Meituan shares climb 5% on debut in HK
September 21 2018 12:28 AM
Wang Xing, co-founder and chairman of China’s Meituan Dianping (centre), attends the debut of the company at the Hong Kong exchange yesterday. The company rose 5% on debut in Hong Kong, valuing firm at about $55bn and sending a positive signal to companies lining up to list in the financial hub.

Reuters Hong Kong

Meituan Dianping rose 5% on debut in Hong Kong yesterday, valuing the Chinese online food delivery-to-ticketing services firm at about $55bn and sending a positive signal to companies lining up to list in the financial hub.
The stock’s performance is being seen as a test of investor appetite for Hong Kong listings against a backdrop of weak markets and multi-billion dollar initial public offerings (IPOs) that have struggled to rise above their issue price, such as smartphone maker Xiaomi and China Tower.
The strong debut also reflects investor confidence that loss-making Meituan can fend off bruising competition from food-delivery platform, which is backed by China’s biggest e-commerce company Alibaba Group Holding.
Both have been offering heavy discounts to win new customers and market share. Shares of Meituan, which counts China’s biggest gaming and social media firm Tencent Holdings as a key investor, closed at HK$72.65 ($9.26) compared to its IPO price of HK$69 but below the opening level of HK$72.9.
Founded in 2010 by Wang Xing, Meituan, which has been likened to US discounting platform Groupon Inc, merged in 2015 with its then main rival Dianping, akin to US online review firm Yelp Inc.
Meituan’s market value today dwarfs Groupon’s $2.3bn and Yelp’s $4.1bn.
Xing owns around 573mn shares in Meituan, making his holdings worth about $5.3bn, more than either of the US-listed companies.
“This may be the most important decision in our investment journey in more than 10 years,” wrote Neil Shen, founding and managing partner of Sequoia Capital China, which owns about 12% of Meituan. “In this scuffle, Wang Xing led the team to fight more and more bravely, and it was a bloody battle in the fierce competition.”
At the listing ceremony on the Hong Kong stock exchange yesterday, Xing praised the role of the company’s almost 600,000 delivery persons and 50,000 employees in fuelling its growth.
“I also want to thank Steve Jobs, thank Apple, without iPhone, without mobile internet, everything we do today wouldn’t have been possible,” he said.
Meituan’s wide variety of services has attracted users, but pushed it into the red. The company lost 22.8bn yuan ($3.33bn) in the first four months of this year, despite a big jump in revenue.
It lost about $2.8bn in 2017.
The company bought bike-sharing firm Mobike for $2.7bn this year, an expensive acquisition that is straining its margins.
Alibaba, meanwhile, has been beefing up its offerings, snapping up food delivery service and Baidu Waimai, which it plans to roll together with its lifestyle services app Koubei.
Meituan’s stock rise was also helped by broad gains in Asian shares yesterday as investors took a less bearish view on the impact of the US-China trade war on markets.
This year is set to be the biggest year for IPOs in Hong Kong since 2015, helped in part by a market rally late last year and rules introduced this year to attract tech companies by allowing them to weight voting rights in favour of their founders.
Hong Kong listings have raised $28.7bn so far this year, compared to $33.8bn raised in 2015, according to Thomson Reuters data.
But an 18% drop in the benchmark Hang Seng index from its January peak and an intensifying Sino-US trade war have clouded the prospects for other companies looking to go public, as investors become more cautious and selective.

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