The Motley Fool

An Investor’s Quick Overview of How Meituan Dianping Makes Its Money

Meituan Dianping (SEHK: 3690) is a Chinese e-commerce platform for services. The company’s offerings on its platform address customers’ daily needs for food, and extend further to broad lifestyle and travel services.

The company is also well-known among China consumers due to the variety of services offered on its app. In this article, I’ll help investors understand one aspect of the company – how does it make its money?

This will help investors get a quick overview of the company’s various sources of income and let them determine whether it’s a business worth investing in.

Segments

Source: Meituan Dianping 2018 Annual Report

From the above, we can see that Meituan operates under three segments, namely food delivery, in-store hotel & travel, and new initiatives and others. We will explore each of these individually.

Let’s start with the biggest segment; food delivery. This segment offers food ordering and delivery service through the company’s online platform. Revenues from the food delivery segment are primarily derived from platform services, online marketing services, and delivery service.

The next segment, in-store, hotel & travel, allows merchants to sell vouchers, coupons, tickets and reservations on Meituan’s platform. Here, the main sources of revenue are from commissions (from selling vouchers, coupons, and others) and online marketing services.

Last but not least, the new initiatives and other segments, is made up of a number of components, which include restaurant management system, supply chain solutions, payment services, micro-loan business, local transportation services (Mobike) and others.

Key takeaway

In all, Meituan is a rather complex company to understand given the diversity of services offered on its platform. Thus, by going through the different segments individually, I hope I’ve helped investors better understand Meituan’s overall business structure.

Want to invest in Asian markets? We discovered 1 Hong Kong stock we believe will skyrocket in the years to come. Click here now to download your FREE stock report - and see how it can potentially generate massive returns for you.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.