Meituan-W (3690 HK) is a company with a high visibility of growth potential and profitability improvement in its to-home business, including Food Delivery (FD) and Instashopping. Despite the adverse impact of COVID controls, Meituan managed to deliver a satisfactory earnings result in 2Q22 and turned profit from loss, demonstrating its profitability potential. The company has gained stable user mind and acquired a larger customer base, thanks to its extensive merchant cooperation and strong fulfillment capacities. We expect its FD market share to remain above 70% and its competitive edge to further improve in the duopoly market. Meanwhile, the number of FD users is far from reaching its peak, and with incremental users acquired by its new initiatives business from less-developed areas, we expect Meituan's peak order volume to be achieved in the future.
