Meituan’s Q1 Results Exceed Low Expectations
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Meituan Q1 Earnings Overview
Meituan gained +6.54% in Hong Kong trading in advance of their financial results that beat low expectations. China’s vicious restaurant delivery war has left its mark, as the company posted its third consecutive quarterly loss. However, losses in the first quarter weren’t as large as analysts expected, as the government has stepped in to protect restaurants. On the earnings call, founder Wang Xing noted subsidies are becoming more “rational,” though top-line year-over-year (YoY) quarterly comparisons will be difficult, due to strong subsidy revenue growth. That is true, though an improvement in net income and EPS will be cheered by investors.
- Revenue +5.6% to RMB 91.04 billion from RMB 86.50 billion versus expectations of RMB 90.7 billio
- Adjusted Net Income -5.5% to RMB -4.97 billion from RMB -10.95 billion versus expectations of RMB -6.80 billion
- Adjusted Earnings per Share (EPS) RMB -0.94 from RMB 1.79 versus expectations of RMB -1.17
May Economic Data Overview
May's purchasing managers' indexes (PMIs) were released over the weekend. The “official” PMI survey is conducted by the National Bureau of Statistics (NBS) and focuses on large companies, including a relatively large number of them. On the other hand, the Rating Dog PMI survey is conducted by S&P, focuses on smaller companies, and surveys fewer companies. The official PMI tends to be less volatile than the private PMI.
Official PMIs:
- Manufacturing 50 versus April’s 50.3 and expectations of 50.0
- Non-Manufacturing 50.1 versus April’s 49.4 and expectations of 49.5
Rating Dog PMIs: Manufacturing PMI 51.8 versus April’s 52.2 and expectations of 51.3
China Emerging Industries PMI: 52.9 versus April’s 57.4. This survey is focused on 7 major industries in green technology, next-gen information technology, biotech, high-end equipment manufacturing, new energy, new materials, and new energy vehicles.
Key News
Asian equities were largely lower on continued Middle East tensions, as the AI "picks & shovels" trade was unwound somewhat. Taiwan and Korea outperformed, while Vietnam underperformed. Meanwhile, Indonesia was closed for Pancasila Day, which celebrates the country’s five founding principles, Malaysia was closed for the Harvest Festival, and Thailand closed for Vesak Day, which is also Buddha’s birthday. China's currency, the renminbi (CNY or RMB), continued to appreciate versus the US dollar overnight, despite broader regional currency weakness.
Internet-based AI large language model provider Minimax fell 15.71% in Hong Kong after announcing it will relist its shares on Shanghai's science and technology-focused STAR Board. The announcement triggered a vicious round of profit-taking in Hong Kong and China’s AI "picks & shovels" subsectors, including technology hardware, semiconductors, and communication equipment.
The move lower in technology hardware was despite President Xi’s article in the Qiushi Journal titled “Forge Ahead Planning and Development of Future Industries". The Ministry of Science and Technology’s Minister Yin Hejun also wrote on “core technologies”.
Hong Kong-listed internet and software stocks had a strong day, as US software companies' partnerships with AI large language models (LLMs) and strong financial results triggered a rotation from hardware stocks, led by Tencent, which gained +2.06% and was Hong Kong's most heavily traded stock by value, Alibaba, which gained +1.57%, Meituan, which gained +6.54%, Bilibili, which gained +4.99%, NetEase, which gained +0.57%, and Trip.com, which gained +2.39%. Baidu fell -0.69% and JD.com fell -0.97%.
Healthcare was weak overall, potentially triggered by US legislation on China’s pharmaceutical exports. However, Sinopharm +0.47%, reaching a 52-week high and bucking the trend after announcing positive Phase 3 results on a lung cancer drug at the ASCO Conference.
Mainland China was off due to the hardware technology selloff, as the STAR Board pulled back -5%.
May Auto Sales Overview:
- BYD 383,453, +0.26% YoY, +19.41% month-over-month (MoM)
- Geely Auto 237,637, +1.03% YoY, +1.05% MoM
- Chery 231,944
- Nio 37,705 +62.3% YoY, 28.44% MoM
- Zeeker 34,377
- Li Auto 33,350 +18.37% YoY, -2.16% MoM
- Xpeng 32,158 -4.08% YoY, +3.7% MoM
- Xiaomi 30,000
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.9% |
| Hang Seng Tech | HSTECH Index | 1.7% |
| Hong Kong Turnover | HKTurn Index | -28.4% |
| Hong Kong Short Sale Turnover | HKSST Index | -23.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 18.7% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 594.80 |
| China (Shanghai) | SHCOMP Index | -0.3% |
| China (Shenzhen) | SZCOMP Index | -0.8% |
| China (STAR Board) | Star50 Index | -5% |
| Mainland Turnover | .chturn Index | -13.3% |
| Japan | NKY Index | 0.9% |
| India | SENSEX Index | -0.7% |
| Indonesia | JCI Index | 0% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | -1.9% |
| Philippines | PCOMP Index | 0.5% |
| South Korea | KOSPI Index | 3.7% |
| Taiwan | TWSE Index | 1.4% |
| Thailand | SET Index | 0% |
| Singapore | STI Index | 1% |
| Australia | AS51 Index | 0% |
| Vietnam | VNINDEX Index | -1% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 125 | 100 |
| Advancing Stocks | 369 | 3504 |
| Declining Stocks | 146 | 859 |
| Outperforming Factors | Quality, Dividend Yield, EPS Revision | Dividend Yield, Low Volatility, Value |
| Underperforming Factors | Liquidity, Momentum, Large Caps | |
| Top Sectors | Real Estate, Energy, Staples | Energy, Communication, Utilities |
| Bottom Sectors | Healthcare | Tech, Healthcare, Industrials |
| Top Subsectors | Paper/Packaging, Coal, Consumer Durables/Apparel | Coal, Energy Equipment, Petrochemical |
| Bottom Subsectors | Semiconductors, Pharmaceuticals, REITs | Semconductors, Communication Equipment, Computer Hardware |
| Southbound Connect Buys | Akeso (Very Large), Pop Mart, Tencent (Large), Alibaba, SMIC, YOFC (Small) | N/A |
| Southbound Connect Sells | Lenovo (Moderate), Hua Hong Semi, KB Laminates(Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | 1.23 |
| Communication Services | 11 | 1.82 |
| Consumer Discretionary | 28 | 1.94 |
| Consumer Staples | 12 | 1.97 |
| Energy | 6 | 2.16 |
| Financials | 25 | 0.33 |
| Health Care | 16 | -1.28 |
| Industrials | 19 | 0.63 |
| Information Technology | 15 | 0.65 |
| Materials | 14 | 0.52 |
| Real Estate | 1 | 2.38 |
| Utilities | 6 | 1.92 |
| Mainland China Listed | 11 | -1.17 |
| Communication Services | 11 | 2.75 |
| Consumer Discretionary | 26 | -0.51 |
| Consumer Staples | 18 | -0.5 |
| Energy | 11 | 2.92 |
| Financials | 64 | 0.82 |
| Health Care | 29 | -1.28 |
| Industrials | 60 | -0.56 |
| Information Technology | 113 | -3.84 |
| Materials | 58 | -0.48 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 2.1 |
| Alibaba HK | 9988 HK Equity | 1.6 |
| JD.com HK | 9618 HK Equity | -1 |
| NetEase HK | 9999 HK Equity | 0.6 |
| Yum China HK | 9987 HK Equity | -1.1 |
| Baozun HK | 9991 HK Equity | 0 |
| Baidu HK | 9888 HK Equity | -0.7 |
| Autohome HK | 2518 HK Equity | 1.5 |
| Bilibili HK | 9626 HK Equity | 5 |
| Trip.com HK | 9961 HK Equity | 2.4 |
| EDU HK | 9901 HK Equity | 1.4 |
| Xpeng HK | 9868 HK Equity | 6.2 |
| Weibo HK | 9898 HK Equity | 3.3 |
| Li Auto HK | 2015 HK Equity | 1.2 |
| Nio Auto HK | 9866 HK Equity | 6.7 |
| Zhihu HK | 2390 HK Equity | -0.3 |
| KE HK | 2423 HK Equity | 1.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2.3 |
| Meituan HK | 3690 HK Equity | 6.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 2.1 |
| SEMICONDUCTOR MANUFACTURI-H | -2.6 |
| LENOVO GROUP LTD | 5.2 |
| ALIBABA GROUP HOLDING LTD | 1.6 |
| POP MART INTERNATIONAL GROUP | 3.6 |
| AKESO INC | -1.9 |
| HUA HONG SEMICONDUCTOR LTD-H | -5.6 |
| MEITUAN-CLASS B | 6.5 |
| XIAOMI CORP-CLASS B | 2.4 |
| KINGBOARD LAMINATES HLDG LTD | -13.1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -2.7 |
| SUZHOU DONGSHAN PRECISION-A | -10 |
| GIGADEVICE SEMICONDUCTO-CL A | 0.2 |
| JCET GROUP CO LTD-A | -7.8 |
| FOXCONN INDUSTRIAL INTERNE-A | 0.5 |
| EOPTOLINK TECHNOLOGY INC L-A | -3.8 |
| SUZHOU TFC OPTICAL COMMUNI-A | -5.8 |
| BOE TECHNOLOGY GROUP CO LT-A | 4.9 |
| HENGTONG OPTIC-ELECTRIC CO-A | -2 |
| VICTORY GIANT TECHNOLOGY -A | -7.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.77 versus 6.77 yesterday
- CNY per EUR 7.88 versus 7.89 yesterday
- Yield on 10-Year Government Bond 1.70% versus 1.71% yesterday
- Yield on 10-Year China Development Bank Bond 1.76% versus 1.77% yesterday
- Copper Price -0.16%
- Steel Price 0.51%
