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A net loss of 15.6 billion, but only a loss of “face”?The operating profit of food delivery has doubled, and the leading position of Meituan is more stable
Source: Market Value Fengyun Pengyu
In the fourth quarter, the operating profit of the food delivery business reached 1.7 billion, a year-on-year increase of 96.7%, mainly due to the increase in the proportion of online marketing business revenue and the reduction of seasonal subsidies for riders.
On March 25, $Meituan-W (03690.HK)$ released its fourth-quarter results. In the fourth quarter, Meituan’s revenue was 49.5 billion yuan, a year-on-year increase of 30.6%. The annual revenue was 179.1 billion yuan, a year-on-year increase of 56%.
The new business burned money, making the company’s adjusted net loss in the fourth quarter of 3.936 billion yuan, a year-on-year increase of 174.0%. The adjusted net loss for the full year of 2021 is 15.6 billion yuan.
In October 2021, the State Administration for Market Regulation issued a fine of 3.442 billion yuan for Meituan’s “choose one out of two” suspected monopolistic behavior. The regulatory authority pointed out that Meituan abused its dominant market position in the food delivery platform service market.
Judging from the public data, although the loss is even greater, Meituan may just lose “face” and win the lizi. In the three major businesses, Meituan has made important progress, and the punishment has not affected the company’s profitability.
1. Double the operating profit of catering takeaway
In the fourth quarter, the food delivery business increased by 21.3% year-on-year to 26.1 billion yuan, still the largest source of income; in-store, hotel and travel business increased by 22.2% year-on-year; new business segments (mainly retail business, B2B catering supply chain services) Revenue increased by 58.7% year-on-year, the fastest growth rate.
Compared with other companies, $Alibaba (BABA.US)$ (09988.HK)’s local life service revenue increased by 27% in the fourth quarter, higher than Meituan’s 21.1%, which roughly means that Meituan’s takeaway market share has reduced.
However, in the context of the high demand for the reduction of commissions on the food delivery platform, Alibaba’s local life revenue increased rapidly in the fourth quarter, but the loss increased by 15.3% year-on-year to 4.99 billion. The operating profit of Meituan’s food delivery business has grown significantly.
In the fourth quarter, the operating profit of the food delivery business reached 1.7 billion, a year-on-year increase of 96.7%, and the operating profit margin was 6.6%, a year-on-year increase of 2.5 percentage points.
The improvement in the profit of the takeaway business was mainly due to the increase in the proportion of revenue from the online marketing business and the reduction of seasonal subsidies for riders.
In the catering takeaway business, the current distribution service revenue contributed by merchants and consumers still cannot cover the company’s distribution fee cost, and each order loses about 1 yuan. But the company uses commission income to offset this part of the loss, and the rest is profit.
2. The market share of the hotel and tourism business increased, and the new business burned money
In the fourth quarter, Meituan’s in-store, hotel and tourism business revenue was 8.7 billion yuan, a year-on-year increase of 22.2%, and its operating profit was 3.9 billion, a year-on-year increase of 38.1%. Meituan’s market share in travel hotel bookings has increased.
The continuous profitability of the takeaway business and in-store, hotel and tourism has given the company the confidence to invest in new businesses.
In the fourth quarter, the fastest-growing new business and other segments recorded an operating loss of 10.2 billion yuan, compared with a loss of 6 billion yuan in the same period last year. The huge losses in new businesses are mainly due to continuous investment in logistics systems, rural coverage, etc.
In the fourth quarter, Meituan’s new business revenue increased by 58.7% year-on-year, which is much better than the data of its peers, and Meituan’s leading position seems to be more stable.
In addition, the company’s R&D investment reached a new high. In 2021, the R&D investment for the whole year will be about 16.7 billion, a year-on-year increase of 53.1%. From “Food+Platform” to “Retail+Technology”, the company has clarified the new strategic development focus and path.
Epilogue
Despite the overall loss, Meituan apparently did not receive the “impact” of the penalty, with the food delivery and hotel travel businesses maintaining growth and improving profitability.
As of December 31, 2021, Meituan had 32.5 billion in cash and cash equivalents, nearly doubling from the end of last year, mainly due to inflows from financing activities. At present, Meituan’s business model of “burning money” can still continue, but will the capital market have the patience to continue to accompany it?
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Responsible editor: Zhang Hengxing SF142