(Bloomberg) -- Shares of Chinese food delivery giant Meituan surged as much as 14% in Hong Kong after its fourth-quarter results impressed analysts.
The stock snapped a two-day loss and was the best performer on the Hang Seng Tech Index on Monday. The firm reported a net loss of 5.3 billion yuan ($831 million) for the December quarter, versus the 7.2 billion yuan projected by analysts. Revenue rose 31% -- the slowest in more than a year -- to 49.5 billion yuan, meeting estimates.
Meituan is one of the Chinese technology giants that are navigating a severe regulatory crackdown from authorities in Beijing. The company, led by high-profile billionaire Wang Xing, is grappling with scrutiny in areas from the welfare of its delivery riders to the commissions it charges restaurants.
READ: Meituan Surges After Solid 4Q Results, Margin Beat: Street Wrap
Meituan and its rivals are also under pressure to do their bit to share the wealth in Xi Jinping’s “common prosperity” drive, and alleviate widespread pain as China battles several Covid outbreaks. In February, the government issued a call to aid the ailing service industry, asking food delivery platforms to cut the fees they charge restaurants -- wiping $26 billion off Meituan’s value in a single day.
Meituan’s stock had dropped 40% this year before Monday.
What Bloomberg Intelligence Says
Meituan’s 4Q boost in food-delivery margin from a persistent increase in transactions could alleviate concerns about the drag from government-initiated fee cuts -- meant to provide relief to merchants amid Covid-19 flare-ups -- to the unit’s 1H profitability. The company needs to raise 1H transaction volume by at least 14% to yield more cost savings, we calculate, while lifting food-delivery margin above the year-earlier level following fee adjustments.
- Catherine Lim and Tiffany Tam, analysts
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Read more: Meituan’s Revenue Slows in Latest Sign of China Crackdown Toll
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