3690.HK - Meituan Dianping

HKSE - HKSE Delayed Price. Currency in HKD
138.900
+13.100 (+10.41%)
At close: 4:08PM HKT
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Performance Outlook
  • Short Term
    2W - 6W
  • Mid Term
    6W - 9M
  • Long Term
    9M+
Previous Close125.800
Open129.000
Bid138.800 x 0
Ask138.900 x 0
Day's Range127.800 - 138.900
52 Week Range57.000 - 138.900
Volume60,406,645
Avg. Volume27,218,172
Market Cap809.334B
Beta (5Y Monthly)N/A
PE Ratio (TTM)N/A
EPS (TTM)N/A
Earnings DateMay 25, 2020
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateN/A
1y Target EstN/A
Fair Value is the appropriate price for the shares of a company, based on its earnings and growth rate also interpreted as when P/E Ratio = Growth Rate. Estimated return represents the projected annual return you might expect after purchasing shares in the company and holding them over the default time horizon of 5 years, based on the EPS growth rate that we have projected.
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    • China's food delivery giant Meituan hits $100B valuation amid pandemic
      TechCrunch

      China's food delivery giant Meituan hits $100B valuation amid pandemic

      Meituan's shares hit a record high on Tuesday, bringing its valuation to over $100 billion. The Hong Kong-listed giant, which focuses on food delivery with smaller segments in travel and transportation, is the third Chinese firm to reach the landmark valuation. Tencent-backed Meituan saw shares rally to HK$138 ($17.8) on Tuesday after it earmarked a smaller-than-projected decrease in revenue during Q1 and a net loss of 1.58 billion yuan ($220 million) after three consecutive profitable quarters.

    • Chinese Delivery Mogul’s Wealth Doubles to $10 Billion in Months
      Bloomberg

      Chinese Delivery Mogul’s Wealth Doubles to $10 Billion in Months

      (Bloomberg) -- Meituan Dianping founder Wang Xing’s fortune has nearly doubled since his company emerged from the depths of China’s Covid-19 lockdown, cementing his place among a generation of the country’s most prominent tech entrepreneurs.Meituan’s stock climbed 10.4% on Tuesday after it reported better than expected revenue, driving its market value past $100 billion for the first time and stoking hopes the world’s largest meal delivery business will bounce back as China regains its footing. Based on his 11.3% slice of the company, the chief executive officer’s wealth has soared since Meituan plumbed a low on March 19 to about $10.3 billion as of Tuesday.Backed by Tencent Holdings Ltd., Meituan’s sprawling services from food delivery to hotel booking helped establish the company as one of a coterie of upstart challengers to incumbent tech leaders, Alibaba Group Holding Ltd. and Tencent itself. Meituan’s businesses -- among the most vulnerable to a nationwide shutdown -- began to climb out of a trough in April and May, offsetting slumps in harder-hit areas such as hotels. As of March’s final week, more than 70% of restaurants surveyed had recovered over half their normal order volumes, while 30% had exceeded pre-pandemic levels, Wang told analysts on a call Monday.Wang relied on deals and expansion to turn what started as a Groupon-type service into a food delivery giant that now also spans food reviews and in-store dining services. A computer engineer by training, Wang -- whose role model is Amazon.com Inc. founder Jeff Bezos -- is putting growth ahead of the bottom line to secure Meituan’s place among China’s pantheon of tech giants. He’s part of a new generation of up-and-comers, along with fellow billionaires like ByteDance Ltd.’s Zhang Yiming and Didi Chuxing’s Cheng Wei.“Looking into the next three quarters, we believe there will still be challenges as there are still uncertainties and potential downside from the ongoing evolution of the COVID-19 situation,” Wang said on the call. “Meanwhile, a large number of local service merchants are still struggling for survival. Short-term profitability is not our top priority.”Read more: The Greatest Delivery Empire on Earth Has Alibaba’s AttentionMeituan’s stock surge came after it reported better-than-expected sales of 16.8 billion yuan ($2.4 billion) in the three months ended March. Morgan Stanley and CICC were among the brokerages that subsequently lifted their targets on the company, citing resilience across business lines and easing competition.“COVID-19 had a negative impact on Meituan but results beat on top-line and bottom line by a wide margin,” Bernstein analysts led by David Dai wrote. In food delivery, the “long run potential is still there and the profitability level can be much higher” after the company pushes advertising, they added.Longer term, the internet services giant will have to grapple with China’s worsening economy, which may further dent consumer spending. Subsidies and measures to help restaurants and merchants during the outbreak will again pressure profitability in the June quarter, executives said. Meituan reported a lower-than-projected net loss of 1.58 billion yuan, but that was after three successive quarters of profit.What Bloomberg Intelligence SaysMeituan’s near-term growth may weaken as its in-store dining, hotel and travel businesses take time to fully recover from China’s coronavirus outbreak. Operating efficiency will likely improve in the longer term as the company expands its market-leading scale and competition with Alibaba moderates. Broadening service categories and providing technology solutions for merchants will aid sales and profit growth.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Before the outbreak, Meituan had pushed aggressively into adjacent arenas from online travel to ride-hailing. While revenue from the business that encompasses hotels and travel plunged 31% during the March quarter, Meituan’s much smaller new initiatives segment -- which includes bike- and car-hailing -- grew sales 4.9%, aided by the launch of a new grocery delivery service. Hotels remained hardest-hit: in the week of May 11, domestic room nights were at about 70% pre-pandemic levels.While Meituan is expanding offerings to sell things like handsets and farm produce, rivals including Ant Group and SF Express, both backed by Alibaba Group Holding Ltd., are elbowing their way into Meituan’s core takeout business. Alibaba’s food-delivery arm Ele.me is also engaging in a subsidy battle with the startup for market leadership.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Food Delivery Giant Meituan’s Sales Beat Estimates
      Bloomberg

      Food Delivery Giant Meituan’s Sales Beat Estimates

      (Bloomberg) -- Meituan Dianping’s shares soared after it reported a smaller than expected 13% slide in revenue that drove hopes the world’s largest meal delivery business is starting to recover as China emerges from Covid-19 lockdowns.Its shares climbed as much as 9.7%, extending strong gains since China began to return to normal in mid-March and propelling Meituan’s market value to more than $100 billion. That surge came after Meituan reported better-than-expected sales of 16.8 billion yuan ($2.4 billion) in the three months ended March. Morgan Stanley and CICC were among the brokerages that lifted their targets on Meituan, citing resilience across business lines and easing competition.Backed by Tencent Holdings Ltd., Meituan’s sprawling services from food delivery to in-store dining and hotel booking were among the most vulnerable to nationwide shutdowns. But its businesses had begun to climb out of the trough, offsetting severe slumps in areas such as hotels, executives told analysts on a Monday conference call. As of March’s final week, more than 70% of restaurants surveyed had recovered more than half their normal order volumes, while 30% had exceeded pre-pandemic levels, Chief Executive Officer Wang Xing said.“COVID-19 had a negative impact on Meituan but results beat on top-line and bottom line by a wide margin,” Bernstein analysts led by David Dai wrote. In food delivery, the “long run potential is still there and the profitability level can be much higher” after the company pushes advertising, they added.Longer term, the internet services giant will have to grapple with China’s worsening economy, which may further dent consumer spending. Subsidies and measures to help restaurants and merchants during the outbreak will again pressure profitability in the June quarter, executives said.Meituan reported a lower-than-projected net loss of 1.58 billion yuan, but that was after three successive quarters of profit.“Looking into the next three quarters, we believe there will still be challenges as there are still uncertainties and potential downside from the ongoing evolution of the COVID-19 situation,” Wang said on the call. “Meanwhile, a large number of local service merchants are still struggling for survival. Short-term profitability is not our top priority.”What Bloomberg Intelligence SaysMeituan’s near-term growth may weaken as its in-store dining, hotel and travel businesses take time to fully recover from China’s coronavirus outbreak. Operating efficiency will likely improve in the longer term as the company expands its market-leading scale and competition with Alibaba moderates. Broadening service categories and providing technology solutions for merchants will aid sales and profit growth.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Before the outbreak, Meituan had pushed aggressively into adjacent arenas from online travel to ride-hailing. While revenue from the business that encompasses hotels and travel plunged 31% plunge during the March quarter, Meituan’s much smaller new initiatives segment -- which includes bike- and car-hailing -- grew sales 4.9%, aided by the launch of a new grocery delivery service. Hotels remained hardest-hit: in the week of May 11, domestic room nights were at about 70% pre-pandemic levels.While Meituan is expanding offerings to sell things like handsets and farm produce, rivals including Ant Group and SF Express, both backed by Alibaba Group Holding Ltd., are elbowing their way into Meituan’s core takeout business. Alibaba’s food-delivery arm Ele.me is also engaging in a subsidy battle with the startup for market leadership.(Updates with target increases by brokerages in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Meituan Shows What Really Matters in a Pandemic
      Bloomberg

      Meituan Shows What Really Matters in a Pandemic

      (Bloomberg Opinion) -- Meituan Dianping suffered from the Covid-19 pandemic in all the ways that investors would have expected: In-person activities got stung, food deliveries stayed relatively resilient and groceries thrived. As a result, revenue dropped and losses widened.What’s surprising is the area where China’s leading delivery and bookings provider benefited most: advertising. Even with business activity decimated, suppliers who rely on Meituan’s connection with customers kept spending money to chase the few orders that were available. Ad spending on food delivery climbed 21%, while that same subcategory in bookings only dropped 8%. This latter figure is remarkable because the number of hotel room nights plunged 46%. These strong results helped lift the stock almost 10% in early Tuesday trading.This comes as revenue in Meituan’s only profitable division — the one that handles restaurant and hotel bookings — dropped 31%, which cut earnings there by 57%. Food-delivery sales fell a mere 11%, with losses narrowing by more than half. On the upside, demand for grocery shopping and micro loans drove the company's new initiatives business 5% higher. Overall, operating loss widened 32% to 1.7 billion yuan ($238 million).I discussed Meituan’s advertising strategy six months ago, likening it to the virtuous cycle deployed by Amazon.com Inc. Having gathered both consumers and suppliers, Meituan can leverage that critical mass to extract income beyond simple commissions. To get ahead of the competition, restaurants not only need to be on the platform, but pay to be seen.In an investor call Monday night, management highlighted that big brands are jumping aboard. With stores closed and consumers afraid to go out, those that previously survived purely from in-store dining realized that delivery is critical. Customers, meanwhile, wanted food from the premium establishments because they’re perceived to be safer and more hygienic. It was a win-win.Except if you’re a little local eatery that’s made its business on stir-fry and two-dollar noodles. While millions of consumers will again one day appreciate the convenience and camaraderie of a quick, cheap meal at the neighborhood joint, volumes could drop sharply if people continue to embrace delivery. Now when they vie for ad space, smaller restaurateurs will be competing with a new wave of branded outlets that have larger marketing budgets.This will still be good for Meituan. The company’s earnings show that when the market is crowded and the pie is shrinking, advertising isn’t a luxury, it’s a necessity. What this portends for the future of small businesses amid an ongoing economic slowdown, however, is less encouraging.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Thomson Reuters StreetEvents

      Edited Transcript of 3690.HK earnings conference call or presentation 25-May-20 11:00am GMT

      Q1 2020 Meituan Dianping Earnings Call

    • China's Meituan Dianping posts Q1 loss, warns virus impact to continue
      Reuters

      China's Meituan Dianping posts Q1 loss, warns virus impact to continue

      Chinese food delivery giant Meituan Dianping posted a smaller-than-expected fall in revenue on Monday after its business was hit by nationwide virus curbs but cautioned that the pandemic would continue to have an impact. Total revenue fell to 16.75 billion yuan from 19.17 billion yuan a year earlier. Beijing-based Meituan, whose sprawling business ranges from hotel booking to ride hailing, warned it would be affected by the pandemic for the rest of the year.

    • Financial Times

      Meituan Dianping gains ground after coronavirus

      China’s biggest food delivery app, Meituan Dianping, said sales had bounced back in May after suffering a near 13 per cent drop and widening losses as the coronavirus crisis hit its first-quarter results. Wang Xing, Meituan’s chief executive, said there had been a “dramatic drop in our food delivery volume” from the end of January to late February, but the company still posted a better set of quarterly results than analysts expected. Its group-buying and travel booking business shrank 31 per cent. Travel is Meituan’s most lucrative segment.

    • Bloomberg

      Baidu Investors Fell Out of Love Years Ago

      (Bloomberg Opinion) -- Five years ago, Baidu Inc. founder and Chairman Robin Li sat down with Bloomberg News to explain how foreign investors were getting it wrong.Listed on the Nasdaq a decade earlier, shares of the Chinese search-engine provider had taken a beating over the prior year, and Li’s chief complaint was that Americans just didn’t appreciate the coming changes in its business. The trend in China was toward services like delivery and ride-hailing, as well as bookings for restaurants, beauty salons and doctors. This online-to-offline economy would eclipse search revenue, he predicted.Now, it seems that Li has lost patience. Baidu is looking into the possibility of delisting its shares from the Nasdaq and moving to an exchange closer to home, Reuters reported Friday, citing three people familiar with the matter. Baidu thinks it’s undervalued, according to the report.The backdrop to these discussions is rising hostility to U.S. investments in Chinese assets amid worsening relations between the two countries. The U.S. Senate passed a bill last week that would force companies to delist unless they can prove they’re not under the control of a foreign government.That sounds like a good excuse for Baidu to look for the exit. The reality is that investors lost patience with its management years ago. It was inevitable that the company would seek one day to list elsewhere, as Alibaba Group Holding Ltd. has already done. Baidu’s U.S.-traded stock fell 15% between that September 2015 interview and the end of last year, before the pandemic hit. Over the same period, Alibaba climbed 248%.Li’s problem is that his company failed to grasp the transformation he was talking up half a decade ago. While Alibaba and Tencent Holdings Ltd. have successfully moved into new areas like payments and physical retail, and upstarts like Meituan Dianping and Pinduoduo Inc. now dominate delivery and social-commerce, Baidu has barely changed.Its core business still centers on advertising and accounts for 73% of revenue, which climbed just 2% last year. Investments into new realms like artificial intelligence and autonomous driving have yet to bear fruit. Its other major sales contributor, iQiyi Inc., a video-streaming platform that listed separately on Nasdaq in March 2018, continues to lose money.Around the time that Li complained foreign investors weren’t getting it, some of his contemporaries decided to move home where they felt Chinese investors had a better understanding and would reward them with higher valuations. Internet security company Qihoo 360 Technology Co. was taken private by a consortium that included Citic Group for $9.3 billion in December 2015. It relisted in Shanghai in 2018 via the purchase of elevator maker SJEC Corp., and now trades under the name 360 Security Technology Inc. Chinese investors have soured on 360 Security, pushing the company’s market value down by more than a third since February. There’s a warning for Li. Investors in China won’t assign a higher valuation to a returning company unless it has a convincing growth story to tell. Baidu was a pioneer when it listed on Nasdaq in 2005, paving the way for dozens of Chinese internet stocks to follow. Touted as the Google of China, it symbolized the potential of the sector for American investors. Those days are long gone: Baidu has been eclipsed as China’s technology darling by fasting-growing companies such as Alibaba and Tencent.The problem for Li isn’t that investors don’t understand his business. It may be that they understand it too well.  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Meituan Dianping Announces Financial Results for the Three Months Ended March 31, 2020
      PR Newswire

      Meituan Dianping Announces Financial Results for the Three Months Ended March 31, 2020

      Meituan Dianping (HKG: 3690) (the "Company" or "Meituan"), China's leading e-commerce platform for services, today announced the unaudited consolidated results of the Company for the three months ended March 31, 2020 ("1Q2020").

    • Meituan Demonstrates its Contributions with the 2019 Corporate Social Responsibility Report
      PR Newswire

      Meituan Demonstrates its Contributions with the 2019 Corporate Social Responsibility Report

      Meituan Dianping (HKG: 3690), China's leading e-commerce platform for services, today released its 2019 Corporate Social Responsibility Report (or "the Report") to demonstrate how the company has created value for users, industry and society through platform resources and technology innovation.

    • Hang Seng Revamps Benchmark Index to Open Door for Alibaba
      Bloomberg

      Hang Seng Revamps Benchmark Index to Open Door for Alibaba

      (Bloomberg) -- Hong Kong’s Hang Seng Index will include dual class shares and secondary listings, allowing Chinese giants such as Alibaba Group Holding Ltd. into the city’s benchmark to provide a potential boost for passive investors who have for years struggled with lackluster returns.Hang Seng Indexes Co., announced the long-awaited change on Monday in Hong Kong, a step that will help move the benchmark away from a heavy dominance of financial shares. Dual class and secondary listings will each be subject to a 5% weighting cap, surprising some investors who had been hoping for a 10% weighting for Alibaba, for example.The move came after “overwhelming market support,” HSI said. Any changes will come into effect during the August 2020 index review and encompass only companies coming from Greater China.The shift will affect about $30 billion in pension fund assets and exchange-traded funds that track the index, and could spur a flood of local share sales by U.S.-listed firms. Dual class shares were long blocked from listing in Hong Kong due to concerns over the unequal voting rights until Xiaomi Corp. became the first in 2018. Alibaba joined the bourse last year after a $13 billion secondary listing.Meituan Dianping, China’s largest food-delivery website, is also a potential candidate for inclusion, while JD.com Inc. is considering a secondary listing of its own in the city.“It’s a bit surprising to me that Hang Seng caps the market weight at 5%,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai Co. “But it’s understandable, since the indexer might want to take it step by step to avoid a sudden change on the Hang Seng Index, since each tech firm is relatively very big by market cap.”Wen expects the cap to lifted eventually to 10%, “but it won’t happen in the next 3 to 6 months.”Daniel Wong, a director at HSI, said at a press conference that the cap “has room to rise.”About half of the total weighting of the Hang Seng Index is in financial firms, compared with about 15% on average for benchmarks in Europe, the U.S., Japan and mainland China, according to data compiled by Bloomberg. The gauge has gained 1.7% a year on average in the past decade, versus 5.2% for the MSCI All-Country World Index. In January, the Hang Seng approached its lowest level relative to the MSCI measure since 2004.HSI said that any shares that carry weighted voting rights, typically those held by the founders of the company, will be considered as non-freefloat, and not eligible for the index. While for secondary listings, any shares held as overseas depositary receipts will be ineligible, further limiting the impact of Alibaba on the index.“Aibaba has about 20% of total outstanding shares in Hong Kong and the remaining are in the U.S.,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd., by phone from Hong Kong. “Even if WVR shares and U.S. portions are not counted as free float in Hang Seng’s calculation, it still easily has a 5% weight if included into the index.”Separately, the HSI consultation conclusion also said no additional limits will be placed on financial stocks.Managers of passive index pension funds will now have to follow the adjustment to include weighted voting rights shares, said Michael Chan, managing director of Hong Kong-based Gain Miles MPF Consultant Ltd. Despite institutional concerns over the corporate governance issues of dual class share companies, which gives some shareholders more weight than others, Chan said it won’t create much stir locally since retail investors are largely indifferent to how their pension money is placed.(Adds comment from HSI in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Hang Seng Index Set for Major Revamp That Paves Way for Alibaba
      Bloomberg

      Hang Seng Index Set for Major Revamp That Paves Way for Alibaba

      (Bloomberg) -- The 50-year old Hang Seng Index is poised to embrace change, and it couldn’t come soon enough for investors forced to put up with years of dismal underperformance.On Monday at around 4:30 p.m. in Hong Kong, the compiler of the gauge is expected to announce whether companies with secondary listings and unequal voting rights will be included for the first time, namely Alibaba Group Holding Ltd. Doing so would open the door to transforming the Hang Seng from a gauge overstuffed with banks and insurers to one that better reflects the technological dynamism of China’s economy.Alibaba -- one of China’s most valuable companies -- launched a secondary listing in Hong Kong in November. Another potential candidate for inclusion is Meituan Dianping, China’s largest food-delivery website, while JD.com Inc. is considering a secondary listing of its own in the city. With almost $30 billion of pension-fund assets and exchange-traded funds tracking the gauge as of December, such a change could spur a flood of local share sales by U.S.-listed firms.“The decision is going to completely change the nature of index, which has been characterized as one with low valuation and low growth rate for a long time,” said Yang Lingxiu, strategist at Citic Securities Co.About half of the total weighting of the Hang Seng Index is in financial firms, compared with about 15% on average for benchmarks in Europe, the U.S., Japan and mainland China, according to data compiled by Bloomberg. The gauge has gained 1.7% a year on average in the past decade, versus 5.2% for the MSCI All-Country World Index. In January, the Hang Seng approached its lowest level relative to the MSCI measure since 2004.The process of adding the likes of Alibaba may take some time, however. “In order to reduce the one-off impact on the market, the index may propose adding the weight of Alibaba gradually,” said Chi Man Wong, analyst at China Galaxy International Financial Holdings. Alibaba is the biggest company listed in Hong Kong by market cap and is the second most actively traded stock in the past 30 days, just after the Hang Seng Index’s largest component Tencent Holdings Ltd., according to data compiled by Bloomberg.The index would need to delete two companies to add Alibaba and Meituan, as current rules require the number of firms on the gauge to be fixed at 50. Component maker AAC Technologies Holdings Inc. and snack firm Want Want China Holdings Ltd. are among likely candidates for deletion due to their smaller market capitalization, according to traders.The addition would raise the Hang Seng Index’s forward price-to-earnings ratio to about 12 from the current 11, making it more expensive than Shanghai Composite Index, data show.Ultimately, the weight of technology and consumer discretionary sectors’ could surge from the current single digits to more than 30%, if all U.S.-listed Chinese companies that match the Hang Seng’s requirements list in the city and are included in the index, according to Citic Securities Co.To be sure, giving greater weight to companies with unequal voting rights could raise investor concerns.“The key issue is that weighted voting rights create an opportunity for someone to have greater influence than their economic ownership would suggest,” said Gabriel Wilson-Otto, head of stewardship Asia Pacific at BNP Paribas Asset Management. “The underlying concern is that this heightens the potential for agency risk, and reduces avenues of recourse if the company does something that’s not in the best interests of the minority shareholders.”Investors in some U.S-listed Chinese firms have recently been burned by accounting scandals, raising questions about the standard of corporate governance at some companies.Two Accounting Scandals in a Week Burn China Inc. Investors (1)The Hang Seng Index would nevertheless benefit from luring more U.S.-listed companies, said Cliff Zhao, head of strategy with CCB International Securities Ltd.“More funds will be attracted to follow the index, which is a good thing for Hong Kong’s stock market.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Meituan Dianping's (HKG:3690) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?
      Simply Wall St.

      Meituan Dianping's (HKG:3690) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?

      Most readers would already be aware that Meituan Dianping's (HKG:3690) stock increased significantly by 15% over the...

    • Meituan Dianping (HKG:3690) Just Reported And Analysts Have Been Cutting Their Estimates
      Simply Wall St.

      Meituan Dianping (HKG:3690) Just Reported And Analysts Have Been Cutting Their Estimates

      Investors in Meituan Dianping (HKG:3690) had a good week, as its shares rose 2.3% to close at HK$92.85 following the...

    • Meal Kits Are the Next Best Thing in Covid-19 Pandemic
      Bloomberg

      Meal Kits Are the Next Best Thing in Covid-19 Pandemic

      (Bloomberg Opinion) -- A whole generation of tech startups was built on the premise that the most lucrative business models aim to connect people or businesses on one side of the marketplace with people or businesses on the other side.Whether Tinder, Uber Technologies Inc. or Airbnb Inc., the platform theory held that acting as a facilitator for someone else’s offering meant you could scrape off commission while maintaining an asset-light business whose low operational costs rewarded you with high profitability. But no one foresaw an event that would shut down a whole side of the marketplace, and the coronavirus pandemic has done just that. For Airbnb, self-isolation means that nobody is travelling. There is plenty of supply with millions of listings still on the site, but the demand has all but evaporated. The same goes for Uber rides.In food delivery, it’s the supply side that has difficulties. On the whole, services like Uber Eats, Grubhub Inc., Deliveroo and Just Eat Takeaway depend on existing restaurants to cook meals. But for many, if not most, of those restaurants, the main business was still preparing food for on-site dining. Now that’s not possible in the U.K., France, Italy and elsewhere, continuing to operate as a delivery-only operation fundamentally changes the economics of the business: Restaurants still have operating costs, except now they might have to direct a quarter of their income to the food delivery platforms. Many have simply shut their doors completely because they can’t make it work. Chinese delivery platform Meituan Dianping is already feeling the impact, as my colleague Tim Culpan wrote yesterday. (Uber Eats and Grubhub are trying to counter the trend by subsidizing some restaurant costs.)Which is why companies like HelloFresh SE and Blue Apron Holdings Inc., long the subject of Silicon Valley derision, suddenly seem to have very sensible business models. On the surface, they are similar to the food delivery platforms: They too deliver food.The difference is that, because they deliver meal kits they put together in their own kitchens, they control the supply, whereas a firm like Deliveroo has to worry about ensuring it has enough restaurants and customers. HelloFresh’s concern is simply demand. Even then, there’s less need for as high a density of demand than for takeaway food — though of course it helps. Because customers cook the meals themselves, there’s less anxiety about a dish congealing in the panniers of a moped. While Deliveroo has started operating some of its own kitchens, it still has to compete with Grubhub, Just Eat Takeaway and Uber Eats on two fronts. HelloFresh can concentrate on one: customers.The upshot is that business is soaring for the meal-kit firms. HelloFresh said Monday it’s expecting first-quarter sales of between 685 million euros ($750 million) and 710 million euros, up from 420 million euros a year earlier. Analysts had been expecting revenue of 553 million euros. The company anticipates adjusted first-quarter Ebitda of as much as 75 million euros — in just three months, it's set to make about three quarters of the profit that analysts had anticipated for the full year. Uber, which isn't expected to be profitable at all on a similar basis until 2022, has seen just a 10% jump in U.S. orders at its food delivery business, according to The Information.HelloFresh stock is up 70% this year, valuing the Berlin-based firm at 5.2 billion euros — more than Grubhub or grocers Casino Guichard Perrachon SA and Wm Morrison Supermarkets Plc. Beleaguered Blue Apron’s shares have jumped more than fourfold from a March 13 low, giving it a $156 million market capitalization, though its ability to capitalize on surging demand is more limited — it has been cutting costs in recent months. Meanwhile HelloFresh is expanding: It plans to add 400 employees at a site in Oxfordshire, near London, according to the BBC.Silicon Valley dogma tends to dictate that assets are bad. But in some instances, more control over the factors of supply can be very satisfying indeed.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • A Look At The Fair Value Of Meituan Dianping (HKG:3690)
      Simply Wall St.

      A Look At The Fair Value Of Meituan Dianping (HKG:3690)

      Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Meituan Dianping...

    • Thomson Reuters StreetEvents

      Edited Transcript of 3690.HK earnings conference call or presentation 30-Mar-20 11:00am GMT

      Q4 2019 Meituan Dianping Earnings Call

    • Chinese Shoppers Can Go Out Again. Online Buys Show They Won’t
      Bloomberg

      Chinese Shoppers Can Go Out Again. Online Buys Show They Won’t

      (Bloomberg) -- China’s consumers are shopping online again. But their purchases signal they plan to stay indoors for the foreseeable future, dashing hopes for a spending recovery as the nation contemplates its post-virus world.Lunch boxes saw 120 times more searches in the last 30 days as the virus pushes people to prepare their own food even after returning to the office, according to March 26 data from Index.1688, which collects information from Alibaba Group Holding Ltd.’s shopping sites.Portable tableware, foldable spoons and work clothing also surged in popularity, while items typically given as gifts or used for travel and outdoor activities haven’t shown signs of recovery.Yoga mats and hula hoops for home exercise also climbed in demand, a bad sign for gyms waiting for the return of patrons.The data undermines predictions of a V-shaped recovery in the world’s biggest consumer market that has seen more than 80,000 infections and 3,000 deaths from Covid-19. While big operators like Starbucks Corp. and Yum China Holding Inc. have been reopening outlets, they face a public that’s preferring to stay home after work and continue to social distance, even though official data indicates China’s number of new infections fallen to zero.China’s experience may prove an important indicator for how the rest of the world recovers. Even after outbreaks are contained, lingering fear is likely to change consumer behavior for longer than expected.“Consumers are still cautious about going out and many of those venues are not yet back to full working mode,” said Jason Yu, Shanghai-based general manager of Kantar Worldpanel. Items for a return to work, such as instant coffee, hair and skin-care products, are recovering ahead of the market, he said.Other products to post a spike in searches include contact-less thermometers, suits and stationery, according to Index.1688.A report by JD.com Inc.’s research center also shows work-related consumption speeding ahead of other categories. China’s second-largest e-commerce company sold five times more lunch boxes in late February than a month earlier, while powerbanks, office equipment and stationery are also high up the list.“Consumption of staples is clearly outshining discretionary or luxury goods in what is still very much a lukewarm and uneven recovery,” Ned Salter, head of global research at Fidelity International, said in a statement. “We need to see more consumer confidence to sustain the improvement and that will depend on how well China deals now with imported cases to contain the virus fully.”A Coronavirus Vaccine in 18 Months? Experts Urge Reality CheckRetailers in China have been cautious in their forecasts since the virus emerged.Yum China Holding Inc., which operates KFC and Pizza Hut in the country, has said the second quarter will be “challenging” and patience is needed. Anta Sports Products Ltd., the country’s biggest sportswear maker, forecasts the first six months of 2020 will be “tough throughout”.About 60% of listed restaurant operators in China are at risk of running out of cash within six months, according to data compiled by Bloomberg and company reports.With the food and beverage industry reeling, local governments are trying to boost consumption by urging officials to dine out in restaurants and shop in malls. Vouchers are being given out by cities including Hangzhou and Nanjing as well as shopping platforms Meituan Dianping and Suning.com Co. to spur spending.While China’s new infection numbers have plunged, the pandemic is widening globally with cases worldwide now topping 786,000 and more than 37,800 dead. Chinese factories are experiencing a second shockwave as western clients cancel orders en masse.Luiz Chen, a 31-year-old auditor in Guangzhou, recently bought moisturizing masks and a new dress before returning to the office but said she won’t be treating herself to anything expensive after her employer froze bonuses for the past two months.“I’m scared to get a salary cut or even lose the job,” said Chen. “Economic crisis seems not far away. How can I have the good mood to buy buy buy?”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • China’s Meituan Soars After Signaling Comeback From Covid-19
      Bloomberg

      China’s Meituan Soars After Signaling Comeback From Covid-19

      (Bloomberg) -- Meituan Dianping surged as much as 10% after the internet services giant said its food delivery business began to recover in March, when shuttered restaurants re-opened and much of China returned to work.Meituan, backed by Tencent Holdings Ltd., told analysts on a conference call Monday that demand for food delivery picked up this month, putting it on track for a longer-term recovery after Covid-19 froze a swath of the world’s second largest economy. But it also projected an operating loss and revenue decline this quarter, and warned that the full extent of fallout from the pandemic -- particularly on its travel and ride-sharing businesses -- remained uncertain in 2020. Its stock was up roughly 7% in early trade after Daiwa lifted its price target and said Meituan should return to growth in the second half.Meituan joined sector bellwethers from Sony Corp. to Apple Inc. and Twitter Inc. in emphasizing the difficulty of parsing an unprecedented event and its impact on their business. The Chinese company is one of the most exposed of the country’s major tech corporations to the spread of Covid-19. The company’s outlook is further clouded by China’s worsening economy, which may contract this quarter for the first time since 1989, denting consumer spending.“Although we have seen gradual recovery from March especially for food delivery business, the active merchants of our in-store service category remain at a very low level as of late March,” Chief Financial Officer Chen Shaohui said on the call. “We expect consumers will need more time to build their consumption confidence for local consumption especially those discretionary consumption scenarios in our in-store business.”What Bloomberg Intelligence SaysDespite mild improvements in Meituan’s local services in late March as the virus outbreak subsided in China, the timing of a full operational recovery remains highly uncertain. Its food-delivery business may stay slow, with many restaurants still closed and consumers wary of interactions with delivery personnel. Its in-store, hotel and travel businesses may take even longer to recover, as users stayed home. Strong 42% sales gains and 117% gross-profit expansion in 4Q suggest Meituan’s longer-term growth drivers are intact. The company plans to maintain strategic investments in B2B food distribution and restaurant management systems.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Read more: Chinese Abandon Food Delivery Fearing Drivers Will Spread VirusThe coronavirus dealt an as-yet unquantifiable blow to a company that, before the outbreak erupted in January, was on track to take its place among the country’s most influential technology corporations. While Meituan’s stock has taken a pounding like every other Chinese internet firm, a 2019 rally secured its position as China’s largest publicly traded internet firm after Alibaba and Tencent.“Market expectations were very low as investors have seen the damage COVID-19 has inflicted on offline service providers,” Nomura analyst Shi Jialong wrote.Meituan on Monday reported a better-than-expected 42% jump in revenue to 28.2 billion yuan ($4 billion) in the three months ended December, compared with the 26.5 billion-yuan average of analysts’ estimates. It booked a profit for the quarter of almost 1.5 billion yuan, versus expectations for a loss.The company still harbors ambitions well beyond its current core business. Meituan had been diversifying from takeout, investing in other online services including travel, competing directly against Alibaba Group Holding Ltd. But others are elbowing their way into Meituan’s turf. Ride-hailing giant Didi recently launched a delivery service similar to Uber Eats across major Chinese cities, while Alibaba-backed Alipay is also morphing into an all-in-one online services platform that allows everything from restaurant booking to car-hailing.Executives on Monday stressed the company will keep investing in new initiatives from bike-sharing to online groceries, an e-commerce segment that accelerated sharply after the pandemic forced millions to work -- and cook -- from home. Meituan said it’s setting up the logistics to support that business while exploring ways to roll out the business to more Chinese cities.“The pandemic has already caused severe disruptions to the daily operations of our merchants, including restaurants, local services merchants and hotels, which in turn resulted in downward pressure on our own operations for the first quarter of 2020,” Meituan said in its filing. “Due to the high uncertainty of the evolving situation, we are unable to fully ascertain the expected impact on full year 2020 at this stage.”Read more: Virus Outbreak Exposes $46 Billion Rift in China’s Tech IndustryFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Bloomberg

      Even Food Delivery Is Getting Hit in Virus Siege

      (Bloomberg Opinion) -- The various levels of lockdown and quarantine across China haven’t proven a golden opportunity for the biggest food delivery and bookings company, a warning for on-demand service providers elsewhere as more of the world stays at home to avoid the coronavirus.Meituan Dianping says it will post a loss for the first quarter ending Tuesday following a decline in revenue. The Beijing-based company’s business consists of three main divisions — food delivery, restaurant and travel bookings, and other services such as car hailing, bike rental and groceries.Bookings, which account for around 23% of revenue, took the biggest hit. That was predictable. Consumers aren’t keen to take a seat at a restaurant or a night at a hotel amid a deadly disease outbreak, and widespread travel curbs meant moving around China wasn’t an option.Food was more of a surprise. Two months ago amid the Lunar New Year break, I theorized that such deliveries  — at 56% of Meituan’s revenue — might bounce back quickly as customers opted to stay in rather than eat out. I was wrong.Thousands of vendors on Meituan’s platform were forced to close either voluntarily or by mandate, and thus couldn’t provide meals. Those who did stay open were often met with fear and complications on the demand side.Many customers had concerns not only over the safety of meals coming from restaurants, but the drivers who delivered them. Those still willing to order online were met with layers of challenges as local governments, neighborhoods and buildings exercised strict controls over who could come and go. There was no supply bottleneck for drivers; Meituan noted plenty of capacity on hand.Three weeks ago, Alibaba Group Holding Ltd. said that its own courier and food delivery services, Cainiao and ele.me, were back to full staffing. But the food business was still down because many restaurants remained closed.An upside has been grocery delivery. Meituan’s two services, self-operated and marketplace, have seen strong growth during the crisis, a trend that echoes what Alibaba experienced with its Freshippo service. In many cities, consumers either cannot or prefer not to step out to shop. They’re apparently less afraid of groceries brought to their door than fresh-cooked meals.Even as China returns to a certain level of normalcy, food delivery may struggle for another few months. Most companies are maintaining degrees of isolation, such as working from home or rotating shifts. Taking lunches to places of business is normally an important part of the consumption scenario.  As investors start to ponder the outlook for Delivery Hero SE, Just Eat Takeaway, and GrubHub Inc., they’d do well to look at how their China peers have fared during the virus battle. Collectively, these companies get most of their revenue from Western markets that are now imposing lockdowns to battle the pandemic. They’re implementing contact-free and non-cash deliveries to make customers feel safe.That may not be enough. While it’s true that people still have to eat, China’s experience shows that this doesn’t mean consumers will necessarily order delivery or that restaurants can supply them.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Meituan Dianping Announces Financial Results for the Year Ended December 31, 2019
      PR Newswire

      Meituan Dianping Announces Financial Results for the Year Ended December 31, 2019

      Meituan Dianping (HKG: 3690) (the "Company" or "Meituan"), China's leading e-commerce platform for services, today announced the audited consolidated results of the Company for the year ended December 31, 2019.

    • Food Delivery Firms Start Contactless Services During Pandemic
      Bloomberg

      Food Delivery Firms Start Contactless Services During Pandemic

      (Bloomberg) -- The increase in quarantined customers has forced food delivery companies to balance a potential boom in orders alongside the risk of spreading sickness to both customers and drivers.Both Uber Technologies Inc. and Deliveroo have said they’re setting aside funds to compensate drivers who might fall ill or are forced to be quarantined.London-based Deliveroo budgeted several million pounds to compensate drivers for lost earnings due to the disease, according to a person with knowledge of the matter who asked not to be identified because the preparations are private. The company will compensate impacted drivers for 14 days above the U.K. statutory sick pay rate, the person said.Uber has said it will offer drivers in the U.S., U.K. and Mexico compensation for a period of time if they’re diagnosed with Covid-19 or placed in quarantine, and the company is planning to implement the program worldwide.In a message sent to U.K. customers, Deliveroo Chief Executive Officer Will Shu said the company was launching a “no-contact” service, letting customers ask drivers to leave their food on doorsteps rather than pass it from one hand to another. Uber said Wednesday that users could leave a note on the app asking for a similar drop off.The person familiar with Deliveroo’s strategy, due to roll out next week, said riders will also be able to elect a no-contact delivery if they choose.Read more: Boutique Economy Slammed as Virus Makes Personal Touch ToxicDeliveroo’s other provisions include ordering hand sanitizer on behalf of drivers, and letting customers in some areas of the U.K. order kitchen and household products from supermarkets via the app.Takeaway.com said that from Friday all its deliveries from restaurants in Europe would be made contact-free. “Delivery couriers are being instructed to ring the customers’ doorbell and to leave the delivery bag at the door,” a spokesperson for the company said in an email.The workers’ funds have been set up at time when ride-hailing companies are challenging attempts by lawmakers and unions to increase benefits to drivers. In the U.K., the Independent Workers’ Union of Great Britain has challenged companies such as Uber on whether drivers should be entitled to overtime and holidays.“If sick pay is the right thing to do in a pandemic when the world is watching, it’s the right thing to do, period,” said Greg Howard, secretary for IWGB’s couriers and logistics branch. “That Deliveroo told the press about this fund before it said a word to its riders is indicative of its priorities.”In the U.S., Uber and its rivals are also appealing a new law that may end up classifying their workers as employees.Tensions are rising among those workers in areas hardest hit by the virus. A letter from unionized delivery staff in Milan, Rome, Naples and Bologna on Thursday called for a strike because it said they lacked adequate rights to protect themselves given the health risk.“Our life and health are worth more than a pizza, a sushi or a sandwich,” groups including the Bologna Riders Union wrote in a Facebook post.Governments have also taken steps to protect gig-economy workers, who are often considered contractors and don’t automatically get access to sick pay or other benefits from the companies they work for. U.K. finance minister Rishi Sunak pledged a 30 billion pound ($39 billion) stimulus package on Wednesday to help fight the impact of the coronavirus, promising statutory payments to everyone who’s been told to self isolate and more generous welfare packages. French labor minister Muriel Penicaud said in an television interview with LCI that the government is reviewing measures to provide financial relief to “precarious” workers hit by the crisis, including food delivery riders.Read more: Italy Shuts Down Shops, Restaurants After Virus Toll RisesThe data so far is showing that as people spend more time at home, they’re getting take out more often, UBS Group AG analyst Hubert Jeaneau said in a note published Thursday. In Italy, where officials ordered a country-wide lock-down that’s shut nearly everything except grocery stores and pharmacies, customers could still order takeout meals from apps like Deliveroo, Glovo and Just Eat.Still, that trend could quickly reverse, Jeaneau said. In China, fear of being infected by sick drivers caused many customers to stop using delivery services, with some building complexes halting access to food delivery drivers. Meituan Dianping and Alibaba Group Holding Ltd., the two biggest delivery companies, also introduced no-touch delivery to help combat concerns.“This can turn negative we think, if there are concerns around contact with food preparation and/or riders,” Jeaneau said in the note. Customers may also be out of luck if drivers are taken off the road or restaurants are shut, he said.(Updates with details on rider elections in 6th paragraph, Takeaway.com in 8th, union comments in 10th)\--With assistance from Alessandro Speciale, Helene Fouquet and John Follain.To contact the reporters on this story: Nate Lanxon in London at nlanxon@bloomberg.net;Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.netTo contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Amy ThomsonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Bloomberg

      Driverless Delivery Van Startup Sees Demand Surge Amid Outbreak

      (Bloomberg) -- The coronavirus has hurt many companies in China and around the world. Neolix, a driverless delivery business based in Beijing, isn’t among them -- in fact, it’s seen a jump in demand.The startup, which has attracted customers including Alibaba Group Holding Ltd., Meituan Dianping and JD.Com Inc., has booked orders for more than 200 vehicles in the past two months; before then, it had only produced 125 units since manufacturing began last May, founder Yu Enyuan said in an interview.Amid the virus anxiety that has disrupted businesses and supply chains, China’s push into autonomous transport and the future of delivery is getting an unexpected boost. Neolix’s small vans help customers reduce physical contact and address labor shortages caused by lingering quarantines and travel restrictions.Neolix’s inventories have been depleted during the epidemic as its vehicles have been used to deliver medical supplies in hospitals, including in Wuhan, at the outbreak’s epicenter. Its vans are also being used to help disinfect streets and move food to people who are working on the front lines to curb the spread of the virus, Yu said.“Demand has been surging since the virus outbreak and more importantly, people’s perception toward driverless delivery had a complete 180-degree shift,” Yu said. “People realize that such vehicles can get things done when it is risky for a human being to do so.”Regulatory BarriersBillionaire Jack Ma three years ago forecast China would have one billion deliveries a day within a decade and that commercialization of driverless-courier technology could provide lessons for autonomous vehicles carrying passengers. Yet there have been restrictions for such vehicles to be used on open roads. During the unprecedented virus outbreak, regulatory barriers are being eased, as roads are empty.“China’s digital services economy has prospered during the crisis as people shifted to online consumption,” said Bill Russo, CEO of consulting firm Automobility Ltd. “This will accelerate the commercialization of autonomous service delivery solutions. Neolix and others stand to benefit.”Local authorities in China are offering incentives to fund purchase and operation of driverless delivery vans in their jurisdictions for up to 60% of the tag price, according to Yu. The government subsidies will speed up promotion of the vehicles, according to the company, which expects to sell 1,000 units this year.“The industry has entered into a fast expansion phase because of the virus,” Yu said.Autonomous VansThe development of autonomous vans is accelerating not only in China. Delivery robot company Nuro Inc., Neolix’s rival in the U.S., won the first federal safety approval for a purpose-built, self-driving vehicle last month, paving the way for its plans to deliver groceries autonomously in neighborhoods. The approval, valid for two years, indicates that regulators at the Department of Transportation think specially built robot cars can start taking to the roads in the U.S.“It is great advancement for all companies developing such delivery vehicles,” Yu said.Yet some industry observers are more cautious about the near-term prospects. China’s relatively low labor costs may undermine promotion of autonomous delivery for some time, said Cui Dongshu, secretary general of the China Passenger Car Association, who sees the current demand as temporary.Russo, the consultant, said he thinks the order uptick for companies like Neolix will translate to future demand as well.“New habits are formed and new capabilities are needed,” Russo said. “The consumption pattern has shifted and this will likely be viewed as an essential set of capabilities in the new normal, post-coronavirus world.”To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.netTo contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Jodi Schneider, Ville HeiskanenFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Baidu Becomes Latest Tech Giant to Deliver Disappointing Outlook
      Bloomberg

      Baidu Becomes Latest Tech Giant to Deliver Disappointing Outlook

      (Bloomberg) -- Baidu Inc. predicted revenue may slide as much as 13% this quarter, joining its fellow technology giants in warning about the impact of the deadly coronavirus.China’s internet search leader forecast a 5% to 13% plunge in sales to between 21 billion yuan ($3 billion) and 22.9 billion yuan in the March quarter, missing an average projection for 23.4 billion yuan. Its U.S.-traded shares slid as much as 1.6% in extended trading.From Microsoft Corp. and Apple Inc. to Alibaba Group Holding Ltd., the world’s largest corporations have either scaled back on projections or warned of a hit to their operations from Covid-19. Apart from the uncertainty of the outbreak, Baidu has been grappling with a slowing home economy and competition from upstarts like ByteDance Inc. that’ve lured advertisers away and depressed marketing rates. Chief Executive Officer Robin Li said it will take time for the world’s No. 2 economy to recover.“The return of economic growth will be a long-term issue after the epidemic, but many new opportunities are emerging,” the billionaire founder told employees in an internal memo obtained by Bloomberg.Certain businesses can thrive despite the epidemic, including online entertainment and education, Li added. Baidu’s Netflix-style unit iQiyi Inc. projected a better-than-expected revenue gain of 2% to 8% this quarter.“The virus has affected consumer spending, so naturally advertisers will want to postpone their budgets,” said David Dai, a Hong Kong-based analyst with Bernstein.Read more: Virus Outbreak Exposes $46 Billion Rift in China’s Tech IndustryIn recent days, anxiety has mounted about the spread of the virus outside of China, where it originated. But Baidu executives on Friday emphasized they remained upbeat about a gradual return to normality.“Business activities have started to pick up as people return to work. At Baidu, our employees are gradually returning to the office, applying strict safety measures,” Chief Financial Officer Herman Yu told analysts on a conference call. “We assume businesses across China will do the same, and that our marketing services will pick up at a faster pace into quarter-end.”Baidu had earlier reported better-than-expected revenue for the quarter ended December, when ad demand stabilized and pressure from competitors eased. To offset stalling growth, it looked to improve its bottom line especially by tightening content costs related to iQiyi. Longer term, the company is investing gains from its core search and news services into divisions like driverless cars and smart speakers.Baidu’s shares rallied after the company reported preliminary revenue for the December quarter that beat the highest of analysts’ estimates, but that gain’s mostly been erased since the epidemic triggered a broader selloff of Chinese stocks. The company has been surpassed in market value by rivals like Meituan Dianping and NetEase Inc. after shedding more than $11 billion last year.“For the majority, or probably all of the industries who advertise on us, those kinds of demand don’t disappear -- they’re just postponed,” Li said on the call Friday. “If you plan to marry, you’ll still get married. If you plan to buy a car, you’ll still buy a car. If you plan to become prettier, you’ll still go for cosmetic surgery. This kind of demand will come back after the epidemic ends.”To contact the reporter on this story: Zheping Huang in Hong Kong at zhuang245@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Colum MurphyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

    • Virus Outbreak Exposes $46 Billion Rift in China’s Tech Industry
      Bloomberg

      Virus Outbreak Exposes $46 Billion Rift in China’s Tech Industry

      (Bloomberg) -- The coronavirus epidemic is exposing the dichotomy of the world’s second largest tech economy. Chinese businesses like Alibaba and Meituan with outsized footprints in the material world are rushing to contain the fallout while virtual denizens ByteDance Inc. and Tencent Holdings Ltd. ride a surge in social media and entertainment.It boils down to the difference between hawking analog and digital wares. Alibaba Group Holding Ltd. and Meituan Dianping have shed $28 billion of market value since Covid-19 erupted in central China in January because they depend on millions of people and trucks to ferry packages and meals through an increasingly tangled nationwide transport network. WeChat operator Tencent, which flogs virtual goods like costumes and armor in mobile games or sprinkles advertising online, has gained about $18 billion. Its market value now hovers around half a trillion dollars.More than any other company, Alibaba’s fate is intertwined with that of the world’s No. 2 economy. Its caution on Feb. 13 about weakening earnings exposed just how much China’s most valuable company depends on old-fashioned elbow grease in delivery, manufacturing and logistics. The e-commerce giant warned of a “significant” hit this quarter because the people who take orders, fabricate products and then ship them to doorsteps can’t get to their jobs. It’s a reminder of how much the fortunes of China’s tech giants hinge on unglamorous, analog tasks -- at their peak, Alibaba’s partners deliver upwards of a billion packages a day.“We just have fewer delivery people now because my co-workers couldn’t get back to work,” said a courier for Alibaba partner SF Express who would only give his surname as Qiu before dashing off. “Those of us still working are assigned more packages. Good thing I got a break during the Spring Festival,” he said, referring to the Lunar New Year holidays.Read more Alibaba Warns Virus Having Broad Impact on Chinese EconomyRead more: Chinese Abandon Food Delivery Fearing Drivers Will Spread VirusChina’s corporations are struggling to cope with the coronavirus outbreak to varying degrees. Some such as Tencent and TikTok-owner ByteDance are benefiting from a vastly increased audience as millions are confined to their homes, with mobile gaming and livestreaming their only recourse to entertainment. Tencent, which reports earnings in March, is expected to unveil a surge in time spent on games such as Honor of Kings and growth on WeChat. For now, analysts are projecting its fastest pace of sales growth since 2018 in both the December and March quarters.But few in tech offer as broad a glimpse into business under the epidemic than Alibaba. The company initially benefited from a surge in online shopping from millions confined by the largest work-from-home undertaking in history. Yet, it turns out, a lot of the millions of packages that get delivered every day are cheap items such as groceries and face masks. Consumers are eschewing pricier merchandise given growing fears that the eventual hit to the Chinese economy could be far worse than expected.“Logistics is probably the biggest bottleneck right now, but it is improving. However, it is not the only bottleneck,” said Jerry Liu, a Hong Kong-based analyst with UBS who expects things to get back to normal only around the second half. “We do assume weaker demand for e-commerce platforms even if online penetration is higher in recent weeks. Based on our checks, a part of that is due to less spending on things that are not urgent, such as apparel or electronics, versus outbreak prevention items or food.”Read more: How Fast Can China’s Economy Bounce Back from Virus LockdownAlibaba’s got other problems too -- like discontent in the ranks. Hangzhou, its home, is a city under self-imposed siege. Just an hour from Shanghai, the city famed for its scenic lake has imposed some of the harshest quarantine and coronavirus-prevention measures outside of the outbreak’s epicenter. Into its third week, the clampdown is posing unusual challenges to tens of thousands of employees that chieftain Jack Ma proudly proclaimed only last year were more than willing to go the extra mile.For one employee, the ordeal began weeks ago. Local officials barred the Alibaba staffer from returning to her own rental apartment for days because she was from out-of-town. She lived and worked from a colleague’s apartment, sending a selfie to her boss every morning to prove she was logged on and raring to go. She’s only allowed to leave her temporary quarters once every three days.“There’s no such thing as counting overtime hours at Alibaba,” said the 27-year-old who goes by Lilac but wouldn’t allow the use of her last name for fear of reprisal. “You have to check messages on DingTalk whenever it rings.”What Bloomberg Intelligence SaysAlibaba’s sales may contract in its core China retail marketplaces and local services business in the coming quarter even if the coronavirus outbreak subsides, as logistic and production disruptions faced by merchants could take time to resolve.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Read more: ‘Nightmare’ for Global Tech: Virus Fallout Is Just Beginning An Alibaba spokesperson said the company was helping merchants cope. Streams on Taobao Live, where brands and merchants showcase products to prospective shoppers, have more than doubled since the start of February, the company said in a messaged statement.“On our platforms and throughout our ecosystem, we’ve rolled out measures to mitigate much of the pain being felt by merchants and to restore ‘normalcy’ through technology,” the spokesperson said.Longer term, any hit to China’s economy will of course wallop consumer spending across the board -- regardless of whether it’s virtual or physical goods. That means Tencent and ByteDance get hammered too.But Alibaba has an ace up its sleeve. Its cloud computing arm is China’s leader and the foundation for much of a post-outbreak surge in online activity -- the virtual piping of increasingly digital businesses. Though barely a tenth of revenue at present, it’s been growing at 60%-plus year-on-year even before the epidemic.Their own warnings aside, investors know better than to count the company out. During the SARS epidemic of 2003, Alibaba not only remained operational despite stringent quarantine measures, it successfully launched Taobao from Ma’s apartment -- the online shopping platform that catapulted the company into the stratosphere.\--With assistance from Lulu Yilun Chen.To contact the reporters on this story: Zheping Huang in Hong Kong at zhuang245@bloomberg.net;Claire Che in Beijing at yche16@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.