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Briefing Aug 4, 2020 04:56 pm EqualOcean

Meituan-Dianping Shares Hit Record High

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Aug 27, 2020 08:00 pm ·

EO Intelligence | Meituan-Dianping Research Report 2020

In recent years, China's economy has gradually shifted from being investment-driven to being consumption-driven. From the perspective of industry, the concentration and chaining rate of China's catering industry are far lower than those of mature markets such as the US and Japan. In 2017, the top 100 catering industry brands in China saw revenue of CNY 286.5 billion, accounting for 7.2%, while those numbers were CNY 1.70 trillion and 30.8% in the US. According to data from the National Bureau of Statistics, at the end of 2019, China's population density was seven times that of the United States. The increase in the number and density of the urban population and the increase in the income level of residents have also promoted the growth of the life service market. Why did we write this report? • Industry: With the current online trend of local life, we can expect accelerated growth. With the mobile Internet growth rate reaching a bottleneck, Internet giants have concentrated on offline. • Enterprise: The local life service market is shared by a small number of producers or sellers. The competition is basically between Meituan and Alibaba and in various dimensions, Meituan's data performance is better than that of Alibaba. Meituan-Dianping has captured the trend of the rise in the local life service industry, digging deep into the catering industry chain, deploying multiple business segments, and achieving a full range of traffic entrances. Besides, the company uses interactive dining, lodging, transportation and entertainment shopping scenarios to enable high-frequency services to drive low-frequency services and form traffic cross-monetization. The food delivery business injects high-frequency and massive traffic into the group's ecology and has become the cornerstone of the company's mid- and long-term performance growth. After years of operating iterations in the in-store and hotel & travel business, the profit model has gradually matured, providing financial support for the other two significant businesses. New initiatives explore new long-term growth engine for the company. Meituan's food delivery business now has a large enough market share of 70%, so its future expansion may rely on industry growth. And it is hard to raise the commission rate substantially in the short term as lifting costs of small merchants cannot tolerate a high commission rate. However, in the long run, if Meituan can improve the operational efficiency of merchants by empowering B-end merchants through SaaS, it may be able to promote a steady increase in the commission rate. In the in-store and hotel & travel segment, Meituan adopts the commission rate and the advertising model. In terms of order volume, the giant tops in the industry. However, Ctrip is still No. 1 in the industry in terms of the unit price per customer since Meituan targets in low-tier cities. The ride-hailing business hasn't achieved large-scale profits yet. Still, it may increase user consumption frequency and increase user stickiness to the platform as the segment is expected to complete a closed-loop for local life services. On October 12, 2018, Alibaba established a local life service company, fighting against Meituan. However, Meituan has more merchants, stronger stickiness, higher distribution efficiency, and dominant market share and traffic. At the same time, Alibaba lacks a differentiated product portfolio and has not given full play to the advantages of the group's ecosystem. In the battle of local life services, the pattern of a duopoly in the industry will likely last for some time. In this report The general methodology of this 35-page research paper is multiple Corporate and Industry Interviews, months of desk research and thorough analysis. Following are the four main chapter within this report: • 10-year development history of Meituan. • Three business units of Meituan. • The battel of the giants:Meituan VS Alibaba • Valuation analysis of Meituan Key Takeaways 1. Meituan has built a very strong barrier to competition in the local life service industry. From the perspectives of the number of users, the number of businesses, or the number of riders, it is difficult for new players to pose a threat to it. 2. In the foreseeable future, the competition between Alibaba and Meituan will continue to heat up. With Meituan having a competitive advantage, we believe that Alibaba will definitely not withdraw from this market. After all, the service capabilities brought by local life (such as CAI NIAO), can help Alibaba penetrate the battlefield of intra-city retail. 3. Compared with similar companies, Meituan’s current price is at a high level, but long-term growth is expected.  

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Aug 24, 2020 02:57 pm ·

Meituan's Market Value Exceeds USD 200 Billion

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Aug 21, 2020 05:49 pm ·

Meituan-Dianping Turns Losses into Profits in 2Q 2020, Net Profit Up 152% YoY

Meituan-Dianping has published its latest financial report. In the second quarter of 2020, revenue was CNY 24.72 billion, a year-on-year increase of 8.9%. Net profit was CNY 2.21 billion, a year-on-year increase of 152.40%. The food delivery business recorded revenue of CNY 14.54 billion, an increase of 13.20% year-on-year.  GMV increased 16.90% year-on-year to CNY 108.80 billion. The average daily number of food delivery transactions increased by 6.90% year-on-year. The take rate of this business decreased from 13.8% in the same period in 2019 to 13.4%. Operating profit turned positive to CNY 1.30 billion in the second quarter of 2020, while the company underwent a loss of CNY 71 million in the first quarter of 2020. The in-store and hotel & travel business was CNY 4.54 billion, a year-on-year decrease of 13.40%. To help merchants to rise above difficulties, Meituan continued to cooperate with local governments. In the second quarter, high-star hotel orders accounted for more than 15% of the total, an increase of 3% year-on-year. New initiatives in business revenues were CNY 5.63 billion, an increase of 22.1% year-on-year. Meituan Maicai, which adopted the self-operated model, developed rapidly and achieved nearly four times previous revenue. For the ride-hailing business, in the second quarter, Meituan launched approximately 1.50 million new bicycles and invested in nearly 300,000 motorcycles. During the epidemic, Meituan actively assisted the digital transformation of merchants and accelerated the post-epidemic recovery. The number of merchants on the platform rose to 6.30 million in the second quarter. The number of annual transaction users increased by 8.2% year-on-year to 460 million. In the first half of 2020, the number of riders earning income from the Meituan platform reached 2.95 million, of which 1.39 million were newly employed riders.

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Sep 22, 2020 10:24 am ·

Yonghui Superstores Opens Four New Stores

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Sep 22, 2020 10:19 am ·

JD.com Confirms JD Health's Listing Plan

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