Biz / Tech

Meituan climbs 5% in trading debut in HK on growth outlook

Meituan has been expanding services from food delivery to ordering groceries, booking hotels, paying bills and bike rentals.
Ti Gong

Meituan Dianping chairman and CEO Wang Xing (center) poses with two other co-founders and senior vice presidents, Mu Rongjun (left) and Wang Huiwen (right) at the Hong Kong stock exchange yesterday.

Meituan Dianping, an online food delivery-to-ticketing services firm, closed 5.29 percent higher on its trading debut on the Hong Kong stock exchange yesterday as investors were confident that such platforms would continue to expand.

Meituan priced its initial public offering at HK$69 (US$8.80) per share and aimed to raise US$4.9 billion as investors were banking on the growth potential of the online lifestyle services platform.

At the listing ceremony in Hong Kong yesterday, Wang Xing, Meituan’s chief executive officer, praised the role of the company’s almost 600,000 delivery persons and 50,000 employees in fueling its growth.

“I also want to thank Steve Jobs, thank Apple, without iPhone, without mobile Internet, everything we do today wouldn’t have been possible,” he said.

Founded in 2010 by Wang Xing, Meituan merged in 2015 with its then main rival Dianping.

In 2017, the Meituan Dianping platform generated over 5.8 billion transactions, with total transaction volume of 357 billion yuan.

Meituan’s total revenue in 2017 amounted to 33.9 billion yuan from 13 billion yuan the year before.

In the 12 months ended April, Meituan saw more than 6.9 billion transactions valued at 410 billion yuan.

It has been expanding services from food delivery to ordering groceries, booking hotels, paying bills and bike rentals.

Wang pointed out that the firm has expanded the search and booking of restaurants to include online information for entertainment services and food delivery.

The overall market size of China’s on-demand food delivery is projected at 360 billion yuan by the end of this year, according to mobile Internet research firm Trustdata.

The battle for consumer services e-commerce is intensifying after Alibaba said last month it raised US$3 billion for its local services unit, which incorporates on-demand delivery site with the Koubei online consumer service.

Chen Liteng, an analyst with private consultancy China E-commerce Research Center, said Meituan should “provide supply chain management and technology solutions to merchants” as it is another opportunity for future growth.

To differentiate their service, some analysts suggest the firms target behavior of various consumer groups.

“For example, co-branding campaigns with video or gaming platforms could be a good idea, as ordering delivery usually means people choose to stay at home to binge-watch dramas or play video games,” Angie Wong, managing director of Leo Burnett Shanghai, said.

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