Wang Xing, founder and CEO of Chinese local services giant Meituan, managed to find faster-than-expected growth in the first three months of 2024 as competition cools and international expansion continues. Analysts say the company, which has added almost $40 billion to its market value from a January low, might continue to benefit from these positive trends for the rest of the year.
Meituan is now the second-best performer on the Hang Seng Tech Index as its Hong Kong-listed shares rallied about 40% this year. The 45-year-old Wang, who now has a net worth of $9.5 billion according to Forbes estimates, streamlined operations at the company’s core local commerce unit—which includes food-delivery and hotel booking—and introduced more value-for-money products to attract frugal users
Those strategies are helping Meituan fend off the likes of Douyin, says Eric Wen, the Hong Kong-based founder of research firm Blue Lotus Capital Advisors. TikTok’s sister app in China was once keen to expand into food delivery, as it was able to direct viewers of live streams and video clips to place meal orders via incorporated links. But that ambition turned out to be expensive, as Douyin must build its own delivery fleet and offer coupons and discounts to make its products cheaper than Meituan.
“Meituan’s fundamentals are now on the positive side,” says Wen. Aside from easier competition, Meituan has made progress in international expansion, including the growth of the KeeTa food-delivery app in Hong Kong.
These helped the company increase sales at a faster-than-expected rate of 25% to 75.5 billion yuan ($10.4 billion) in the first quarter of 2024 from the same period a year earlier. Profit for the quarter was 5.4 billion yuan, up 60% year-on-year thanks partly to shrinking losses at some of its newer businesses such as community group-buying, which lets people bulk-buy groceries at cheaper rates. Analysts at CMB International expect those losses to keep shrinking, especially with the closure of underperforming warehouses and a reduction in discount coupons for users, according to a research note published via platform Smartkarma.
Yet Meituan still has to face China’s patchy economic recovery and there is no guarantee that Douyin won’t make a renewed push in food delivery by adjusting its strategies and possibly acquire small players in the industry.
Those are reasons that Wang is keen to take Meituan into more markets. During a Thursday analyst call, he said the company is looking at Europe, the Middle East and Southeast Asia.
Meituan is hoping to introduce the KeeTa app in Saudi Arabia’s capital of Riyadh as a first stop outside the greater China area, Bloomberg reported in April. But Wang also struck a cautious tone on yesterday’s call, emphasizing that those plans are still at an early stage.
“We are actually evaluating many different markets. And the Middle East or the Gulf countries is one of them,” Wang said. “But to be honest, it’s kind of a surprise to me that we received media coverage of Middle East operations so early. So we haven’t really launched anything there. We are just doing some preparation.”
