公司动态：主动应对外卖市场竞争

Meituan (3690 HK) Proactively responding to competition in fooddelivery market Target PriceHK$181.60(Previous TPHK$200.20)Up/Downside40.3%Current PriceHK$129.40 Meituan reported (26May) its1Q25results: revenue was RMB86.6bn, up18%YoY, 1% higher thanboth our forecast andBloomberg consensus estimate,while adj. NP reached RMB10.9bn,up 46% YoY, and was 12/13% higher thanour forecast/consensusestimates. The RMB13.5bn OP forthecore localcommerce (CLC) segment was10% better than consensus, mainly attributableto the beat in OP offood delivery (FD) business aided by optimization in usersubsidy, in our view.Sincecompetitionisgearing up forthefood deliverybusiness, and industry players are deploying more resources to accelerate thedevelopment of instant retail business, Meituan is proactively responding andtrading off short-term profitability to enhance user stickiness, to ride on the tideof accelerated industry penetration.Meanwhile, Meituan remainscommittedtoinvest ininternationalexpansion to drive long-term revenue and earningsgrowth.We remain positive on Meituan’scompetitiveedge intheFD industry,and believeindustrycompetitionshouldreturn torationalityin due course, butthere will be a lack of visibility in the short term.We lowerour2025-2027Erevenue/adj.NP forecastsby1-2%/11-21%toaccountfor theadditionalinvestment intheFD business, and incrementalinvestment to support overseasexpansion oftheFD business. Our DCF-based TP was cut by 9% to HK$181.6(previous: HK$200.20), translating into 25x 2025E adjusted PE.MaintainBUY. China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Ye TAO, CFAfranktao@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Joanna Ma(852) 3761 8838joannama@cmbi.com.hk StockData Proactivelyrespond tocompetitionand target to maintain marketshare.CLC segment rev/OP was RMB64.3bn/13.5bn in1Q25, up18%/39%YoY,2%/10% better than consensus, thanks to better-than-expected UEexpansion of FD aided by optimization in user subsidy.However, withincreasingindustry competition, we expect Meituan to respond actively andmaintain market share in both FD and instant retailmarketsin theshortterm.That said, we expect solid revenue and earningsgrowthforthein-store hotel & travel (ISHT) segment to buffer some of the investmentimpactsintheshortterm.WeforecastCLCtoinkrevenue/OPofRMB66.7bn/13.6bn,implying YoY growth of 10%/-11% in2Q25E. New initiatives: 1Q lossin linewith expectation, determined to drivefor overseas expansion.Revenue generated from new initiatives wasRMB22.2bn in1Q25, up19% YoY, driven by grocery retail businesses andthe development of overseas business. Operating loss was RMB2.3bn,narrowedfromRMB2.8bnlossin1Q24,mainlydrivenbyimprovingoperating efficiency and marketing efficiency in grocery retail businesses.We estimate thatoperatingloss generatedfromMeituanSelectwasRMB1.6bn,narrowed from RMB2.9bn in 1Q24 and also delivered slightimprovement QoQ. For2Q25, we are estimating21.5% YoY revenuegrowth for new initiatives, driven by solidgrowthinthegrocery retailbusiness, and ramp-up in revenue generation intheFD business in theoverseas market.We are looking for a sequential flat operating loss forMeituanSelectbusiness,andslightlywidening loss foroverseas FDbusiness driven bythemixed impact from rapid business expansion andimprovinguniteconomics.Onacombinedbasis,weareforecastingRMB2.6bn operating loss for thenew initiativessegment(2Q24: loss ofRMB1.3bn). Source: FactSet Revision of forecast andvaluation Key changes in ourestimates include: 1) we lower 2025-2027E revenue forecast by 1-2%to factor inpotentiallyslower-than-expected revenue growth intheCLC business, but partlyoffset by thelikelystronger-than-expected revenue growth in new initiatives driven by moresolid than expected revenue growth in grocery retail; 2) we cut2025-2027Eoperating profitforecast by 10-23% to account forMeituan’s escalated user subsidy to respond toincreasingindustrycompetition,andincrementalinvestmenttodriveforoverseasexpansion. DCF-based target price of HK$181.6 To account for the lowered earnings forecast, our DCF-based TP was lowered by 9% toHK$181.6 (WACC of 11.0%, terminal growth of 2.5%; both unchanged), translating into25x 2025E adjusted PE. Disclosures& Disclaimers Analyst CertificationThe researchanalyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or herpersonal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report withi