Source: e Company Author: Cao Chen.
On the evening of June 25th, there were rumors in the market that the leading life service e-commerce platform in China $MEITUAN-W (03690.HK)$is considering raising funds through bond issuance this year to repay some existing debts and provide funds for its expansion. It is reported that Meituan is working with investment banks to prepare for bond issuance, which is more inclined to conventional bonds rather than convertible bonds. The scale of the bond offering may exceed $1 billion.
Regarding this, a Meituan spokesperson declined to comment.
In terms of the secondary market, Meituan opened low by 1.54% today, and then fluctuated and rose. As of the reporter's deadline, Meituan's stock price was HKD 117.1 per share, up 0.26%, with a total market value of HKD 725.446 billion.
Renowned economist Pan Helin told Securities Times e Company reporters that Meituan still has room to increase its asset-liability ratio, so in the future, Meituan will increase its resource utilization efficiency through more bond financing, and many of Meituan's businesses are still in the expansion stage. Although Meituan seems to have a lot of money, the speed at which expansion consumes funds is very fast, so it needs to plan in advance for its sources of funding.
"Usually, if a company has a low asset-liability ratio, sufficient cash flow, and a stable financial structure, bond issuance may help the company optimize its financial structure and reduce overall financing costs. It can enhance the company's cash flow, increase its business stability, and may also be due to the company's future business expansion needs." A securities industry source told Securities Times e Company reporters.
According to Meituan's latest financial report, the company currently has ample cash on hand.
Meituan's financial report for the first quarter of 2024 announced on June 6 shows that as of the end of the first quarter, its cash and cash equivalents and short-term financial investments held were RMB 50.8 billion and RMB 87.8 billion, respectively. The announcement showed that the company has mainly raised funds through shareholder contributions and the issuance and sale of equity securities and bonds in the past to meet cash requirements.
From the balance sheet, as of the end of the first quarter, Meituan's total assets were RMB 285.3 billion, total liabilities were RMB 128.6 billion, and total equity was RMB 156.7 billion. As of March 31, 2024, Meituan's capital-to-liability ratio was approximately 30%.
In terms of bond issuance, Wind data shows that Meituan has issued a total of 6 overseas bonds, of which 4 bond issuances were on October 28, 2020 and 2 bond issuances were on April 27, 2021, and their listing locations were all in Hong Kong Exchanges and Clearing Limited. As of now, the total balance of the six overseas bonds is USD 6.984 billion.
In terms of operating performance, in the first quarter of 2024, Meituan achieved revenue of RMB 73.3 billion, a year-on-year increase of 25%; the operating profit of the core local business segment was RMB 9.7 billion, and the operating loss of the new business segment narrowed from RMB 5 billion in the same period last year to RMB 2.8 billion.
In the first quarter, the company's adjusted EBITDA and adjusted net profit increased year-on-year to RMB 8.1 billion and RMB 7.5 billion, respectively. In the first quarter of this year, Meituan achieved operating cash inflows of RMB 6 billion.
It is worth mentioning that recently, Meituan has frequently made moves in the capital market, and threw out a $2 billion share buyback plan which attracted attention.
On the evening of June 11th, Meituan announced that the board of directors had decided, according to the shareholder resolution passed at the June 30, 2023 shareholder meeting, to occasionally repurchase the company's B-class common stock on the open market for a total amount not exceeding $2 billion. The company will repurchase it under applicable rules. Meituan stated that the stock repurchase could demonstrate the company's confidence in its own business development and prospects, and ultimately benefit the company and create value for shareholders. Meituan's board of directors believes that the company's existing financial resources are sufficient to support stock repurchases while maintaining a stable financial situation.
Meituan stated that the stock repurchase could demonstrate the company's confidence in its own business development and prospects, and ultimately benefit the company and create value for shareholders. Meituan's board of directors believes that the company's existing financial resources are sufficient to support stock repurchases while maintaining a stable financial situation. Meituan currently has sufficient cash on hand. The financial report for the first quarter of 2024 released by the company on June 6th showed that as of the end of the quarter, it held cash and cash equivalents and short-term financial investments of CNY 50.8 billion and CNY 87.8 billion, respectively.
This is also a large-scale buyback plan that Meituan has thrown out after more than half a year. On November 28, 2023, Meituan's stock price fell by 5.16%, and on November 29, Meituan's stock price fell sharply by 12.18%. To boost investor confidence, on the morning of November 29, Meituan announced that from December 1, 2023, it will occasionally repurchase the company's shares on the open market with a total amount not exceeding USD 1 billion.
The Meituan board of directors also stated at the time that the share buyback can demonstrate the company's full confidence in its business prospects and prospects, and the company's existing financial resources are sufficient to support share repurchases while maintaining a stable financial condition.
After this buyback plan was announced, Meituan announced on the evening of January 10 this year that the company bought back 5.63 million B shares that day, with a cost of approximately HKD 399 million. According to this calculation, Meituan's buyback price this time was HKD 71.07 per share, which was Meituan's first stock buyback since its listing.
Since then, Meituan has conducted multiple buyback operations. The company disclosed in its first-quarter report that it has spent a total of HKD 7.174 billion to buy back 82.51 million B shares on the Hong Kong Stock Exchange, which is equivalent to 92% of the original plan of US$1 billion (HKD 7.81 billion).
Editor/Lambor