Meituan reports robust revenue and profit growth in the second quarter thanks to “value-for-money” approach

China's largest on-demand service provider Meituan on Wednesday reported a 21 percent jump in second-quarter revenue, supported by steady growth in its core business of local food and grocery delivery.

Beijing-based Meituan generated 82 billion yuan ($11.5 billion) in the quarter ended June, up from 68 billion yuan a year earlier. The company stepped up efforts to offer discounted meals through a series of campaigns and expanded its on-demand e-commerce business, helping it fend off competition from rivals such as Alibaba Group Holdings' Ele.me and ByteDance's Douyin. (Alibaba owns the South China Morning Post.)

Quarterly profit was 11 billion yuan, up 142 percent from 4.7 billion yuan a year earlier.

In its earnings release, the company said it focused on operational improvements and improved value for money in the June quarter.

“We have actively explored new product formats to meet diverse consumer demand, particularly in the low-price segment,” it said.

Revenue of the core local commerce segment, which includes on-demand food and grocery delivery, hotel and travel bookings, and marketing services for merchants, amounted to 60.7 billion yuan, up 18.5 percent from 51.2 billion yuan a year earlier.

One bright spot remained the growth in the so-called on-demand e-commerce business, in which goods are delivered to online shoppers within hours instead of days.

The company, called Meituan Instashopping, posted strong growth in the June quarter, partly due to higher transaction frequency and growing offerings on the platform, as Meituan accelerated its collaboration with domestic and overseas brand retailers and brought their offline stores to its platforms, including the eponymous Meituan app and crowdsourcing review platform Dianping.

In a note following the results release, analysts at consulting firm Third Bridge said they expect Instashopping orders to grow by around 40 percent this year, particularly in the electronics, alcohol, cosmetics and household goods categories, as brands have significantly increased their investments in Meituan.

Earlier this month, Meituan partnered with Chinese company Midea, one of the world's largest home appliance manufacturers, to connect Midea's 25,000 offline stores with Meituan's platforms.

The merger will allow hundreds of millions of Meituan registered users to order products from refrigerators to dishwashers “with the same ease as they order food delivery,” a company executive said in announcing the partnership.

Over the years, Meituan has signed similar deals with brands such as toy maker Lego, authorized Apple dealers, candy and food giant Mars, sporting goods retailer Decathlon and electronics retail chain Suning, contributing to an expansion of offerings that has helped convert food delivery users into grocery and electronics shoppers within Meituan's apps.

The abundant product offering has led to a surge in the number of on-demand transactions on the platform, which rose 14 percent to 6.1 billion in the second quarter.

Meituan's Hong Kong-listed shares closed 3.2 percent lower at HK$102.8 ahead of the results announcement.

The second-quarter results were released days after the company announced the structural changes in an internal memo. According to several local media reports, these are the latest in a series of changes since the beginning of this year as the company seeks to consolidate and streamline its operations.

The latest move sees Meituan consolidate its software-as-a-service, bike-sharing and power bank rental businesses into a new software and hardware unit and rename its overseas business Keeta.