from HK$230. He noted the company’s revenue pace and “strong” long-term outlook, given expectations of a rapid post-pandemic recovery for China’s food delivery industry, as well as the size of the industry’s ever-expanding addressable market.

Write to Yifan Wang at [email protected]