Meituan spends $51 million on first share buyback as investor confidence runs low

After a more than $80 billion market price wipeout considering that last January, Meituan on Wednesday invested $51 million (HK$ 399 million) on its very first share buyback considering that it noted in Hong Kong, in a quote to support financier self-confidence in the business’s durability amidst intense competitors in a regional life sector brimming with fresh entrants.

Why it matters: Meituan’s very first share buyback considering that going public more than 5 years earlier follows executives cautioned of a downturn in its primary takeaway service in the 4th quarter and as Douyin, China’s TikTok brother or sister, strokes into its organization sections.

Information: The food shipment provider redeemed an overall of 5.63 million Class B shares, costing approximately HK$ 71.07 each, according to its most current filings. Meituan’s stock cost reacted by increasing 5.4% today in Hong Kong.

• Meituan revealed in late November that it prepared to buy shares on the free market starting Dec. 1, expecting an overall buyback of as much as $1 billion in the future.
• In 2015, the company’s Hong Kong-listed stock plunged by majority and dropped 82% from its 2021 peak. The trading cost is not likely to go back to this peak in the short-term as financiers stress over ever tighter competitors from ByteDance-owned Douyin.
• CEO Wang Xing, nevertheless, stated in the company’s most current incomes call that he thought Meituan was “underestimated at the present share cost,” revealing self-confidence about business he co-founded’s “long-lasting development and worth.”
• Since Sept. 30, Meituan held money and money equivalents of RMB 25.1 billion, its quarterly outcomes revealed.
• Meituan has yet to accomplish constant quarterly success, however like other Chinese tech business, it is likewise looking for to broaden company beyond mainland China, a venture which is still at the “financial investment phase,” according to Wang. Meituan’s sis app KeeTa has actually increased to end up being the second-largest food shipment platform in Hong Kong considering that its launch in May.

Context: Meituan, China’s many important tech companies consisting of Alibaba and Tencent have actually displayed a down pattern in share cost that has actually lost them hundreds of billions of dollars because their peak around 2021. Alibaba and Tencent performed record buybacks in 2015, with e-commerce huge Alibaba redeeming $9.5 billion of normal shares, and WeChat owner Tencent investing an overall of HK$ 48.429 billion on buybacks in the very same duration, implying the latter topped the Hong Kong stock exchange’s repurchase list.