Meituan Dianping Stock Analysis (China Super-App)

Meituan Dianping is one of the super-app in China.
Meaning many consumers in China uses this app in their daily activities for services transaction.




Recently in 2019, the company has finally started to be profitable.


Is this a good time to enter a position in this stock?
I have personally entered some position in 2019.''

What is the performance so far for 2019?

The ticker symbol is HK.3690.
Meituan Dianping is traded at the HK Stock Exchange.

Since the IPO listing in Sept 2018, the share has soared to an all-time high.
From about HK 74 to currently about HK 109.7.
Of course, there is fluctuation along the way.

During the initial IPO period, the share price has dropped to an all-time low at HK 41 at Jan 2019.

So far, the uptrend is still intact.
Long term investor can accumulate when the share retraces to the 50 SMA.





With more than 422 million users in this super-app Meituan Dianping, it has a big potential to grow.


FINANCIAL PERFORMANCE HIGHLIGHTS In the six months ended June 30, 2019:

• Total revenues increased by 58.9% year-over-year to RMB41.9 billion from RMB26.3 billion in 2018. Revenues increased across all major business segments.

• Total gross profit increased by 114.9% year-over-year to RMB13.0 billion from RMB6.1 billion in 2018, resulting from growth in our business scale, continuous improvement of our gross margin in food delivery, and narrowing losses in our new businesses.

• Selling and marketing expenses as a percentage of total revenues decreased to 18.8% from 25.5% in 2018, as we further enhanced operating leverage across all of our business segments and optimized branding and marketing expenses.

• Adjusted EBITDA and adjusted net income were RMB2.8 billion and RMB452.8 million, respectively. We achieved positive adjusted net profit(1) on a consolidated basis for the first time, attributable to our ongoing efforts to improve the operating margin of our core businesses, narrower operating losses in our new initiatives and seasonality in the food delivery business segment.


Personal Take:
I believe this is just the beginning of further growth for the company.

With many users in China continue to use this App in their daily lives, the economy of scale will just become better and better, bigger and bigger.


Recently, Meituan Dianping has also been made available in Stock Connect.
Therefore, more Chinese in China can purchase the stock as well.
This will boost liquidity.



Target Price:
Based on analyst target price (from Investing.com website), it can go up to average HK 111.

Note: In any case, please do your own analysis.

3690 Consensus Estimates

Overall Consensus

Buy Sell Neutral

Outperform

Analysts 12-Month Price Target

Average 111.34 (+1.59% Upside)

High | 130.00

Average | 111.34

Low | 85.30

Past 12 Months

12-Month Forecast

Listen here for a podcast about Meituan Dianping merger:
https://open.spotify.com/episode/4Pkjv5q40DCKvLCz540w3Q


Reference:
http://meituan.todayir.com/html/index.php
https://www.scmp.com/business/investor-relations/article/3034568/mainland-investors-giddy-about-soon-getting-access

Happy Investing!