(Nov 28): Meituan posted its first loss in almost three years, reflecting the toll of a three-way battle with Alibaba Group Holding Ltd and JD.com Inc in a weak Chinese consumer market.
The company posted an adjusted net loss of 16 billion yuan (US$2.3 billion or RM9.5 billion) for the September quarter, worse than the 14 billion yuan average projected by analysts. Most of that loss came from Meituan’s domestic commerce segment, “due to the continuous intensified competition in food delivery sector,” the company said in a statement on Friday. Revenue grew 2% to 95.5 billion yuan.
The Beijing-based company said it sees the losses continuing through the current quarter, as the contest for market share with Alibaba and JD intensifies. The e-commerce giants are spending billions of yuan on discounts and subsidies to drive deeper into the meal delivery and quick-commerce markets. Meituan has been forced to respond in kind, depressing margins even as its growth slows.
In August, Meituan blamed “irrational competition” for eradicating most of its profit. Alibaba and JD both reported a halving in overall net income for the September quarter, while Meituan on Friday said competition “remained overheated.”
Morningstar projects Meituan’s share of the on-demand, or quick-commerce, delivery market will fall to 55% of gross transaction value by 2027 from 73% in 2024. It sees Alibaba’s share expanding to 40% from 21% over the same span, and JD.com’s rising marginally to 6%.
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“Meituan’s guidance on how long these losses are likely to persist will be crucial to judging if consensus expectations for a 2026 turnaround are realistic. Meituan’s overseas push, via Keeta’s expansion across Qatar, Kuwait and the United Arab Emirates in 3Q, probably added to losses on new initiatives,” said Bloomberg Intelligence.
That slowdown at home helps explain why Meituan is expanding overseas. The Beijing-based company launched its Keeta food delivery app in Brazil as well as Qatar, Kuwait and the United Arab Emirates this year. There have been some reports that the company is also now exploring a possible entry into India, which is in the midst of its own clash of rivals.
“Meituan’s decision to prioritise investments in multiple overseas markets almost feels like an acceptance that domestic market share is a lost battle,” Sanford C Bernstein & Co analysts Jignanshu Gor and Robin Zhu wrote in a note dated Tuesday. “India may be a strategic necessity — but will almost certainly be a costly and time-consuming endeavor at a time when protecting home base strikes us as more important.”
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The consensus recommendation on Meituan slumped to a record low last month after a series of downgrades. The average analyst price target for the company’s shares is down 40% since the end of March, compared with a 24% drop for JD.com’s and 20% rise for Alibaba’s Hong Kong-listed stock.
Uploaded by Magessan Varatharaja
