On August 23, the second quarter of 2019 was reported by the American Mission Review (Stock Code: 3690.HK, hereinafter referred to as American Mission). Operating revenue was 22.7 billion yuan, up 50.6% year-on-year, and total transaction volume was 159.2 billion yuan, up 28.7% year-on-year. EBITDA was adjusted to 2.3 billion yuan, and net profit was adjusted to 1.5 billion yuan, making profits for the first time.
The companys single-quarter profit is also related to the performance of the main business pillar catering takeout. According to the financial report, the revenue of catering takeout increased by 44.2% in the current quarter to 12.8 billion yuan, while gross profit reached 2.9 billion yuan, more than double the 1.4 billion yuan in the same period in 2018.
Take-out business is the result of both open source and throttling. On the one hand, the growth of total business leads to the increase of commission. On the other hand, the delegation has reduced user subsidies in the same period, which is to say, the red envelope has been reduced.
Of course, the lower cost per unit of distribution brought about by seasonal factors has also played a role, Wang said on the conference call.
From a net loss of 1.86 billion yuan in the fourth quarter of late 2008 to a positive net profit in the second quarter of 2019, its revenue and earnings performance are all manifestations of the super-platform effect of the expansion of the company from a single catering business to life services. The companys profitability depends on the power of roads and distribution networks. CEO Wang Xing believes that this profit is the continuous increase of brand penetration on the supply side and demand side, which has led to the continuous growth of the business scale of multiple service categories.
The Key to Turning Loss into Profit
In the second quarter, the companys total revenue was 22.7 billion yuan, up 50.6% year-on-year and 18.4% year-on-year. Gross profit increased from 2.8 billion yuan in the same period in 2018 to 5.1 billion yuan, an increase of 179.5% over the same period last year, almost doubling.
In fact, the company has done a lot to create revenue.
As stated at the beginning of this article, compared with the daily red envelope subsidy for hungry people, from the second half of 2018, the amount of subsidies for the American League has become lighter and lighter. In 2019, the amount of subsidies has decreased significantly.
In comparison, hungry subsidies are equivalent to full reduction mode, stimulating effect is more direct; American League is equivalent to paying membership, and then enjoying a fixed number of discounts, the threshold is high but the user stickiness is stronger, and the invisible stimulus of unit price is stronger. Probably no one counts the cost of buying a member when ordering takeout.
Its a good thing for the platform that users grow sticky or get into the habit of using a certain platform. However, from the overall takeout trend, the growth trend of takeout users has slowed down, and the competition of the platform will become more intense.
According to CNNICs 43rd Statistical Report on the Development of Internet in China, as of December 2018, the number of Internet users in China was 829 million, of which 406 million were online takeout users, accounting for 49% of the total number of Internet users. According to takeout user estimates, its penetration is close to the ceiling.
Compared with the period of rapid expansion of the scale of overseas sales users, from the end of 2015 to the end of 2017, takeout users expanded from 114 million to 334 million, with an average annual growth of 110 million takeout users. But in the whole year of 2018, takeout users grew by only 0.72 billion, totaling 406 million.
Correspondingly, in the first quarter, Metros trading users exceeded 418 million, an increase of 26.4% compared with the same period last year, and the number of merchants reached 5.8 million, an increase of 27.3% compared with the same period last year. By the second quarter, the number of trading users was 420 million, up 18.4% year-on-year; the number of active businessmen was 5.9 million, up 16.2% year-on-year. The growth of traders and businesses fell by 8% and 11.1% respectively.
However, Wang Xing revealed at the conference that the takeout volume of the sinking market in the second quarter grew faster than that of the first and second tier cities, and the sinking market contributed most of the orders. As Wang Xing said, This industry is still in the early stage of development. With the penetration of the sinking market, the growth trend of the industry may improve.
Takeaway turnaround slowed down
As of June 30, 2019, the number of takeout transactions increased 34.6% year-on-year to 2.1 billion. Compared with the first quarter, takeout revenue increased from 5.1 billion yuan to 7.9 billion yuan, an annualized increase of 56.6%. It is pointed out in the financial report that the continuous improvement of gross interest rate on catering takeout and the narrowing of new business losses are due to the expansion of business scale.
Beginning in 2019, the contribution ratio of takeout and new business to the groups revenue has been growing slowly, while the contribution ratio of store, Hotel and tourism business to the revenue has been declining gradually.
In the second quarter of 2019, the companys takeout revenue was 12.8 billion yuan, accounting for 56.6% of the total revenue; 5.2 billion yuan for stores, hotels and tourism, accounting for 23.1% and 21.3% for new businesses and other 4.6 billion yuan. Compared with the revenue structure of the American League in 2018, the above businesses accounted for 58.48%, 24.28% and 17.24% respectively.
However, it is noteworthy that it is not easy to turn a loss into a profit at the high cost of takeout.
The gross profit and gross interest rate corresponding to the above three items are 2.9 billion yuan, 22.3%, 4.7 billion yuan, 88.8%, 400 million yuan and 9.1% respectively.
The problem facing the delegation now is that the takeout business with high cost and low gross profit is expanding, and the low cost and high gross profit business tends to shrink in stores, hotels and tourism.
New Business Debursement
In the second quarter, sharing bicycles became a lighter burden.
New business revenue of 4.6 billion yuan this quarter, up 85.1% year-on-year. Compared with the first quarter, the gross profit of the new business and other branches in the second quarter was 421.1 billion yuan, turning negative to positive. The gross profit rate is 9.1%, which is a qualitative change compared with -76.4% in the same period in 2018.
But Mobai bicycles are still a problem. According to the earnings report, the operating loss narrowed sharply in the second quarter, mainly due to the fact that depreciation charges no longer occur when a number of bicycles expire within three months, and the introduction of new vehicles has also resulted in a significant reduction in depreciation charges.
The impact of bicycle depreciation on revenue can be seen from the net profit before and after adjustment. In the second quarter, EBITDA was adjusted to 2.3 billion yuan and 1.5 billion yuan. Comparing with 2018, the group accounted for 5.367 billion yuan of depreciation and amortization. Among them, the depreciation of property, plant and equipment commented by the group totaled 4.25 billion yuan, an increase of 3.9 billion yuan over the same period of last year, mainly the depreciation of Mobye bicycle assets.
EBITDA means profit before interest, tax, depreciation and amortization. The EBITDA deducted by the delegation in the second quarter was 800 million yuan, and the income tax deducted was 226 million yuan. Of the remaining 574 million yuan, the depreciation fees generated by the Mobi bicycles were the overwhelming majority.
Shared bicycle business does not seem to be cost-effective. Shared bicycle service life is three years. Whether it has cyclical depreciation costs or gradually average quarterly depreciation costs, it is not directly proportional to the current visible revenue promotion. But the company believes that the new business helps to increase the number and stickiness of transactions with users.
As of the second quarter, Metros online car service has penetrated into 42 cities, including Shenzhen-Guangzhou Airlines. In the long run, the new fields and the new consumption scenarios brought by them have already made the deluxe feel the sweetness of profitability.
This will undoubtedly be the first step in the expansion of the American League.
Source: Editor-in-Charge of Tiger Sniffing Network: Wang Fengzhi_NT2541