Investment Rating - The report maintains a "Buy" rating for the company with a target price of 135.66 HKD, based on a reasonable valuation of 829.1 billion HKD [3][12]. Core Insights - The company is experiencing significant competition, leading to a focus on high-value orders and a prolonged period of losses. The report suggests that the worst phase of losses may have passed, but the ongoing competition will likely extend the duration of losses [9][12]. - The company's Q3 performance showed a substantial increase in order volume driven by subsidies, but this has negatively impacted average order value (AOV), resulting in a revenue decline of approximately 12% year-on-year [9]. - The report highlights that the company's market share in high-value orders (AOV above 15 HKD) is over two-thirds, indicating a strategic focus on maintaining this segment despite competitive pressures [9]. Financial Forecasts - Revenue projections for the company are as follows: - 2023: 276,745 million HKD - 2024: 337,592 million HKD - 2025: 366,600 million HKD - 2026: 406,302 million HKD - 2027: 462,787 million HKD - The year-on-year growth rates are expected to decline significantly, with 2025 showing only an 8.59% increase [4][16]. - The company is projected to incur losses in the coming years, with net profit estimates for 2025 at -19,633 million HKD and -25,640 million HKD for 2026 [4][16]. Segment Valuation - The report employs a segmented valuation approach, estimating the following for 2026: - Delivery and Flash Purchase: 2,097 billion CNY in revenue, valued at 4,516 billion HKD - In-store and Hotel Travel: 170 billion CNY in after-tax operating profit, valued at 2,437 billion HKD - New Business: 1,216 billion CNY in revenue, valued at 1,338 billion HKD - The total estimated market value for the company is 8,291 billion HKD [11][12].

Core Insights - On December 3, 2025, Alibaba-W (09988), Tencent Holdings (00700), and SMIC (00981) were the top three companies by trading volume in the Southbound Stock Connect, with trading amounts of 3.255 billion, 2.092 billion, and 1.312 billion respectively [1] - In the Shenzhen-Hong Kong Stock Connect, Alibaba-W (09988), Xiaomi Group-W (01810), and Tencent Holdings (00700) also ranked as the top three, with trading amounts of 2.390 billion, 1.621 billion, and 1.474 billion respectively [1] Southbound Stock Connect Trading Activity - **Top Active Companies**: - Alibaba-W (09988): Trading amount of 3.255 billion, net inflow of 260 million [2] - Tencent Holdings (00700): Trading amount of 2.092 billion, net outflow of 726 million [2] - SMIC (00981): Trading amount of 1.312 billion, net outflow of 231 million [2] - **Other Notable Companies**: - Xiaomi Group-W (01810): Trading amount of 1.145 billion, net outflow of 76.07 million [2] - Meituan-W (03690): Trading amount of 930 million, net inflow of 129 million [2] Shenzhen-Hong Kong Stock Connect Trading Activity - **Top Active Companies**: - Alibaba-W (09988): Trading amount of 2.390 billion, net inflow of 167 million [2] - Xiaomi Group-W (01810): Trading amount of 1.621 billion, net inflow of 946 million [2] - Tencent Holdings (00700): Trading amount of 1.474 billion, net outflow of 6.3735 million [2] - **Other Notable Companies**: - SMIC (00981): Trading amount of 866 million, net outflow of 188 million [2] - Meituan-W (03690): Trading amount of 697 million, net inflow of 169 million [2]

Group 1 - Northbound capital recorded a net purchase of 22.79 billion HKD in the Hong Kong stock market on December 3, with net purchases of 5.48 billion HKD from the Shanghai Stock Connect and 17.32 billion HKD from the Shenzhen Stock Connect [1] - The most net purchased stocks included Xiaomi Group-W (01810), Alibaba-W (09988), and Meituan-W (03690), while the most net sold stocks were Tencent (00700), SMIC (00981), and Hua Hong Semiconductor (01347) [1] Group 2 - Xiaomi Group-W (01810) saw a net purchase of 8.7 billion HKD, with over 500,000 cars delivered since April 3, 2024, and November deliveries exceeding 40,000 units [3] - Alibaba-W (09988) received a net purchase of 4.27 billion HKD, with its AI product "Qianwen App" achieving a monthly active growth rate of 149.03% [3] - Meituan-W (03690) had a net purchase of 2.97 billion HKD, with expectations of reduced losses in its food delivery business and a focus on high-value orders [3] Group 3 - Longpan Technology (02465) received a net purchase of 1.17 billion HKD, signing a long-term procurement agreement for lithium iron phosphate cathode materials worth approximately 4.5 to 5.5 billion CNY [4] - ZTE Corporation (00763) faced a net sell-off of 59.73 million HKD, with its nubia M153 phone being an engineering sample for industry professionals [4] - Northbound capital continued to sell semiconductor stocks, with Hua Hong Semiconductor and SMIC experiencing net sales of 66.36 million HKD and 419 million HKD, respectively [4] Group 4 - XPeng Motors-W (09868) recorded a net purchase of 59.29 million HKD, while Tencent (00700) faced a net sell-off of 732 million HKD [5]

Core Insights - This year is described as the most active year for Meituan Dragon Ball in its approximately 8-year history, with a significant increase in investment activity [1] - The capital market is characterized by a state of "revival" and "diversity" [1] - The gap between AI capabilities in China and the US has significantly narrowed, with doubts about this disparity largely diminished [1] Investment Activity - Meituan Dragon Ball has made numerous investments in 2023, marking a peak in their investment volume [1] - The firm invested in Kimi this year, reflecting its active engagement in the market [1] AI Development - The discourse around the AI gap between China and the US has shifted, with fewer questions raised about the differences in capabilities [1] - The gap in state-of-the-art (SOTA) AI models between China and the US has reportedly reduced to a timeframe of six months [1]

Group 1: Market Overview - Northbound capital recorded a net purchase of HKD 22.79 billion on December 3, with HKD 5.48 billion from the Shanghai Stock Connect and HKD 17.32 billion from the Shenzhen Stock Connect [1] - The most purchased stocks included Xiaomi Group-W (01810), Alibaba-W (09988), and Meituan-W (03690) [1] - The most sold stocks were Tencent (00700), SMIC (00981), and Hua Hong Semiconductor (01347) [1] Group 2: Stock Performance - Alibaba-W (09988) saw a net inflow of HKD 4.27 billion, driven by the launch of its AI app, which achieved a monthly active growth rate of 149.03% [4] - Xiaomi Group-W (01810) received a net purchase of HKD 8.7 billion, with over 500,000 cars delivered since April 3, 2024, and a share buyback of HKD 1.02 billion for 2.5 million shares [3][5] - Meituan-W (03690) had a net inflow of HKD 2.97 billion, with expectations of reduced losses in its food delivery business and a significant share purchase by JPMorgan [5] Group 3: Notable Transactions - Dragon Power Technology (02465) received a net purchase of HKD 1.17 billion, signing a long-term procurement agreement for lithium iron phosphate materials worth approximately HKD 4.5-5.5 billion [5] - ZTE Corporation (00763) faced a net sell-off of HKD 59.73 million, with reports of a new AI phone prototype being developed [5][6] - Northbound capital continued to sell semiconductor stocks, with Hua Hong Semiconductor and SMIC experiencing net sell-offs of HKD 66.36 million and HKD 419 million, respectively [6]

Core Viewpoint - Meituan has launched a "free return shipping" service for apparel and footwear, enhancing the shopping experience for consumers by allowing quick returns within 30 minutes, thus addressing common size-related return issues [1][3][4] Group 1: Service Overview - The new service allows Meituan's black gold and black diamond members to return items without shipping costs, with a maximum return time of 30 minutes [3][4] - Over 50 brands and more than 20,000 stores have adopted this service, including major brands like Nike, Adidas, and Anta [3][4] - This initiative marks the first free return shipping service for apparel and footwear in the instant retail sector [4] Group 2: Consumer Insights - Research indicates that functional apparel, particularly sportswear, is popular among consumers for various activities, and they prefer a "buy now, wear now" experience [4][5] - The return rate for these items is generally low, primarily due to size issues, and consumers desire a quick return process to maintain their immediate usage [4][5] Group 3: Business Impact - The service is fully funded by Meituan, alleviating the financial burden on brands while enhancing customer satisfaction and potentially increasing repurchase rates [4][5] - Brands participating in the service have reported improved sales and customer feedback, indicating a positive impact on their business [5][6] - During the recent Double 11 shopping festival, Meituan's sales for over 800 brands doubled, with sportswear becoming a significant growth area [6]

Core Viewpoint - The company, Vital Group, is preparing for an IPO to raise funds for enhancing R&D capabilities, expanding advanced technology applications, international expansion, and improving products [1] Group 1: Financial Performance - In 2024, Vital Group sold 33.9 million flight tickets and 94.5 million train tickets, with revenue increasing by 24.8% year-on-year to 351 million yuan, and net profit rising by 48.6% to 47 million yuan [1] - The company's revenue for 2022, 2023, and 2024 was 280 million yuan, 502 million yuan, and 647 million yuan respectively, with a compound annual growth rate of 52%, although revenue growth is slowing [8] - The company recorded a net loss of 758,000 yuan in 2022 but turned profitable in 2023 and 2024, with net profits of 59 million yuan and 51 million yuan respectively, a year-on-year decrease of 15.7% [8] Group 2: Market Position and User Base - As of June 30, 2025, Vital Group's services cover over 220 countries and regions, with more than 5,200 airports and over 3,500 domestic train stations, and a total of over 217 million registered users, a 56.5% increase since 2021 [4] - In 2024, the company ranked eighth in China's comprehensive internet travel service market with a market share of approximately 1.4%, while its flight booking platform ranked fifth with a 1.9% share and its train ticket platform ranked third with a 2.4% share [2] Group 3: Business Structure and Strategy - Vital Group's main business segments include travel-related services, online marketing services, and data and technology services, with travel-related services contributing over 80% of total revenue, although this proportion is declining [6] - The company plans to increase the application of AI in travel and expand globally, focusing initially on the Asian market before extending worldwide [8] - The company aims to enhance its overseas business strategy, with initial expansions in markets like Singapore, Japan, and South Korea, and has reported a repurchase rate of approximately 30% to 40% for its overseas platforms [8] Group 4: Ownership and Investment - Vital Group was founded in 2009 and has received at least five rounds of financing from various investors, including Sequoia Capital China and other notable firms [2] - The largest shareholder is the founder and CEO, Wang Jiang, who holds 16.79% of the shares, followed by co-founder Li Lijun with 15.99% [2]

Core Insights - The third quarter witnessed unprecedented competition in the food delivery and instant retail sectors, with major players Meituan, Alibaba, and JD.com collectively spending nearly 80 billion yuan, reaching a record high of approximately 44.4 billion yuan in a single quarter [1] - Meituan's revenue grew by 2% year-on-year to 95.5 billion yuan, but it recorded an adjusted net loss of 16 billion yuan due to increased subsidies in the restaurant sector [1] - Despite the losses, Meituan demonstrated resilience and maintained a significant market share, indicating the effectiveness of its competitive barriers in the local lifestyle sector [1][2] Financial Performance - Meituan's adjusted net loss in Q3 was 16 billion yuan, while its local business revenue was 67.447 billion yuan, significantly higher than Alibaba's instant retail revenue of 22.9 billion yuan [2] - Meituan's loss ratio was maintained at 1:2.5 to 1:2.8 compared to Alibaba, meaning for every 1 yuan lost by Meituan, Alibaba's instant retail business lost 2.5 to 2.8 yuan [2] - Meituan's daily active users (DAU) grew over 20% year-on-year, with transaction users surpassing 800 million, indicating strong user engagement [3] Market Dynamics - Alibaba signaled a strategic retreat by planning to significantly reduce investments in its instant retail segment, reflecting inefficiencies in its subsidy model [4] - The shift from a "price war" to a "service war" is expected to benefit companies like Meituan that have established long-term competitive barriers [5] - Regulatory policies aimed at curbing "low-price subsidies" are pushing the industry towards a focus on service quality and efficiency [5] Business Expansion - Meituan's new business segment saw a revenue increase of 15.9% to 28 billion yuan, with operating losses narrowing to 1.3 billion yuan [6] - The international expansion of Meituan's Keeta brand has shown promising results, with successful entries into Qatar, Kuwait, and the UAE, and a pilot operation launched in Brazil [6] Conclusion - The intense competition has tested Meituan's defensive capabilities, with a low loss ratio reflecting its operational resilience and long-term competitive advantages [7] - Alibaba's strategic shift acknowledges Meituan's strength as a market leader, indicating a transition to a new competitive landscape focused on service rather than price [7]

Core Viewpoint - The third quarter witnessed unprecedented competition in the food delivery and instant retail sectors, with major players Meituan, Alibaba, and JD.com collectively spending nearly 80 billion yuan, reaching a record high of approximately 44.4 billion yuan in a single quarter [1] Group 1: Financial Performance - Meituan's revenue grew by 2% year-on-year to 95.5 billion yuan in Q3, but it recorded an adjusted net loss of 16 billion yuan due to increased subsidies in the local dining sector [1] - Meituan maintained a low loss ratio of 1:2.5 to 1:2.8 compared to Alibaba's instant retail losses, indicating a more efficient operational model [2] - Meituan's new business revenue increased by 15.9% to 28 billion yuan, with operating losses narrowing to 1.3 billion yuan, improving the operating loss rate by 2.5 percentage points to 4.6% [5][6] Group 2: Market Position and Strategy - Meituan holds over two-thirds of the market share for orders above 15 yuan and over 70% for orders above 30 yuan, indicating strong customer loyalty and resilience against subsidies [3] - Alibaba's strategy of focusing on low-priced orders has led to inefficiencies, with its instant retail segment expected to incur losses between 36 billion to 40 billion yuan in Q3, significantly higher than Meituan's losses [2] - The shift in the industry towards high-quality development is marked by Alibaba's decision to reduce investments in its instant retail segment, reflecting a strategic retreat in response to unsustainable competition [4] Group 3: Industry Trends and Future Outlook - The regulatory environment is tightening, pushing the industry from price wars to service-oriented competition, which is expected to favor companies like Meituan that have established long-term competitive barriers [5] - Meituan's international expansion is progressing, with its Keeta business entering new markets in the Middle East and achieving profitability in Hong Kong, enhancing the narrative of its replicable business model abroad [6] - The extreme competition phase may be concluding, but the food delivery industry remains a challenging environment with thin profit margins, emphasizing the importance of long-term strategies and operational efficiency [7]

Group 1 - BlackRock's stake in Meituan-WH increased from 5.99% to 6.14% as of November 27 [1]