Considering issuing more than $1 billion in bonds? Meituan responded!
On the evening of June 25, there were market rumors that Meituan, China's leading life service e-commerce platform, is considering raising funds through bond issuance this year to repay part of its existing debt and provide funds for its expansion. It is reported that Meituan is working with investment banks to prepare for the bond issuance, which is more inclined to conventional bonds rather than convertible bonds. The bond issuance size may exceed US$1 billion.
In response to this, a person from Meituan said that they would not comment.
In the secondary market, Meituan opened 1.54% lower at the opening of Hong Kong stocks today, and then rebounded. As of press time, Meituan's share price was HK$117.15 per share, up 0.3%, with a total market value of HK$729 billion.
Well-known economist Pan Helin told the Securities Times e-company reporter that Meituan's asset-liability ratio still has room for improvement, so in the future, Meituan will use more bond financing to improve resource utilization efficiency, and many of Meituan's businesses are still in the expansion stage. Although Meituan looks rich, its expansion consumes funds very quickly, so it needs to plan the source of funds in advance.
"Generally speaking, if a company has a low asset-liability ratio, sufficient cash flow and a stable financial structure, the company's issuance of bonds may be due to the current lack of 'high-quality' assets in the market and low market financing costs. The development of the company will help optimize the financial structure and reduce the overall financial financing costs; enrich the company's cash flow and enhance operational stability. At the same time, it may also be due to the company's future business expansion needs." A securities company official told Securities Times e-company reporter.
Judging from Meituan’s latest financial report, the company currently has relatively abundant cash flow on hand.
Meituan's first quarter 2024 financial report released on June 6 showed that as of the end of the first quarter, its cash and cash equivalents and short-term financial investments were 50.8 billion yuan and 87.8 billion yuan respectively. The announcement showed that the company used to meet its cash needs mainly through shareholders' capital contributions and financing through the issuance and sale of equity securities and bonds.
From the balance sheet, as of the end of the first quarter, Meituan's total assets were 285.3 billion yuan, total liabilities were 128.6 billion yuan, and total equity was 156.7 billion yuan. As of March 31, 2024, Meituan's debt-to-equity ratio was about 30%.
In terms of bond issuance, Wind data shows that Meituan has issued a total of 6 overseas bonds so far, of which 4 bonds were issued on October 28, 2020, and 2 bonds were issued on April 27, 2021, and all were listed on the Hong Kong Stock Exchange. So far, the total balance of the 6 overseas bonds is US$6.984 billion.
In terms of operating performance, in the first quarter of 2024, Meituan achieved operating revenue of 73.3 billion yuan, a year-on-year increase of 25%; the operating profit of the core local business division was 9.7 billion yuan, and the operating loss of the new business division narrowed from 5 billion yuan in the same period last year to 2.8 billion yuan.
In the first quarter, the company's adjusted EBITDA and adjusted net profit increased year-on-year to 8.1 billion yuan and 7.5 billion yuan respectively. In the first quarter of this year, Meituan achieved operating cash inflow of 6 billion yuan.
It is worth mentioning that recently, Meituan has been active in the capital market, and its huge repurchase plan of US$2 billion has attracted attention.
On the evening of June 11, Meituan announced that the board of directors resolved to repurchase Class B common shares of the company in the open market from time to time for a total amount not exceeding US$2 billion, in accordance with the share repurchase authorization approved at the shareholders' meeting on June 30, 2023. The company will repurchase in compliance with relevant regulations.
Meituan said that the company believes that the share repurchase can demonstrate the company's confidence in its business development and prospects, and will 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 the share repurchase while maintaining a sound financial position.
This is also the first time in more than half a year that Meituan has launched a large-scale repurchase plan. On November 28, 2023, Meituan's stock price fell by 5.16%, and on November 29, Meituan's stock price plummeted by 12.18%. In order to boost investor confidence, Meituan announced in the morning of November 29 that starting from December 1, 2023, it will repurchase company shares on the open market from time to time with a total amount not exceeding US$1 billion.
Meituan’s board of directors also stated at the time that stock repurchases could demonstrate the company’s confidence in its business outlook and prospects, and that the company’s existing financial resources were sufficient to support share repurchases while maintaining a sound financial position.
After the repurchase plan was disclosed, Meituan announced on the evening of January 10 this year that the company repurchased 5.63 million Class B shares on the same day, spending about HK$399 million. Based on this calculation, the average repurchase price of Meituan this time was HK$71.07 per share. This was Meituan’s first stock repurchase since its listing.
Since then, Meituan has carried out multiple repurchase operations. The company disclosed in its first quarter report that this year, Meituan has spent a total of HK$7.174 billion to repurchase 82.51 million Class B shares on the Hong Kong Stock Exchange, equivalent to 92% of the original US$1 billion plan.
