China’s Meituan beats revenue estimates, swings to profit

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BEIJING (Reuters) – Chinese food delivery giant Meituan reported better-than-expected quarterly revenue growth of 28.2% on Friday and returned to profit as the company recovered from COVID-19 restrictions.

Meituan, whose services also include restaurant reviews and bike sharing, said total sales rose to 62.62 billion yuan ($8.74 billion) in the three months ended September, compared to the average analyst estimate of 61, 79 billion yuan, according to Refinitiv data.

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The company posted a quarterly profit of 1.22 billion yuan from a loss of 9.99 billion yuan a year earlier as it slammed the brakes on heavy funding for its new initiatives.

Revenue from new initiatives, including community e-commerce business Meituan Select, grew 39.7% year-over-year to 16.29 billion yuan.

Revenue from local core trade, which includes food delivery and shopping, hotel and travel operations, rose 24.6% to 46.33 billion yuan.

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Investor Tencent Holdings, the Chinese social media and gaming giant that owns 17% of Meituan, said last week it would return capital to shareholders through a dividend payment from its $20 billion stake, which represents about 15.5% of the total amount issued. represents shares.

At the time, Meituan said it would continue its mutually beneficial business relationship with Tencent after the divestment.

Meituan’s Hong Kong-listed shares have lost nearly half of their value in the past 12 months.

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As several major Chinese cities, including Beijing, Guangzhou and Chongqing, tightened pandemic controls significantly amid new waves of outbreaks, analysts warned of a greater negative impact on consumer demand for Meituan’s businesses in the fourth quarter.

($1 = 7.1615 Chinese Yuan Renminbi)

(Reporting by Yingzhi Yang and Brenda Goh; Editing by Mark Potter and Elaine Hardcastle)

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