Summary of Meituan's Conference Call Company Overview - **Company**: Meituan (3690.HK) - **Event**: Asia Leaders Conference 2025 - **Date**: September 5, 2025 - **Focus**: Food delivery competitive landscape, Instashopping growth, AI strategies, and financial outlook Key Points Industry and Competitive Landscape - **Food Delivery Competition**: Increased competition since June-July has significantly impacted unit economics due to elevated subsidy levels and higher delivery costs [5][7] - **Market Share Strategy**: Meituan aims to maintain its GTV market share leadership in the meal category by focusing on core users and leveraging extensive merchant coverage and superior user experiences [5][7] - **Order Volume Growth**: Goldman Sachs forecasts 13% and 11% order volume growth for 3Q25 and FY25E, respectively, driven by elevated industry-wide subsidies [5][7] Financial Performance and Projections - **EBIT Loss Forecast**: For 2025E, Meituan is expected to incur a food delivery EBIT loss of -Rmb22 billion due to user subsidies [5][7] - **Instashopping Growth**: Instashopping's order volume is projected to grow by 31% in 2025E, with an EBIT loss of -Rmb1.7 billion attributed to investments [6][7] - **Revenue Growth**: Meituan's group revenue is projected to reach Rmb337.6 billion in 2024, with a growth rate of 23% [9][11] Strategic Initiatives - **AI and New Initiatives**: The company is investing in AI applications and expanding its Keeta initiative, which is expected to drive new growth [7][8] - **Overseas Expansion**: Meituan is prioritizing domestic market resources but continues to develop overseas business, particularly in Hong Kong and the Middle East [8][9] Risks and Challenges - **Downside Risks**: Key risks include worse-than-expected competition, labor cost inflation, food safety concerns, and larger-than-expected investments in Keeta [8][9] - **In-store Competition**: The in-store segment is facing margin pressures due to macro factors and competition from food delivery services [8][9] Investment Outlook - **Rating and Price Target**: Goldman Sachs maintains a Buy rating on Meituan with a 12-month price target of HK$144, indicating a potential upside of 39.8% from the current price of HK$103 [11][12] Additional Insights - **Long-term Confidence**: Despite near-term profit pressures, there is confidence in Meituan's leadership in local services and recovery in profitability as competition normalizes [7][8] - **Market Position**: Meituan's strong balance sheet and leading position in GTV are seen as advantages in navigating the competitive landscape [7][8] This summary encapsulates the critical insights from Meituan's conference call, highlighting the company's strategic focus, financial outlook, and the competitive environment in which it operates.

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Core Insights - Meituan has launched the LongCat-Flash-Chat model, a 560 billion parameter mixture of experts (MoE) model, showcasing its aggressive stance in the AI sector [1] - The model has achieved significant performance metrics, including training on 20 trillion tokens in 30 days and a cost of only $0.7 per million tokens, making it competitive with top industry models [1][4] Group 1: Architectural Innovations - The LongCat model utilizes a "Zero-Computation Experts" mechanism to dynamically allocate computational resources, allowing for efficient processing of low-information tokens without complex calculations [2] - Despite having 560 billion parameters, the model only activates between 18.6 billion to 31.3 billion parameters per task, achieving a balance between cost and efficiency [2] - The introduction of "Shortcut-connected MoE" allows for parallel computation and communication, significantly enhancing the model's throughput during training and inference [3] Group 2: Performance Metrics - The model boasts a single-card inference speed exceeding 100 tokens per second and supports long-context text of up to 128k tokens, indicating its high performance and low operational costs [4] - LongCat's inference speed surpasses that of other mainstream models like DeepSeek, Kimi, and Qwen3, while also demonstrating advanced agent capabilities for complex tasks [4] - The model has shown to match or exceed the performance of leading models in various aspects, including its ability to generate professional code and provide technical and legal risk assessments [4]

Investment Rating - The investment rating for Meituan-W (03690) is "Buy" with a target price not specified [6][15]. Core Views - The report indicates that short-term competition is putting pressure on profits, but there is optimism for long-term profitability recovery due to efficiency advantages [5]. - Meituan's core local business revenue for Q2 2025 was 653.5 billion yuan, which was below Bloomberg consensus expectations by 3.3% [1]. - New business revenue reached 264.9 billion yuan, exceeding Bloomberg consensus expectations by 2.1% [4]. Summary by Sections Overall Performance - In Q2 2025, Meituan reported total revenue of 918.4 billion yuan, which was 2.0% lower than Bloomberg consensus expectations. EBIT was 2.3 billion yuan, falling short of expectations by 97.2%. Adjusted net profit was approximately 14.9 billion yuan, also below expectations by 84.8% [1]. Core Local Business - The core local business faced competitive pressures, resulting in lower-than-expected revenue and profit. Revenue was 653.5 billion yuan, with delivery service revenue at 236.6 billion yuan, commission revenue at 249.5 billion yuan, and online marketing revenue at 135.5 billion yuan. Operating profit was 37.2 billion yuan, which was below expectations by 69.0% [1]. Food Delivery - The company expanded its user base and improved core user engagement and transaction frequency. Collaborations with restaurant merchants led to innovations that benefited both small and chain restaurants. The Meituan Flash Purchase service saw strong growth in order volume and total transaction value [2]. In-store and Travel - Meituan is expanding into new categories and innovating supply models while penetrating lower-tier markets. The company is enhancing digital transformation and standardization for merchants, providing integrated solutions to improve operational efficiency [3]. New Business - New business revenue was 264.9 billion yuan, with an operating loss of 1.88 billion yuan, which was better than expectations. The company is optimizing its grocery retail strategy and expanding its overseas presence with Keeta [4]. Investment Recommendations - The report suggests that while short-term competition may impact profit performance, Meituan's strong merchant base and user reviews provide a solid competitive moat. Future profitability in the core local business is expected to improve, and new businesses are anticipated to continue narrowing losses. Revenue projections for 2025-2027 are 3700 billion, 4356 billion, and 4939 billion yuan respectively, with net profits of 9 billion, 216 billion, and 465 billion yuan [5].

Market Overview - The Hang Seng Index rose by 359 points, closing at 25,417, an increase of 1.43% for the day and 1.4% for the week [3][4] - The total market turnover was 299.945 billion, with a net inflow of 5.623 billion from northbound trading [3] Key Companies Performance - Major tech stocks contributed to the market rise, with Tencent up 2.2% at 605.5, Alibaba up 1.5% at 131.8, and JD.com up 1.9% at 122.1 [4] - HSBC Holdings increased by 2.5% to 102.1, while Hong Kong Exchanges and Clearing rose by 0.8% to 435.6 [4] Macroeconomic and Industry Dynamics - The Hong Kong government is actively contributing to the Belt and Road Initiative, with a summit scheduled to discuss investment opportunities in various sectors [7] - The Hong Kong Stock Exchange is exploring T+1 settlement and expanding ETF connectivity to enhance liquidity and competitiveness [8] - The Ministry of Industry and Information Technology in China is focusing on accelerating the development of AI and robotics industries [9] Regulatory Changes - The China Securities Regulatory Commission is proposing to lower the maximum subscription fees for public funds, aiming to reduce investor costs [10] Corporate News - Ctrip's chairman plans to sell 1 million ADS valued at approximately 73.75 million USD [11] - Hong Kong Broadband announced a board restructuring, appointing a new chairman to enhance governance [12] - Singularity Future Technology is acquiring an AI company for 460 million HKD, with payment through share issuance [13] - Emperor International is selling properties in Macau for 90 million HKD, expecting a fair value loss of approximately 36.4 million HKD [14]

Group 1 - The core viewpoint of the article discusses the competitive landscape of the food delivery market in 2025, focusing on the performance of four major retail e-commerce platforms: Alibaba, JD.com, Pinduoduo, and Meituan [1] Group 2 - Financial highlights and key indicators reveal that all four platforms exhibit a common trait of "increased revenue without increased profit," with significant differences in strategic direction and performance [8] - Alibaba's highlights include: - Instant retail revenue reaching 14.78 billion yuan, a 12% year-on-year increase, contributing to a 25% growth in monthly active users on the Taobao app, despite an expected loss of 22 billion yuan in instant e-commerce [8] - Cloud intelligence revenue of 33.398 billion yuan, a 26% year-on-year increase, with capital expenditure on AI rising 220% to 38 billion yuan [8] - International digital commerce group revenue of 34.741 billion yuan, a 19% year-on-year increase [8] - JD.com highlights include: - Revenue of 356.7 billion yuan, a 22% year-on-year increase [8] - Retail business revenue growth of 20.6%, achieving a new profit margin high during promotional seasons [8] - Daily order volume for food delivery surpassing 25 million, supported by 150,000 full-time delivery riders [8] - Meituan highlights include: - Revenue of 91.84 billion yuan, an 11.7% year-on-year increase [9] - Core local business revenue of 65.3 billion yuan, a 7.7% year-on-year increase, with annual user transaction frequency rising to 45 times [9] - New business revenue of 26.5 billion yuan, a 22.8% year-on-year increase [9] - Pinduoduo highlights include: - Revenue of 104 billion yuan, with growth slowing to 7% [9] - Initiatives like "2025 Duohuo Specialty Products" and "New Quality Merchant Support Plan" [9] - A model combining farmers, cooperatives, and e-commerce driving over 40% growth in agricultural product sales [9] Group 3 - The balance between short-term profits and long-term investments is crucial, with strategies including maintaining cash cow businesses, heavy investments in new growth engines, and setting loss limits for long-term innovations [10] - Corporate social responsibility and entrepreneurial spirit play a key role, as seen in JD.com's provision of social insurance for delivery workers and Pinduoduo's initiatives to support agricultural products [11] Group 4 - The industry is transitioning from a phase of "burning money for market share" to a focus on value creation, with a consensus on green consumption, smart technology, and experience upgrades by 2025 [12][13]

Core Insights - Meituan's CEO Wang Xing disclosed that in Q3 2023, the average monthly income for high-frequency riders (those completing over 26 orders per month) ranged from 7,230 to 10,100 RMB [2] - The company served 770 million users and 14.5 million active merchants over the past year, with a peak daily order volume exceeding 150 million [2] Income and Earnings Structure - The income stability for riders has been enhanced through technological upgrades and rule optimizations, including a dynamic pricing mechanism that can increase rider earnings by 30% to 50% during peak times and adverse weather [3] - A tiered reward system provides additional subsidies and bonuses for high-frequency riders, with some experienced riders earning over 10,000 RMB per month [3] - Delivery fees account for approximately 75% of rider income, with the remainder coming from user tips, platform rewards, and activity subsidies [3] Financial Performance - Meituan's revenue for Q2 2025 reached 91.84 billion RMB, an 11.7% increase from 82.3 billion RMB in the same period of 2024 [4] - The operating profit for the core local business segment significantly declined to 3.7 billion RMB due to intense competition in the food delivery sector [4] Rider Welfare Initiatives - Meituan is enhancing rider welfare by launching pilot programs for occupational injury insurance in nine provinces, covering over 1.2 million riders, with plans for nationwide coverage by 2024 [5] - The company plans to invest 500 million RMB in 2024 to improve rider benefits, including health check-ups and education subsidies for riders' children [5] Industry Context - The disclosure of rider income data is seen as a significant move for the industry, promoting transparency and potentially driving companies to optimize management practices [6] - The number of food delivery riders in China surpassed 7 million in 2022, with the instant retail market expected to grow at a compound annual growth rate of over 20% [6]

Core Viewpoint - Goldman Sachs expresses confidence in Meituan-W (03690) maintaining its leadership position in the expanded Total Addressable Market (TAM) for local services, anticipating a gradual normalization of food delivery subsidies by 2026. The target price is set at HKD 144 with a "Buy" rating [1]. Group 1 - The main focus of investors is on the latest competitive landscape in food delivery and Meituan's unique positioning [1]. - There is significant interest in the competition and profit margin trends in the in-store business [1]. - Growth and profitability prospects for instant retail are also key areas of investor attention [1]. Group 2 - The expansion and investment scale of Keeta is a point of interest for investors [1]. - The company's AI strategy is under scrutiny as part of its future growth potential [1]. - Investors are monitoring the situation regarding the narrowing losses of new business ventures [1].

Group 1 - Goldman Sachs expresses confidence in Meituan-W's (03690) leadership position in the expanded total addressable market (TAM) for local services [1] - The firm anticipates that food delivery subsidies will gradually normalize by 2026 [1] - The target price is maintained at HKD 144 with a "Buy" rating [1] Group 2 - Key investor concerns include the latest food delivery competition landscape and Meituan's unique positioning [1] - Other focal points are the competition and profit margin trends in the in-store business, growth and profitability prospects of instant retail, and the expansion and investment scale of Keeta [1] - The impact of AI strategies and the narrowing losses of new businesses are also significant areas of interest [1]

Core Viewpoint - The article discusses the impact of the recent food delivery war on small and micro businesses, highlighting the decline in profit margins and the challenges faced by local eateries amidst aggressive competition from major platforms [2][3][7]. Group 1: Market Dynamics - The food delivery market has significantly expanded, with daily orders from major platforms reaching 250 million, up from 80 million before the competition intensified [4]. - Major platforms like Meituan, JD, and Alibaba reported a combined profit drop of over 20 billion yuan in the second quarter, with net profits down 89%, 50.8%, and 18% respectively [3][5]. - The competition has led to a substantial increase in user engagement, with Taobao's flash purchase orders peaking at 12 million daily and Meituan maintaining a dominant market share with over 15 million daily orders [5]. Group 2: Impact on Small Businesses - Small and micro businesses, particularly those with low average transaction values, have seen profit margins decline by 7.2% overall, with those under 20 yuan experiencing a 12.61% drop [7][10]. - Community-based eateries, often family-run, are struggling as consumer preferences shift towards cheaper delivery options, leading to a decrease in foot traffic and profitability [12][13]. - Many small business owners report that participation in delivery services often results in losses, as they are forced to subsidize delivery costs while receiving only half the profit compared to dine-in orders [15][16]. Group 3: Survival Strategies - Some small businesses have adapted by focusing on enhancing the dine-in experience, using delivery as a supplementary channel rather than a primary revenue source [21][26]. - Successful examples include eateries that maintain a strong local presence and customer loyalty by offering unique dining experiences and quality service, which helps convert delivery customers into dine-in patrons [26][31]. - The article suggests that the future of small eateries may involve either enhancing dine-in experiences or embracing retail trends, similar to successful models seen in Japan and Singapore [34][39][43].