INSUBCONTINENT EXCLUSIVE:
Meituan-Dianping (3690.HK) enjoyed a strong debut today in Hong Kong, a sign that investors are confident in the Tencent-backed company
prospects despite its cash-burning growth strategy, heavy competition and a sluggish Hong Kong stock market.
During morning trading, Meituan
shares reached a high of HKD$73.85 (about $9.41), a 7% increase over its initial public offering price of HKD$69
When Meituan reportedly set a target valuation of $55 billion for its debut, it triggered concerns that the company, which bills itself a
&one-stop super app& for everything from food delivery to ticket bookings, as overconfident.
While Meituan, the owner of Mobile, is the
leading online marketplace for services in China, it faces formidable competition from Alibaba Ele.me and operating on tight margins and
heavy losses as it spends money on marketing and user acquisition costs
As it prepared for its IPO, Meituan was also under the shadow of underwhelming Hong Kong debuts by Xiaomi and China Tower
Like Xiaomi, Meituan is listed under a new dual-class share structure designed to attract tech companies by allowing them to give weighted
voting rights to founders.
The sponsors of Meituan IPO are Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley.
