The week ahead in macro
Saxo Bank Head of APAC Macro Strategy Kay Van-Petersen takes a look at the weak ahead with special focus on Sino-US relations into the November 29 G20 summit in Buenos Aires.
Australian Market Strategist
Tencent-backed Meituan-Dianping, a Beijing-based technology startup and China’s answer to Groupon, Uber Eats, and Yelp all rolled into one, has filed for a Hong Kong IPO. Full details of the listing are yet to be released, but Meituan are said to be seeking to raise at least $4 billion, according to the China Securities Journal.
Meituan is the worlds fourth most-valuable tech startup, according to Bloomberg, and has been growing at a rapid pace, offering hotel, travel, shopping, entertainment, and food delivery services to China’s ever-increasing consumer demographic. Meituan connects offline merchants to online consumers through a smartphone app/social platform providing on-demand access to a vast range of products and services from manicures, massages, and home delivery meals to movie tickets and bike hire.
The company also allows consumers to review restaurants and services within the app which drives traffic cheaply through the platform; this traffic is then monetised through the purchases and group discounts paid for with an integrated, in-app payments system connected to users' WeChat pay or Alipay accounts.
Meituan has grown at a startling pace and now has more than 300 million annual transacting users (similar to the entire US population). Revenue has also grown rapidly, increasing 161% year-on-year to 33.9bn yuan ($5.2bn) in 2017. Last year, however, the company posted a loss of 18.99bn yuan, according to the prospectus, although after adjusting for changes in the value of convertible redeemable preference shares, share-based compensation expenses, and other items, the adjusted net loss was recorded as 2.85bn yuan.
Operating losses are trending down (decreasing 39% from the year before) and if revenue continues to grow in line with the current trend the company will soon turn a profit. Meituan still has a ways to go, but if the top line growth accelerates in tune with the rapid acquisition of new users, then the potential is there.
Operating loss is trending down (decreasing 39% from the year before); if revenue continues to grow at the current trend, the company will turn a profit before long.