Tencent-backed Meituan jumps 5% in HK debut

HONG KONG: Meituan Dianping rose 5% on debut in Hong Kong yesterday, valuing the Chinese online food delivery-to-ticketing services firm at about US$$55 billion (RM227 billion) 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 lossmaking Meituan can fend off bruising competition from fooddelivery platform Ele.me, 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 (RM38.29) 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 US$2.3 billion and Yelp’s US$4.1 billion. Xing owns around 573 million shares in Meituan, making his holdings worth about US$5.3 billion, more than either of the US-listed companies.

Meituan’s wide variety of services has attracted users, but pushed it into the red. It lost 22.8 billion yuan in the first four months of this year, despite a big jump in revenue. – Reuters