News Alert: Talks that Meituan to expand food delivery business to Hong Kong, expects limited financial impact in short-term
- Meituan’s food delivery is studying to enter the Hong Kong market as its first move of international expansion, according to Bloomberg
- Meituan had planned to expand into Hong Kong in 2018 but was suspended before it entered the execution stage
- If the news is confirmed, we expect a limited impact on financials given the plan is still at a preliminary stage and improving operating efficiency remains the top priority
- Maintain BUY with TP of HK$296
What’s New
– Bloomberg reported that Meituan’s food delivery is studying to enter Hong Kong market as its first move of international expansion, citing sources.
– Talks that the company has hired Tony Qiu, a former head of Kuaishou Technology’s international business earlier this year to lead Meituan’s international efforts. (News link: https://www.bloomberg.com/news/articles/2022-10-08/meituan-said-to-mull-first-global-push-as-china-growth-slows?srnd=premium-europe#xj4y7vzkg )
– Meituan has not commented on the news so far.
Our View:
– We recalled that Meituan had planned to expand into Hong Kong in 2018 but the plan was suspended before it entered the execution stage due to difficulties in ensuring delivery capacity.
– If the news is confirmed, we expect limited impact on financials given the plan is still at a preliminary stage and improving the operating efficiency of local commerce business remains the top priority for Meituan. The company has gradually scaled back its loss-making business (e.g. Community group buy) to protect its earnings performance in last two quarters.
– Maintain BUY with TP of HK$296.
