Tue, Jun 26, 2018 - Page 10 News List

Meituan reveals big loss as sales soar before IPO


Meituan drivers talk on a Beijing sidewalk on April 11.

Photo: Reuters

Meituan Dianping (美團點評), the world’s fourth-most valuable tech start-up, revealed huge losses, but also a scorching pace of growth when it filed for a much-anticipated Hong Kong initial public offering (IPO).

The company is turning to public markets to raise cash for a costly battle against some of China’s biggest Internet companies, particularly as it ventures into new arenas from ride-hailing and finance to travel.

Meituan, of which social media giant Tencent Holdings Ltd (騰訊) owns more than a fifth, posted a net loss of 19 billion yuan (US$2.9 billion) last year, hurt by ballooning marketing and research spending and after accounting for its preferred stock.

However, the Internet company more than doubled revenue to 33.9 billion yuan.

It joins smartphone maker Xiaomi Corp (小米) in targeting an IPO in Hong Kong after the territory revised regulations to attract the major tech listings it has lost out on in the past.

Meituan did not disclose objectives, but the food delivery and restaurant reviews service was said to have been targeting a US$6 billion fundraising at a valuation of about US$60 billion — rivaling Xiaomi’s goal of as much as US$6.1 billion in what would be the world’s largest IPO in two years.

Meituan is to try to get investors to focus on its rapid top-line expansion, in the tradition of Amazon.com Inc and other fast-growth firms that bled money for years.

It remains to be seen if the market will overlook its significant spending on marketing as it fends off a crop of deep-pocketed rivals from ride-hailing giant Didi Chuxing (滴滴出行) to Alibaba Group Holding Ltd (阿里巴巴).

Assuming a US$60 billion valuation, its price relative to the value of its transactions would be higher than its peers, said Li Yujie (李玉潔), an analyst with RHB Research Institute Sdn in Hong Kong.

“Meituan might be basing this on its stronger abilities to monetize its platform, based on its various services,” Li said.

Chief executive officer Wang Xing (王興) founded Meituan.com (美團) in 2010 as a group-buying site similar to Groupon Inc before a 2015 merger with Dianping (大眾點評), which provided reviews of restaurants and other local businesses.

Wang will remain controlling shareholder after it lists, according to the filing.

The combined company handled US$57 billion of transactions last year between more than 300 million annual active buyers — about the size of the US population —-and more than 4 million merchants.

It has more recently expanded into areas such as ride-sharing, bikes and travel.

Meituan’s debut is another signal of China’s rising technology might — a flashpoint for tensions with the US.

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