Meituan (美團) has shed more than US$58 billion of its market value over two frenetic trading sessions, after Beijing unveiled sweeping reforms against private-sector companies that darkened the outlook for the world’s biggest food delivery giant.
The Chinese company yesterday slid a record 17 percent in Hong Kong, on top of a 14 percent plummet the previous day. The Tencent Holdings Ltd (騰訊)-backed company, already the target of an antitrust probe with uncertain outcomes, was caught up in a broader sell-off of Internet stocks after China ordered swathes of its US$100 billion private education sector to go non-profit.
The clampdown on the booming industry has shocked seasoned China watchers, prompting a rethink of how far Chinese President Xi Jinping’s (習近平) Chinese Communist Party is willing to go as it tightens its grip on the world’s second-largest economy.
Meituan’s losses deepened after the nation’s powerful antitrust watchdog posted rules late on Monday ordering online food platforms to ensure their workers earn at least the local minimum wage, which appeared to target the sector’s leader.
The Chinese government also asked meal delivery operators to respect the rights of delivery staff, according to a guideline released by seven government agencies including the Chinese State Administration for Market Regulation.
The guidelines were not a surprise, but the timing of their announcement was, Citigroup analyst Alicia Yap wrote. “We do see risks of slower profit growth and push out of near-term margins.”
Meituan’s stock has tumbled more than 50 percent from its peak in February as the company grapples with scrutiny on multiple fronts. The food industry regulations added to a litany of regulatory woes.
Beijing in April announced an investigation into whether Meituan contravened anti-monopoly laws through practices such as forced exclusivity arrangements with restaurants.
The company has also drawn criticism over the way it treats hundreds of thousands of low-income delivery riders, who were put to the test during the COVID-19 pandemic.
Meituan chief executive officer Wang Xing (王興) himself has been warned to keep a low profile, Bloomberg News has reported, after the founder posted a controversial poem that convulsed markets and sparked a social media furor.
Wang has detailed plans to address government concerns about its business practices. Among other things, the company has pledged to work with regulators and improve its compliance standards.
It also promised to provide insurance for millions of its delivery drivers — many of them work as part-time personnel and lack proper employee benefits — and has started to reform its commissions scheme in a move to cut fees for partner restaurants.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by