BRIEF: Meituan profit doubles on improving efficiencies

Online-to-offline services provider Meituan (3690.HK) said on Wednesday its revenue grew 21% year-on-year to 82.3 billion yuan ($11.5 billion) in the second quarter, while its profit for the period jumped 142% to 11.4 billion yuan. Revenue from the company’s core local commerce services, which accounts for about three-quarters of its total, rose 19% to 60.7 billion yuan, while revenue from its new initiatives rose 29% to 21.6 billion yuan.

Significantly, the company’s revenue growth was far faster than the increase in its cost of revenue as it gained efficiency with its increasing scale. Cost of revenues for its core local commerce services rose 13% year-on-year during the quarter, while cost of revenues for its new initiatives rose just 4%. That helped to lift the company’s operating margin to 16.9% in the second quarter from 8.7% a year earlier, facilitating the big profit gain.

The company also announced its board approved a plan to buy back up to $1 billion worth of its Hong Kong-listed shares. Meituan’s stock was up 12% in late Thursday trade after the pair of announcements.

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