FAST NEWS: Meituan Director Cuts Shareholding Twice After Latest Results

The latest: Shen Nanpeng, a non-executive director of Meituan (3690.HK) and founder and managing partner of Sequoia Capital China, reduced his stake in Meituan from 4.68% to 3.98%, according to two disclosures last Thursday and this Wednesday, cashing out about HK$6 billion ($770 million), according to Hong Kong Stock Exchange Filings. 

Looking up: After the reduction, Shen still holds about 219 million Meituan shares and remains one of the company’s major shareholders.

Take Note: Shen started selling his shares on March 31, less than a week after the end of the directors’ lock-up period and also less than a week after Meituan announced its 2021 results on March 25. Such sales are common when lockup periods end, but can still represent a lack of confidence.

Digging Deeper: Meituan has entered a new cash-burning phase with the launch of its new community group-buying and grocery businesses in 2020. That pushed it into the red with an operating loss of 23.1 billion yuan last year, mainly due to a 38.4 billion yuan loss from the new businesses, offsetting profits for its older food delivery and in-store, hotel & travel services businesses. The market worries the new businesses will continue to drag down the company’s performance. It’s worth noting that Sequoia Capital China, owned by Shen, has distributed Meituan’s shares to its partners several times in recent years, resulting in a continuous decline in its shareholdings. That includes a distribution of 44.81 million B-shares last September and another 31.11 million shares in January. Shen also reduced his own holdings in September and October last year.

Market Reaction: Meituan’s shares fell 2.8% and 3.7%, respectively, on the two days when Shen sold his stock. The stock closed at HK$155 on Thursday, higher than the average price of HK$153.80 at which he sold his shares last Wednesday.

Translation by Jony Ho

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