The Chinese calendar’s Year of the Dog has coincided ominously with a trend for Chinese entrepreneurs to float businesses at steep prices. Meituan Dianping filed for a Hong Kong initial public offering on Monday. The meal delivery group is reportedly seeking a $60bn valuation. Investors, such as Sequoia, will celebrate. Others will worry the deal marks a market peak.
Eight months ago, Meituan’s mooted value was around $30bn. The company has not become twice as desirable since, despite the breadth of its offer to customers. Gourmets can order a portion of spicy freshwater crayfish complete with claws, a summer seasonal favourite. More prosaically, some office workers find the mark-up so cheap they have coffees delivered.
That helps explain an increase in losses to revenues of 10 percentage points to more than 50 per cent in the most recent year. Peers GrubHub and JustEat make decent profits before one-off costs. Yet Meituan’s touted market worth is 12 times revenues, placing it between its US and UK counterparts.