Meituan Records Fastest Growth Since 2021 Despite Weak Economy

(Bloomberg) -- Meituan posted its fastest pace of revenue growth since 2021, after dining and travel bounced back from Covid-Zero depths despite broader consumer spending malaise.

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Sales rose 33% to 67.96 billion yuan ($9.3 billion) in the quarter ended June, against an average projection for 67.2 billion yuan, the company said in a statement Thursday. Net income rose

As with its peers in the internet industry, Meituan is seen as a barometer of China’s post-Covid recovery, which has proven weaker than expected. It’s shed more than 25% of its market value this year.

Still, the company has benefited as consumers grappling with a property slump shun big-ticket items to instead spend on experiences from trips and movies to dining. That’s propping up Meituan’s meals and travel services, and the company has splashed out on marketing to tap that post-pandemic demand.

The company’s longer-term prospects depend on how it navigates post-pandemic demand swings and new arenas such as AI. Meituan joined a global AI investment frenzy alongside big players like Baidu Inc. and Tencent Holdings Ltd. when it doled out almost $234 million to buy co-founder Wang Huiwen’s generative AI startup. But Chief Executive Officer Wang Xing acknowledged this year it was “still playing catch-up” on that front.

What Bloomberg Intelligence Says

Meituan’s 2Q core local commerce operating profit gain probably exceeded consensus estimates of a 17% year-over-year increase as margin of the firm’s in-store and travel-related unit jumped from Covid-impacted lows a year earlier. This would have been led by a surge in the unit’s revenue as more consumers in mainland China dined out and traveled within the country and overseas after the cessation of local Covid Zero measures. Such a rise in travel demand will likely persist through December and help lift Meituan’s overall margin this year.