Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Capital Markets

Our initial impressions of <a href="https://www.smartkarma.com/entities/26970" target="_blank" data-smartkarma-citation="entities:26970:1">Meituan Dianping (3690 HK)</a> H118 results -- its first earnings report since it listed in Hong Kong last week -- are mostly negative.The monetization of Meituan's Food Delivery segment has apparently peaked and the segment's rate of Revenue growth slowed dramatically at the end of Q218. In addition, H118 food delivery rider costs grew faster than food delivery transactions, suggesting this segment will continue to suffer from poor profitability.It also appears Meituan reduced spending on incentives for consumers in H118, which is a good thing. But lower incentives may have caused a slowdown in Revenue growth, especially in May-June -- not surprising, since food delivery is ultimately a discretionary item. Slower Revenue growth may disappoint investors eager to capture more of the spectacular growth Meituan reported in recent periods.Finally, on disclosure: in its H118 release, Meituan failed to disclose the proportion of food deliveries it manages (it was 70%+ in 2017), and it also failed to disclose how much it spent on incentives for delivery riders. This information (which was disclosed for earlier periods in its prospectus) could help investors better understand how the Food Delivery segment works and whether it's making significant progress towards sustainable profits.Ultimately, we don't believe Meituan's H118 results offer any convincing reasons to raise our HK$45-55 per share target price range, which remains far below the September 27 closing price of HK$67.

Our initial impressions of Meituan Dianping (3690 HK) H118 results -- its first earnings report since it listed in Hong Kong last week -- are mostly negative.The monetization of Meituan's Food Delivery segment has apparently peaked and the segment's rate of Revenue growth slowed dramatically at the end of Q218. In addition, H118 food delivery rider costs grew faster than food delivery transactions, suggesting this segment will continue to suffer from poor profitability.It also appears Meituan reduced spending on incentives for consumers in H118, which is a good thing. But lower incentives may have caused a slowdown in Revenue growth, especially in May-June -- not surprising, since food delivery is ultimately a discretionary item. Slower Revenue growth may disappoint investors eager to capture more of the spectacular growth Meituan reported in recent periods.Finally, on disclosure: in its H118 release, Meituan failed to disclose the proportion of food deliveries it manages (it was 70%+ in 2017), and it also failed to disclose how much it spent on incentives for delivery riders. This information (which was disclosed for earlier periods in its prospectus) could help investors better understand how the Food Delivery segment works and whether it's making significant progress towards sustainable profits.Ultimately, we don't believe Meituan's H118 results offer any convincing reasons to raise our HK$45-55 per share target price range, which remains far below the September 27 closing price of HK$67.

Meituan-Dianping H118 Results: Revenue Growth Slows | Incentives Cut? | Disclosure Worsens

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

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<li>
Management Shake-up: Alibaba Group Holding (BABA.US) [Alibaba] announced that long-time CFO Maggie Wu will be stepping down in April 2022;</li>
<li>
Restructure: Alibaba also announced that it will be reorganizing its international and domestic e-commerce businesses; and</li>
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Further Pressure:Just last month, Alibaba reduced its revenue growth forecast. The formation of a financial holding company will cause earnings to compress while capital requirements increase.</li>
</ul>



Management Shake-up: Alibaba Group Holding (BABA.US) [Alibaba] announced that long-time CFO Maggie Wu will be stepping down in April 2022;

Restructure: Alibaba also announced that it will be reorganizing its international and domestic e-commerce businesses; and

Further Pressure:Just last month, Alibaba reduced its revenue growth forecast. The formation of a financial holding company will cause earnings to compress while capital requirements increase.


Alibaba Group Holding – Palace Intrigue

China

DiDi Chuxing Incorporated operates passenger transportation platforms. The Company provides mobility solutions, cloud computing and other application based services. DiDi Chuxing serves customers worldwide.

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DiDi Global (DIDI US)

Meituan-Dianping H118 Results: Revenue Growth Slows | Incentives Cut? | Disclosure Worsens

Our initial impressions of Meituan Dianping (3690 HK) H118 results -- its first earnings report since it listed in Hong Kong last week -- are...

Daniel Hellberg

Alibaba Group Holding – Palace Intrigue

ALIBABA: Alibaba announced that long-time CFO Maggie Wu will be stepping down in April 2022, and that it will be reorganizing its international and...

Thomas J. Monaco

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