BEIJING (Reuters) -Chinese food delivery giant Meituan reported better than expected quarterly revenue growth of 28.2% on Friday and swung back to profit as the company recovered from COVID-19 curbs.
Meituan, whose services also include restaurant reviews and bike-sharing, said total revenue rose to 62.62 billion yuan ($8.74 billion) in the three months ended September, compared with analysts’ average estimate of 61.79 billion yuan, according to Refinitiv data.
The company swung to a quarterly profit of 1.22 billion yuan from a loss of 9.99 billion yuan a year earlier, as it pulled the brakes on heavily funding its new initiatives.
Sales from new initiatives, including its community e-commerce business Meituan Select, grew by 39.7% year on year to 16.29 billion yuan.
Revenue from core local commerce, which includes food delivery, and non-food delivery service Meituan Instashopping, rose 24.6% to 46.33 billion yuan.
In a first step outside mainland China, the company has recently been expanding in Hong Kong. The operations there are still small-scale pilot programs, chief executive Wang Xing said during a conference call on Friday, and Meituan sees the city as a testing ground for its global plans.
Investor Tencent Holdings, China’s social media and gaming giant which owns 17% of Meituan, said last week it would return capital to shareholders through a dividend distribution of its $20 billion stake which represents roughly 15.5% of the total shares issued.
Meituan said at the time it would maintain its mutually beneficial business relationship with Tencent after the divestment.
Meituan’s Hong Kong-listed shares have lost nearly half their value in the last 12 months.
As China sees a surge in COVID cases that are prompting lockdowns in several major cities, including Beijing and Guangzhou, analysts warned of a bigger negative impact on consumer demand for Meituan’s businesses over the fourth quarter.
($1 = 7.1615 Chinese yuan renminbi)
(Reporting by Yingzhi Yang and Brenda Goh; Editing by Elaine Hardcastle, Kirsten Donovan)