(Yicai Global) Sept. 4 -- China's online startup Meituan-Dianping, which owns the country's biggest bicycle-sharer Mobike, is aiming to beat smartphone maker Xiaomi in valuation in its upcoming initial public offering. The losses that the firm has racked up during its heated competition against rivals such as Alibaba Group Holding may cool down the hype.
Meituan-Dianpjng, which offers platforms for food takeout, restaurant reviews and travel bookings, updated its prospectus today with a new valuation from USD46.4 billion to USD55.7 billion to match the record high revenue of the first four months this year, the prospectus shows. In comparison, Xiaomi reached a valuation of USD54 billion in its IPO. Meituan proposed the price per share to be from HKD60 (USD7.6) to HKD72 in its floatation scheduled for Sept. 7.
The Beijing-based firm logged an increase in losses to CNY22.8 billion (USD3.4 billion), nearly 3 times larger than that of last year. The revenue was CNY15.8 billion (USD 2.4 billion), close to half of the total revenue of CNY33.9 billion (USD5 billion) in 2017.
The company gave three main reasons for the loss, such as the potential debts in convertible and callable preferred stocks because of the rapid development of the company, as well as the constant rise of valuations, the amount of which reached CNY20.5 billion (USD3 billion). Larger expenses in sales and marketing, as well as costs of acquiring Mobike in April and its losses all added to the parent's debt burden.
Meituan will reduce the amount of Mobike's staff and optimize the pricing strategy while not intending to further explore the sector which is dominated by two players, including Alibaba-backed Ofo.
The core business of meal delivery, restaurant dining and hotel bookings were the main sources of revenue. Food and beverage takeaway brought in over 61 percent of the total revenue at CNY9.7 billion (USD1.4 billion), while in-shop dining and hotel accommodation made up about 28 percent at CNY4.4 billion (USD640 million).
Editor: Emmi Laine