(Yicai Global) Aug. 25 -- Meituan Dianping has seen its market capitalization double in the last three months to become the fifth-most valuable firm on the Hong Kong stock exchange as profits at China’s biggest food delivery app nearly doubled in the second quarter, smashing expectations.

Meituan Dianping’s share price [HKG:3690] was trading down 2.71 percent at HKD258.60 (USD33.37) this afternoon with a market cap of HKD1.52 trillion (USD196 billion).

It is now the fifth-most valuable company listed on the Hong Kong stock exchange, behind only Chinese e-commerce giant Alibaba Group Holding, internet titan Tencent Holdings, the Industrial and Commercial Bank of China and Ping An Insurance Group.

The Beijing-based firm’s net profit surged 95.5 percent in the second quarter from the same period last year to CNY2.2 billion (USD318.4 million), according to the company’s earnings report released on Aug. 21. Revenue for the period was up 8.9 percent to CNY24.7 billion (USD3.6 billion).

Meituan’s profitability was much better than expected and this has boosted its share price, Wang Pengbo, a senior analyst at Beijing-based thinktank Analysys told Yicai Global. The lifestyle platform has swiftly recovered from the fallout from the Covid-19 pandemic, he added.

The firm’s market share of both ‘in-restaurant dining’ and ‘home food deliveries’ are rising, Wang Pengbo added. The company is unlikely to seek to gain too much profit from these two core businesses but will instead diversify its services so as to offer more valued-added products to make money, Wang Pengbo added.

“The pandemic has accelerated the digitalization process in all walks of life, and shown us that our capabilities accumulated over the years continue to create great value and strengthen our confidence in investing in the future,” founder and Chairman Wang Xing said earlier.

Hong Kong-based investment group financial institution CLSA Asia-Pacific Markets has re-instated Meituan’s rating as ‘buying-in,’ raising the target price to HKD300 (USD38.30) from HKD230.

Revenue at the firm’s catering takeaway business was CNY14.5 billion (USD2 billion) in the three months ended June 30, up 13.2 percent, according to the earnings report. The value of transactions jumped 16.9 percent to CNY108.8 billion due to an increase in the number of vendors on the platform. The average daily order volume rose 6.9 percent to 24.5 million.

Meituan has recently introduced a number of new business lines to offer a closed loop of in-house services. In May it launched its own credit payment option ‘Meituan Monthly Pay’ to rival other mobile payment platforms such as Alibaba Group Holding’s AliPay and Tencent Holdings’ WeChat Pay. Meituan also rolled out its budget commodities and fresh produce app ‘Tuanhaohuo’ this month, further cementing its position in the e-commerce sector.

Editors: Liao Shumin, Kim Taylor