Delivery Giant Meituan Delivers On Q3 Results, Week In Review
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Week in Review
- Asian equities were mixed for the week as Mainland China and Pakistan outperformed while the Philippines and Taiwan underperformed.
- The week began with a bounce in Asia on Trump's pick for Treasury Secretary, Scott Bessent, who has stated publicly that tariffs are only meant to be a negotiation tactic.
- Consumer stocks received a lift this week as multiple cities issued vouchers to residents for specific consumption activities, the first type of direct consumer transfer this stimulus cycle.
- Mainland investors piled into Hong Kong-listed stocks and ETFs this week, to the tune of over $3 billion via Southbound Stock Connect.
Meituan Q3 Earnings Overview
Food delivery and local services giant Meituan released Q3 financial results after the Hong Kong close overnight. The company delivered outstanding results, beating analyst estimates. The company’s new initiatives, including Pin Hao Fao, which allows for group deals on orders, and Shen Qiang Shou, a live-streaming E-Commerce platform, contributed to top-line growth.
It is worth noting that one of the company’s busiest days, with 16 million deliveries, was Valentine’s Day, proving I’m not the only one needing a last-minute gift.
In the analyst Q&A, the same analyst has asked every company about stimulus. Meituan’s founder & CEO/Chairman Xing Wang answered, “Yes, we noticed that from the end of September onwards, various monthly and fiscal stimulus measures have been announced. We think these measures aim to restore consumer confidence and realize the huge potential of consumption in China. While it will take some time for the positive effects to fully materialize and to further pass on to more consumption categories, we’re confident that this policy will gradually provide more support for a real economy and incentivize consumer spending, bringing more growth opportunities for our business.”
% Changes are year-over-year unless otherwise indicated
- Revenue increased +22.4% to RMB 93.5 billion versus expectations of RMB 91.9B and Q3 2023’s RMB 76.5B
- Adjusted Net Income increased +124% to RMB 12.8 billon versus expectations of RMB 11.6 billion and Q3 2023’s RMB 5.73 billion.
- Adjusted EPS RMB 2.05 versus expectations of RMB 1.92 and Q3 2023’s RMB 0.92
- The number of deliveries increased 14.5% to 7.077B from 6.179B
Key News
Asian equities ended the week mixed, as Hong Kong-listed growth stocks, Mainland China, and India all outperformed. Meanwhile, Japan was off on inflation and BOJ rate hike fears, and everyone’s favorite short, South Korea, underperformed.
Hong Kong and Mainland China had strong morning sessions, as the State Council’s Customs Tariff Commission extended US import tariff exclusions amid rumors the Politburo meeting will be held sooner than anticipated indicating the government’s focus on getting the economy going.
Broker stocks had a great day on chatter that Mainland exchange fees could be waived. Like yesterday’s profit-taking following Wednesday’s strong move, traders' profit-taking capped the day’s gains, though both markets ended the week in the green. Hong Kong was off for the month, as foreign investors wanted instant gratification via domestic consumption-focused stimulus, though Shanghai and Shenzhen managed small gains for the month as domestic investors' patience recognizes how the monetary, housing, and local government policies are quasi-consumption-focused.\
Overnight, Chongqing and Shanxi provinces announced hidden debt refinancing of RMB 75.4 billion and RMB 38.5 billion, respectively, as 20 provinces have come forward though economic heavyweight provinces Shenzhen, Beijing, Guangdong, and Tianjin haven’t announced plans.
Mainland investors followed up their very healthy purchase of $1 billion of HK stocks and ETFs yesterday with today’s $421 million, bringing the weekly total to $3.1 billion! If you peel the onion, I find it very interesting that consumption-focused subsectors are holding up and outperforming on consumption voucher chatter.
The Hang Seng and Hang Seng Tech indexes gained +0.29% and +1.06%, respectively, on volume that increased +23% from yesterday, which is 104% of the 1-year average. 372 stocks advanced while 112 stocks declined. Main Board short turnover increased 8% from yesterday, which is 99% of the 1-year average, as 15% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The growth factor and small caps outperformed the value factor and large caps. Meanwhile, the top-performing sectors were Consumer Staples, which gained +1.93%, Health Care, which gained +1.42%, and Real Estate, which gained +0.89%. Meanwhile, Utilities fell -0.5% and Communication Services fell -0.08%. The top-performing subsectors were semiconductors, industry conglomerates, and electric equipment. Meanwhile, household appliances, utilities, and chemicals were among the worst-performing subsectors. Southbound Stock Connect volumes were back to pre-stimulus levels as Mainland investors bought a net $421 million worth of Hong Kong-listed stocks and ETFs, including the Hong Kong Tracker ETF, which was a very large net buy, Tencent, SMIC, Sunac, Meituan, CMSC, and Alibaba. Meanwhile, Xiaomi was a small net sell.
Shanghai, Shenzhen, and the STAR Board gained +0.93%, +1.67%, and +2.41% on volume +14.48% from yesterday, which is 175% of the 1-year average. 4,121 stocks advanced while 844 declined. Growth and small caps outperformed value and large caps. All sectors were positive led by tech +1.97%, healthcare +1.59% and discretionary +1.47%. Top sub-sectors were office supplies, retail, and software while leisure products, motorcycle and gas were the worst. Northbound Stock Connect volumes were above average. CNY and the Asia dollar index gained versus the US dollar. Treasury bonds rallied. Copper fell while steel gained.
Last Night’s Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.3% |
| Hang Seng Tech | HSTECH Index | 1.1% |
| Hong Kong Turnover | HKTurn Index | 23.4% |
| HK Short Sale Turnover | HKSST Index | 8.2% |
| Short Turnover as a % of HK Turnovr | N/A | 14.9% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 419.8 |
| China (Shanghai) | SHCOMP Index | 0.9% |
| China (Shenzhen) | SZCOMP Index | 1.7% |
| China (STAR Board) | Star50 Index | 2.4% |
| Mainland Turnover | .chturn Index | 14.5% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.3% |
| Japan | NKY Index | -0.4% |
| India | SENSEX Index | 1% |
| Indonesia | JCI Index | -1.2% |
| Malaysia | FBMKLCI Index | -0.2% |
| Pakistan | KSE100 Index | 1.2% |
| Philippines | PCOMP Index | -0.4% |
| South Korea | KOSPI Index | -1.9% |
| Taiwan | TWSE Index | -0.2% |
| Thailand | SET Index | 0% |
| Singapore | STI Index | 0.1% |
| Australia | AS51 Index | -0.1% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 154 | 0.27 |
| Communication Services | 9 | -0.08 |
| Consumer Discretionary | 29 | 0.25 |
| Consumer Staples | 13 | 1.93 |
| Energy | 7 | 0.07 |
| Financials | 24 | 0.34 |
| Health Care | 14 | 1.42 |
| Industrials | 18 | 0.21 |
| Information Technology | 11 | 0.45 |
| Materials | 11 | 0.62 |
| Real Estate | 6 | 0.89 |
| Utilities | 12 | -0.5 |
| Mainland China Listed | 487 | 1.27 |
| Communication Services | 13 | 1.46 |
| Consumer Discretionary | 41 | 1.48 |
| Consumer Staples | 32 | 1.18 |
| Energy | 17 | 0.09 |
| Financials | 68 | 1.2 |
| Health Care | 45 | 1.59 |
| Industrials | 74 | 1.12 |
| Information Technology | 93 | 1.98 |
| Materials | 80 | 1.17 |
| Real Estate | 7 | 1.03 |
| Utilities | 17 | 0.16 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.5 |
| Alibaba HK | 9988 HK Equity | 0.3 |
| JD.com HK | 9618 HK Equity | 1.1 |
| NetEase HK | 9999 HK Equity | 1.5 |
| Yum China HK | 9987 HK Equity | -1.3 |
| Baozun HK | 9991 HK Equity | -1.7 |
| Baidu HK | 9888 HK Equity | 1.1 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | 2.5 |
| Trip.com HK | 9961 HK Equity | 1.5 |
| EDU HK | 9901 HK Equity | 2.4 |
| Xpeng HK | 9868 HK Equity | 2.4 |
| Weibo HK | 9898 HK Equity | 1 |
| Li Auto HK | 2015 HK Equity | 3.8 |
| Nio Auto HK | 9866 HK Equity | 0.6 |
| Zhihu HK | 2390 HK Equity | 0.5 |
| KE HK | 2423 HK Equity | 2.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.4 |
| Meituan HK | 3690 HK Equity | -2 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| MEITUAN-CLASS B | -2 |
| TENCENT HOLDINGS LTD | -0.5 |
| XIAOMI CORP-CLASS B | -0.4 |
| ALIBABA GROUP HOLDING LTD | 0.3 |
| SEMICONDUCTOR MANUFACTURING | 3.4 |
| PING AN INSURANCE GROUP CO-H | 0 |
| SUNAC CHINA HOLDINGS LTD | 8.3 |
| HONG KONG EXCHANGES & CLEAR | 0.8 |
| IND & COMM BK OF CHINA-H | 0.2 |
| CHINA CONSTRUCTION BANK-H | 0 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EAST MONEY INFORMATION CO-A | 5.7 |
| HITHINK ROYALFLUSH INFORMA-A | 9.7 |
| DAWNING INFORMATION INDUST-A | 3.7 |
| SHENZHEN YSSTECH INFO-TECH-A | 20 |
| CITIC SECURITIES CO-A | 2.9 |
| CONTEMPORARY AMPEREX TECHN-A | 2.6 |
| SEMICONDUCTOR MANUFACTURIN-A | 3.5 |
| IFLYTEK CO LTD - A | 7.3 |
| SHENZHEN INFOGEM TECHNOLOG-A | 7.1 |
| 360 SECURITY TECHNOLOGY IN-A | 5.4 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.24 versus 7.24 yesterday
- CNY per EUR 7.65 versus 7.65 yesterday
- Yield on 10-Year Government Bond 2.02% versus 2.03% yesterday
- Yield on 10-Year China Development Bank Bond 2.11% versus 2.12% yesterday
- Copper Price -0.31%
- Steel Price 0.24%
