Wang Xing from Meitan suffers $ 1.1 billion wealth dip due to subsidy war

Wang Xing, founder of the Chinese food delivery leader Meitan, saw his wealth on Thursday $ 1.1 billion falling during the morning trade when the shares in Hong Kong sank on Hong Kong, no less than 11.3% after it had announced a decrease of 97% in win the day before.

The 46-year-old chairman and CEO still has a fortune of $ 9 billion largely based on a company stake, according to the estimates of Forbes. But he is confronted with a grim look. If e-commerce giants Alibaba and Jd.com Keep investing heavily in food provision to attract new users, Meitan is forced to spend billions of Yuan every quarter to defend his market position and to match the expenditure of competitors in meal coupons and user subsidies.

“Investors are very concerned that Meitan can no longer keep track of if Alibaba continues to invest in food delivery,” says Eric Wen, head of research at Hong Kong -based research agency Blue Lotus Capital Advisors, by WeChat.

The subsidy war has taken a big toll. In the second quarter that ended in June, the net profit of Meitan fell 97% on an annual basis to 365.3 million Yuan ($ 51.1 million), although sales rose 11.7% to 91.8 billion yuan from the same period a year earlier.

During a Wednesday analyst call, billionaire Wang said that the company has previously confronted intense competition and Meitan will defend himself. Chief Financial Officer Chen Shaohui said that his most important local trading activities, which largely consist of food delivery, will run “substantial” losses in the current quarter as a result of strategic expenditure.

Based on reductions of the respective cash register of the companies, Blue Lotus’s Wen Gen that Alibaba, Jd.com And Meitan burned around 2 billion Yuan every three -monthly one to offer customer subsidies and a discount on customer subsidies. Wen thinks that the war supply war will last throughout the year, while the battle for attracting new users will continue. It can disappear early next year if the competitors choose to focus more investments in areas such as AI, he says.

But Ke Yan, the Singapore -based head of research at DZT Research, is more pessimistic. The murderous competition in Chinese food delivery will decrease at least 12 months, he says via WeChat. The profit of Meitan remains under pressure because it has to spend on both meal subsidies and to expand internationally, says Ke.

The Local Services Giant has launched its overseas food delivery Keeta in markets outside China mainland. In Hong Kong Elleboog Rival Deliveroo, who left the Asian financial hub in March. Since its launch in 2023, the user grant subsidies have made one of the most popular services for supplying food in the city. In Saudi Arabia, Keeta was extended to 20 cities at the end of July, according to the results of the second quarter of Meitan.

“International expansion does not earn money in one day,” says Ke. “It takes at least a year or two for this company to solve a profit.”