Meituan’s Wang Xing suffers 1.1 billion wealth to a large extent due to subsidy

Wang XingThe founder of the Chinese food leader Meituan, he saw wealth during the morning traded on Thursday, because Hong Kong was listed in Hong Kong as stated at Hong Kong as much as he announced 97% of profit suffering.

The 46-year-old chairman and the director still has a wealth of $ 9 billion largely based on the company’s share, in accordance with the estimates of forbes. But he confronts Grim Outlook. As an alibaba giants e-commerce Jd.com Continue to enter a large extent in food delivery to attract new users, Meituan is forced to spend billions of Yuan every quarter to defend its market position and compete consumption matches and customer subsidies.

“Investors are very concerned that Meituan can no longer continue to invest in food delivery” Eric Ven, Head of Research in Hong Kong-based research companies Blue Lotus Capital counselors, says Vechat.

The subsidy war took a large number. In the second quarter ended in June, net profit Meituana ran 97% compared to 365.3 million Yuan ($ 51.1 million), although the sale increased 11.7% to 91.8 billion Yuan from the same period of the year earlier.

During the middle-made analyst, a billionaire Wang said that the company faced intense competition before and Meituan will defend himself. Chen Shaohui’s Chief Financial Officer said his basic operations of local trade, which is largely consisting of food delivery, in the running quarter will result in “significant” losses in current quarters due to strategic consumption.

Based on the reduction of the relevant cash positions of companies, Ven Blue Lotus estimates that Alibaba is, Jd.com And Meituan burned collectively through about 2 billion yuan on a quarterly basis to offer subsidies for customers and reduced meals. Ven thinks that war for food delivery will last during the year as the battle to attract new users. It can exceed the beginning of next year if competitors decide to focus more investment in areas such as AI, he says.

But Ke Ian, the head of Singapore-based research in the DZT survey, is more pessimistic. The competition in the throat in the Chinese age delivery will not be reduced for at least another 12 months, he says over Vechat. Meituan’s profit will still be under pressure because it must spend on both meals and expand international, says KE.

Local services Giant has launched its overseas service for food for food in the markets in front of the terrestrial country. In Hong Kong, the rival traffic was escaped, which was exited in March to the Asian financial center. The great user subsidies made Keeta one of the most popular food delivery services in the city from its launch 2023. years. In Saudi Arabia, Keeta spread to 20 cities by the end of July, according to the Meitu’s results of the second quarter.

“International expansion does not earn in one day,” says KE. “It takes at least one year or two before this job can break out profit.”