Meituan continues to be ＂stable＂, with a net profit of 7.488 billion in the first quarter

Text | Kanjian Finance

Internet companies are coming out of the trough, and the performance of some emerging Internet companies has even reached new highs.

In this context, the share prices of some leading Internet companies are obviously undervalued by the market, such as Tencent, Meituan, Kuaishou and other Internet Tech Giants. Despite their continued high performance, their share prices are still far from their peak. Obviously this is unreasonable.

Although the Hong Kong stock market has been affected by the interest rate hike cycle and the interest rate cut cycle has been delayed, the valuation of our Internet Tech Giants, one of the largest markets in the world, urgently needs to be reassessed.

On June 6, Meituan disclosed the 2024 Quarter 1 performance report. The financial report shows that the first quarter achieved revenue of 73.30 billion yuan, an increase of 25% year-on-year; net profit was 5.369 billion yuan, 3.358 billion yuan in the same period last year, an increase of 59.9% year-on-year; adjusted net profit was 7.488 billion yuan, 5.491 billion yuan in the same period last year, an increase of 36.4% year-on-year.

Judging from the performance data, this is a "answer sheet" that satisfies the market.

In the face of strong performance, Meituan founder and CEO Wang Xing attributed it to the continued stable recovery of the local consumer market this year, which has led to the steady development of Meituan’s various businesses.

Through Meituan’s performance, we can also see the strong vitality of our society, especially in the field of basic consumption, where our purchasing power is still considerable, which further proves that our market still has great potential.

In addition, Meituan revealed in the earnings report that the instant delivery business achieved strong growth in Quarter 1, the annual active users of the takeaway business increased to nearly 500 million, and the transaction frequency of medium and high frequency users further increased year-on-year. Driven by this, the number of instant delivery orders on the platform increased by 28% year-on-year to 5.46 billion in the quarter.

The financial report also shows that in the first quarter, the average daily order volume of Meituan flash sale reached 8.40 million, and the number of annual active users and transaction frequency achieved strong growth year-on-year.

In terms of research and development, Meituan invested 5 billion yuan in R & D in the first quarter, aiming to continue to promote the efficiency of the retail industry through technological innovation. It is reported that the average annual transaction frequency of Meituan platform annual transaction users has increased steadily to more than 50 times, and the number of users and merchants has ushered in a new high.

From the above data, it is not difficult to see that Meituan’s various data have confirmed that the consumer market is gradually picking up.

In fact, Meituan’s share price has been one step ahead of the performance. Meituan’s share price has doubled in three months since the beginning of February, and although it is still at a low level, the dawn has begun to appear.

"We are evaluating and studying various markets around the world, and the Middle East is one of them. We are also evaluating some other markets, including Europe or South East Asia," Mr. Wang said on the earnings call.

From Wang Xing’s words, we can easily get a glimpse into the future strategic direction of Internet companies.

In fact, not only Meituan, other companies are not limited to Internet companies, and they are all seeking to "go overseas". In particular, ByteDance, Pinduoduo and other companies have already set an example, so it is normal for Meituan to have this action.

Perhaps aware of the attention paid to Meituan’s "going overseas", Wang Xing immediately said, "We don’t have much substantive progress to share at present. We haven’t confirmed it yet, it’s still in the preparatory stage."

According to reports related to Tiger Sniff, Meituan’s overseas business has opened 9 recruitment positions in Riyadh. On the domestic recruitment website, Meituan is also looking for experts who are familiar with Saudi Arabia and proficient in Arabic. And currently within Meituan, going overseas has been upgraded to a "first-in-command project".

Of course, Meituan is not safe from worries in addition to going overseas to expand the market. It also faces the impact of short video platforms such as Douyin and Kuaishou on Meituan’s local life. Reports show that the total transaction value of Douyin’s life service platform will increase by 256% in 2023, and stores will cover 370 + cities. In addition, according to media reports, Douyin’s life service sales in the first quarter exceeded 100 billion, with a growth rate of more than 100% compared with the same period last year.

It can be seen that although Meituan has achieved good results, the pressure is not small.

Kanjian Finance believes that Meituan’s position in the local life field will not be shaken in the short term, but in the long run, it is inevitable that Meituan’s business will be cannibalized. Therefore, Meituan must accelerate its overseas expansion and further expand its overseas market in order to stabilize its market position.

Of course, in addition to stabilizing the basic market, Meituan also needs to assume more social responsibilities. As Wang Xing said, as a beneficiary of the growth of the industry, Meituan will continue to firmly fulfill the mission of "helping everyone eat better and live better", and actively lead the digital transformation and upgrading of the retail industry of goods and services. I believe that there will be more synergy effects between various businesses in the future, and continue to create greater value for all industry participants.