As of the close of trading on February 23, Meituan was quoted at HK$176.6 per share, and the company's total market capitalization was HK$1.08 trillion
Lu Gong, a researcher at Investment Times
After experiencing a huge anti-monopoly fine in October 2021, Meituan Dianping (hereinafter referred to as Meituan, 03690.HK) may have "dived" due to the policy stock price.
On 18 February 2022, the National Development and Reform Commission (NDRC) issued the Notice on Several Policies on Promoting the Recovery and Development of Difficult Industries in the Service Sector (hereinafter referred to as the Notice). In the "Notice" in the catering industry bailout support measures, it pointed out that to guide takeaway and other Internet platform enterprises to further reduce the service fee standards of catering industry merchants, and reduce the operating costs of relevant catering enterprises. Guide Internet platform enterprises to give preferential service fees to catering enterprises in county-level administrative regions where high-risk areas are located during the epidemic.
On the day of the release of the above policy, meituan's stock price experienced a sharp "dive" intraday, falling below HK$200 per share in the afternoon, and as of the close of trading on February 18, 2022, Meituan's stock price plunged by nearly 15% that day, closing at HK$188 per share, and the company's total market value fell to HK$1.15 trillion. If the closing price of HK$220.8 per share on the previous day was calculated, meituan's market value of the company has evaporated by about HK$200 billion in just one day on February 18.
As of the close of trading on February 23, Meituan was only quoted at HK$176.6 per share, and the company's total market capitalization was HK$1.08 trillion.
According to the latest "report card" handed over by the US group, until the third quarter of 2021, the US group is still in a loss trend in the single quarter. The data discloses that in the third quarter of 2021, the company's total revenue increased by 37.9% year-on-year to 48.829 billion yuan; the loss for the same period was 9.994 billion yuan, a record single-quarter loss in three years; adjusted EBITDA and adjusted net profit fell to -4.062 billion yuan and adjusted net loss of 5.527 billion yuan respectively.
New business continued to lose money
Today's Meituan has grown from a start-up company to an Internet giant enterprise in the field of life services, mainly including catering takeaway, in-store hotel and tourism, new retail and other businesses, while serving consumers, but also facing investors.
According to its existing financial report data, Meituan, which has been losing money for eight consecutive years, has achieved continuous profitability in 2019 and 2020. However, from the perspective of specific business, the performance of Meituan's new business, including Meituan's preferred, Meituan flash purchase, Meituan's grocery shopping, etc., has always been unsatisfactory.
According to the company's latest disclosed financial report data, in the third quarter of 2021, Meituan achieved revenue increased by 37.9% year-on-year to 48.829 billion yuan, while the loss for the same period was 9.994 billion yuan, setting a new high in a single quarter in three years.
Among them, the revenue of Meituan's new business and other segments increased by 66.7% year-on-year to 13.723 billion yuan, mainly driven by the growth of retail business and shared cycling services. However, the segment's operating loss for the same period increased to $10,906 million year-on-year and quarter-on-quarter, while the operating loss ratio continued to decline by 2.7 percentage points to -79.5% sequentially.
In its earnings report, Meituan attributed this part of the loss to the company's increased investment in the segment, especially in the retail business.
In addition to further losses in new business, Meituan's core business also showed a slight lack of growth. According to the financial report data, in the third quarter of 2021, Meituan's catering takeaway business revenue was 26.485 billion yuan, an increase of only 28.0% over the same period of the previous year, which is a big gap compared with 116.8% in the first quarter of 2021.
At the same time, the operating profit of Meituan Catering Takeaway in the third quarter of 2021 was only 876 million yuan, an increase of 14.0% year-on-year, compared with the operating profit of 2.447 billion yuan in the second quarter of the same year, a contraction of more than 1.5 billion yuan. The operating margin was only 3.3%.
For the slowdown in the growth rate of the takeaway business in the third quarter, Meituan explained at the performance meeting that it was "mainly affected by the epidemic lockdown, flooding in the central region and the slowdown in the growth rate of the catering industry", while saying that "it is expected that the order volume in the fourth quarter will be significantly negatively affected and may continue until the first few quarters of next year." ”
Challenges continue under antitrust pressure
In the main business of Meituan, catering takeaway has occupied a large proportion for a long time. According to the latest financial report data, in the third quarter of 2021, Meituan's revenue from the catering takeaway business was 26.485 billion yuan, accounting for 54.24% of Meituan's total revenue in the quarter.
It is worth noting that in the third quarter of 2021, Meituan's commission income was about 29.559 billion yuan, constituting about 60% of Meituan's revenue in the quarter. Among the commission revenue, the catering takeaway commission accounted for nearly 80% of the proportion, reaching 23.223 billion yuan. This may mean that a large part of Meituan's total revenue comes from the commission of catering takeaway.
The "Notice" issued by the National Development and Reform Commission pointed out that it is necessary to guide Internet platform enterprises such as takeaway to further reduce the service fee standards for merchants in the catering industry. In this regard, some industry insiders believe that according to the guidance of the National Development and Reform Commission, the future takeaway platform may have to reduce the merchant commission, and this is undoubtedly a heavy blow for the Meituan, which currently has a large part of its revenue derived from the catering takeaway commission, and perhaps this is also the main reason why the Meituan stock price has fallen all the way after the "Notice" was issued.
"Investment Times" researchers noted that the catering industry has long been resentful of the rising commission of the Meituan and the excessive commission, and the contradiction between takeaway riders, commissions and merchants has always plagued the Meituan. After the outbreak of the epidemic in early 2020, the proportion of commissions charged by Meituan to merchants throughout the year dropped to 88.42% only from 90.52% in 2019, down less than 3 percentage points year-on-year.
According to the financial report data, the proportion of Meituan riders' costs in catering takeaway commission revenue increased from 82.67% in 2019 to 83.10% in 2020. It can be seen that more than 80% of the commission charged by the company is used to pay for the cost of riders, but at present, the income obtained by Meituan takeaway riders from each order is still low, and the previous incident of "a cadre experiencing food delivery only earned 41 yuan for 12 hours" has triggered a hot discussion in the market. Does this mean that whether it is directly increasing the commission or reducing the commission, it is difficult to solve the contradiction between the takeaway rider, the commission, and the merchant?
Entering 2021, the proportion of commissions charged by Meituan to merchants in the first quarter fell by about 1% compared with the same period of the previous year, but the commission charged by the catering takeaway business to merchants doubled, that is, from 8.564 billion yuan in the same period of the previous year to 18.371 billion yuan, an increase of 114.5% year-on-year. Does this mean that the "entrance fee" for merchants to enter the Meituan platform will be further increased?
It is worth noting that in April 2021, the State Administration for Market Regulation filed an investigation into suspected monopolistic behaviors such as "two choices one" against Meituan according to the report. In October of the same year, the State Administration for Market Regulation made an administrative penalty decision in accordance with the law, ordering Meituan to stop its illegal acts, fully refund the exclusive cooperation deposit of 1.289 billion yuan, and impose a fine of 3% of its sales of 114.748 billion yuan in China in 2020, totaling 3.442 billion yuan.
At the same time as announcing the amount of the penalty, the State Administration for Market Regulation also put forward 15 rectification opinions to Meituan, including canceling the "two choices", "protecting consumers' personal information and privacy according to law", "protecting the labor income of takeaway food delivery workers, and improving the social security of takeaway food delivery workers".
Revenue composition of each business segment of Meituan in the third quarter of 2021
Source: Company earnings