Meituan - Breathing easier

$03690.HK (Meituan Class B)


The share of the Chinese delivery service Meituan is on the road to recovery. It has already risen by almost 50 per cent from its August low. If it jumps above the 200-day line, it would be the first Chinese internet stock to switch back to bullish on the chart. I would have rather bet on $BABA (Alibaba)$9988.HK (Alibaba Group Holding Ltd (Hong Kong)) and $0700.HK (Tencent) due to the travel industry within Meituan and COVID, but I didn't have to as we have shares in all three companies.


However, we now have another easing signal for China's platform companies. Earlier, US investment giants Charlie Munger and Cathie Wood bought large positions in Alibaba and $JD.US (JD.com) ; asset managers BlackRock and Krane announced new ETFs on Chinese tech stocks. There is apparently no lack of investor interest. Also, with the selling of large funds reported elsewhere, it must always be noted that there is much more pressure there to drop certain companies that are too hot, even if the prices are more than attractive. We don't have that problem.


Like Alibaba, Meituan also incurred a monopoly fine. This turned out to be comparatively mild at the equivalent of a good 530 million dollars, measured against the estimated turnover of 18.4 billion dollars for 2021.


The Chinese authorities are evidently saying to themselves: "Don't let it start again" and are showing their tech giants the yellow card as a precautionary measure. However, the rulers in Beijing do not want to bleed the companies dry financially. After all, they are important drivers of innovation in important fields of the future.


Meituan will be able to cope with the penalties and continue its strong growth. Due to the scalability of the business, positive free cash inflows are expected for the first time in 2022. The leap over the break-even point should follow a year later, with annual sales then exceeding 50 billion dollars.


𝐇𝐚𝐯𝐞 𝐚 𝐰𝐨𝐧𝐝𝐞𝐫𝐟𝐮𝐥 𝐰𝐞𝐞𝐤!


𝐁𝐑

 
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