Investment Rating - The investment rating for Meituan-W (03690.HK) is "Buy" (maintained) [1] Core Views - The report indicates that Meituan is increasing short-term investments to consolidate market share amid intensified competition, with expectations of profitability returning in 2026 and a projected net profit growth of 68.4% in 2027 [6][8] - The company's non-IFRS net profit forecasts for 2025-2027 have been revised down to -19.9 billion, 32.2 billion, and 54.2 billion CNY respectively, reflecting the competitive landscape and increased subsidies [6] - The report highlights that while the core business is facing challenges, new business segments are showing improvement, particularly in Hong Kong and the Middle East [7] Financial Summary and Valuation Metrics - Revenue for 2023 is reported at 276.7 billion CNY, with a year-over-year growth of 25.8%. Projections for 2025 and 2026 are 365.4 billion and 433.5 billion CNY respectively, with expected growth rates of 8.2% and 18.6% [10] - Adjusted net profit for 2025 is expected to be a loss of 19.9 billion CNY, improving to a profit of 32.2 billion CNY in 2026 and 54.2 billion CNY in 2027, with corresponding year-over-year growth rates of -145.5%, 261.4%, and 68.4% [10] - The report provides a diluted EPS forecast of -3.2, 5.2, and 8.7 CNY for 2025, 2026, and 2027 respectively, with P/E ratios of -29.1, 18.0, and 10.7 for the same years [10]

Core Insights - Meituan's Q3 earnings report highlights its resilience amid fierce competition in the food delivery market, maintaining a leading position in high-value orders despite significant losses [1][2][3] - Goldman Sachs maintains a "Buy" rating on Meituan, citing its strong execution capabilities and the current attractive stock price as key investment factors [1] User Metrics - Meituan's transaction user base has surpassed 800 million, with daily active users (DAU) increasing by over 20% year-on-year, and monthly transaction users for food delivery reaching a historical high [1][3] - The company holds over 70% market share in orders exceeding 30 yuan and over 66% in orders above 15 yuan, indicating strong market dominance in higher-priced segments [2][3] Financial Performance - In Q3, Meituan's core local business revenue (food delivery + in-store) was 67.4 billion yuan, remaining stable compared to the previous year, despite a slowdown in service marketing revenue growth [3] - Adjusted net loss for Q3 was 16 billion yuan, primarily due to losses in the core local business, but this loss is considered manageable compared to competitors [2][3] New Business Developments - Meituan's instant retail business has shown significant growth, with new user acquisition and transaction frequency both increasing [5] - The company has made notable progress in international markets, with its Keeta business achieving monthly profitability in Hong Kong ahead of schedule [5] Ecosystem and Community Support - Meituan has implemented comprehensive support for delivery riders, including pension insurance, welfare benefits, and housing support, covering over a million riders and their families [7][8] - The company has launched initiatives to assist merchants in navigating competitive pressures, including a 2.8 billion yuan support plan and upgrades to its merchant evaluation system [7] Technological Advancements - Meituan has invested 6.9 billion yuan in R&D in Q3, a 31% increase year-on-year, focusing on AI tools and applications to enhance service efficiency [5][6] - The company has expanded its drone delivery services, achieving over 670,000 commercial orders by September, showcasing its commitment to technological innovation [8]

Investment Rating - The investment rating for Meituan-W (03690.HK) is "Buy" (maintained) [1] Core Insights - The company's Q3 2025 performance was below expectations, with total revenue of 95.5 billion yuan, a year-on-year growth of 2.0%, and an adjusted net profit of -16.01 billion yuan, which was lower than Bloomberg consensus estimates [7] - The core local business turned from profit to loss due to intensified competition, while new business losses improved [7] - The report anticipates that Q3 represented the peak of losses, with expectations for marginal improvement in Q4, although competitive strategies need to be monitored [7] - The company is expected to continue strengthening its supply side, user experience, and membership benefits, maintaining its market share and user engagement advantages [7] - New business losses were better than expected, with strong growth in grocery retail businesses like Xiaoxiang Supermarket and Keeta, which are expanding globally [7] - The adjusted profit forecasts for 2025-2027 have been revised down significantly due to the impact of competition on profits, but the long-term profit recovery and overseas expansion potential remain promising [7] Financial Projections - Total revenue projections for Meituan are as follows: 2023A: 276.75 billion yuan, 2024A: 337.59 billion yuan, 2025E: 364.53 billion yuan, 2026E: 415.41 billion yuan, 2027E: 478.47 billion yuan [1] - The adjusted net profit for 2025E is projected at -21.57 billion yuan, with a recovery to 19.63 billion yuan by 2027E [1] - The latest diluted EPS for 2025E is projected at -3.53 yuan per share, with a recovery to 3.21 yuan per share by 2027E [1]

Core Insights - The article discusses the intense competition in the food delivery and instant retail sectors, highlighting Meituan's financial performance in Q3, which shows a revenue of 95.5 billion yuan, a 2% year-on-year increase, but a significant adjusted net loss of 16 billion yuan, with core local business shifting from profit to a loss of 14.1 billion yuan [1][3][5] Financial Performance - Meituan's total revenue increased from 93.6 billion yuan to 95.5 billion yuan year-on-year, while core local business revenue slightly declined from 69.4 billion yuan to 67.4 billion yuan [3] - The cost of sales surged from 56.8 billion yuan to 70.3 billion yuan, accounting for 73.6% of revenue, while sales and marketing expenses nearly doubled from 18 billion yuan to 34.3 billion yuan, representing 35.9% of revenue [1][3] Competitive Landscape - Meituan's significant losses reflect the fierce competition, with competitors reportedly investing hundreds of billions in subsidies [1] - Despite the losses, Meituan managed to maintain approximately 60% of the industry order GTV share, showcasing a high "battle loss ratio" compared to competitors [3][4] User Engagement and Market Position - Meituan's app daily active users (DAU) grew over 20% year-on-year, with transaction users exceeding 800 million, indicating increased user engagement despite financial losses [3] - The company holds over two-thirds of the market share for orders above 15 yuan and over 70% for orders above 30 yuan, indicating a focus on high-value transactions rather than low-price promotions [4] Long-term Strategy and Investments - Meituan is investing in long-term initiatives such as rider benefits and tools for merchants to enhance operational efficiency, which may compress short-term profits but strengthen the business model [2][7] - The company is also focusing on efficiency optimization, with R&D spending increasing by 31% to 6.9 billion yuan, representing 7.3% of revenue [7] New Business Growth - New business revenue grew by 15.9% year-on-year to 28 billion yuan, with operating losses narrowing to 1.3 billion yuan, indicating improved operational efficiency in grocery retail and international expansion [12] - The instant retail segment, particularly Meituan's flash purchase service, is evolving towards brand-focused and structural upgrades, enhancing its commercial value [12][13] International Expansion - Meituan's international arm, Keeta, is expanding into the Middle East and Latin America, with operations in Qatar, Kuwait, UAE, and Brazil, indicating a strategic move towards global market penetration [13] Conclusion - The Q3 report reflects a challenging yet strategic phase for Meituan, balancing short-term losses with long-term investments in user retention, operational efficiency, and international growth, positioning itself for future profitability in a low-margin industry [16][17]

Core Insights - Meituan's 3Q25 performance slightly missed expectations, with management anticipating a narrowing of core local commerce (CLC) operating losses in 4Q25 [3][4] Financial Performance - 3Q25 revenue reached RMB 95.5 billion, a 2% year-over-year increase but 2% below market consensus [3] - CLC revenue declined by 2.8% year-over-year to RMB 67.4 billion, while new initiatives revenue rose by 16% year-over-year to RMB 28 billion [3] - CLC operating loss widened to RMB 14.1 billion, compared to a consensus loss of RMB 13 billion, with an operating margin of -21% [3][4] - Adjusted net loss was RMB 16 billion, slightly larger than the expected RMB 14 billion loss [3] Market Dynamics - Competitive intensity in food delivery has decreased since Singles' Day, allowing Meituan to recover market share in order value while maintaining a leading gross transaction value (GTV) share [4] - The company expects the food delivery segment to incur notable operating losses in 4Q25, depending on competition levels in December [4] New Initiatives and Growth - Management indicated that the operating loss for Instashopping may slightly widen in 4Q25 due to increased investments in user experience during promotional campaigns [5] - The launch of Branded Flagship InstaMart in October has shown potential, with hundreds of partner brands achieving over 300% year-over-year sales growth during Singles' Day [5]

Core Insights - Meituan reported 3Q25 revenue of RMB95.5 billion, a 2% year-over-year increase but 2% below consensus expectations [1] - Core Local Commerce (CLC) revenue declined 2.8% year-over-year to RMB67.4 billion, while revenue from New Initiatives rose 16% year-over-year to RMB28 billion, slightly below the 17% consensus estimate [1] - CLC operating loss widened to RMB14.1 billion, exceeding the consensus loss of RMB13 billion, with an operating margin of -21% [1] - Management anticipates that CLC operating losses will narrow in 4Q25 despite elevated losses due to intensified competition [1] Food Delivery Segment - Competitive intensity in food delivery has eased since Singles' Day, allowing Meituan to recover market share in order value while maintaining leading GTV share [2] - The food delivery segment is expected to incur notable operating losses in 4Q25, depending on December competition levels [2] Instashopping and User Experience - Instashopping operating loss may slightly widen in 4Q25 due to increased investments in user experience during promotional campaigns [3] - Meituan launched Branded Flagship InstaMart, achieving over 300% year-over-year sales growth for partner brands during Singles' Day [3] In-Store, Hotel, and Travel (IHT) Business - Competition in the IHT sector is intensifying, with GTV growth moderating to 18% in 3Q25 [4] - Management expects IHT GTV margins to decline further in 4Q25 before normalizing toward the ~30% margin level [4] Technology and AI Innovations - Meituan is advancing its AI strategy with updates on AI models, chatbots, merchant tools, and internal efficiency improvements [5] Global Expansion of Keeta - Keeta turned profitable in Hong Kong in October 2025, with ongoing improvements expected [6] - Expansion in the Middle East and Brazil is underway, with management optimistic about replicating the Mainland China's food delivery experience [6] Market Share in High-AOV Orders - Meituan holds approximately 67% GTV share for orders above RMB15 and over 70% for orders above RMB30, indicating strong brand strength among high-value users [7] Valuation Metrics - Meituan trades at HK$102.5 per share, with a market cap of HK$626.4 billion, and consensus estimates for CY26 EBITDA at HK$44.7 billion, implying an 11.7x EV/EBITDA multiple [8] - The valuation premium has compressed due to heightened competition, but profitability is expected to recover as competitive pressure normalizes [9]

Market Overview - The Hong Kong stock market showed a mixed performance with the Hang Seng Index rising by 0.81% to 26,068.05 points, the Hang Seng Tech Index up by 0.99% to 5,654.62 points, and the National Enterprises Index increasing by 0.64% to 9,188.61 points [1] - Major technology stocks performed well, with Alibaba up 3.3%, Tencent up 0.82%, and JD Group up 1.29%, while Xiaomi and Meituan saw declines of 2% and 1.46% respectively [1] - The non-ferrous metals sector experienced significant gains, with Minmetals Resources and China Gold International leading the increases [1] - The People's Bank of China made a significant move to stabilize the currency, leading to declines in cryptocurrency-related stocks [1] Company News - Meituan reported third-quarter revenue of 95.5 billion yuan, a year-on-year increase of 2%, but its core local business operating profit turned negative with a loss of 14.1 billion yuan [2] - China Gas announced revenue of 34.481 billion HKD and a profit of 1.334 billion HKD for the six months ending September 30, 2025 [3] - Yingtong Holdings reported a revenue of 1.028 billion RMB, a decrease of 3.42%, but a net profit increase of 15.4% to 133 million RMB [3] - Jihai Resources achieved a revenue of 450 million RMB, a year-on-year increase of 23.41%, with a net profit of 88.127 million RMB, up 2.98% [3] - Yuhua Education reported an annual revenue of 2.497 billion RMB, a 5.4% increase, and a net profit of 930 million RMB, a significant increase of 133.2% [3] - Huitai Textile reported a revenue of 2.524 billion HKD, a decrease of 6.72%, and a net profit of 79.322 million HKD, down 25.77% [3] - New Higher Education Group reported an annual revenue of 2.599 billion RMB, a 7.78% increase, and a net profit of 829 million RMB, up 9.67% [3] - Huaxin Handbag International reported a revenue of 432 million HKD, a year-on-year increase of 22.55%, and a profit of 48.262 million HKD, up 78.88% [4] - Bay Area Development reported toll revenue for October from various highways, showing a year-on-year decrease [4] Institutional Insights - Huatai Securities indicated that the market is nearing a "bad news fully priced" state, suggesting limited downside potential and pointing to left-side layout opportunities [11] - GF Securities noted that the foundation of the Hong Kong bull market remains intact, with a potential for a "volatile upward" trend rather than a rapid increase, highlighting three key triggers for future performance [12] - Dongwu Securities mentioned that short-term risk factors in the Hong Kong market are decreasing, but a rebound confirmation requires catalysts, with current positions being attractive for long-term allocation [12]

Core Viewpoint - The focus of the market debate regarding Meituan has shifted from "when will losses peak" to a deeper concern about "how much of Meituan's competitive moat remains" [1] Group 1: Financial Performance - Meituan's adjusted operating loss for Q3 was 17.5 billion RMB, better than Goldman Sachs' expectation of an 18.8 billion RMB loss [2] - The market's initial reaction was negative due to cautious comments about future performance, despite some positive signals [2] - The basic scenario suggests a 17% upside potential, with a target price of 120 HKD, reflecting concerns over long-term profitability [2] Group 2: Competitive Landscape - The market has shifted focus from short-term subsidy wars in the food delivery business to evaluating Meituan's defensive capabilities against strong competitors like Alibaba and Douyin [2][3] - Meituan's unit economics are superior, with an estimated loss of 2.6 RMB per order compared to Alibaba's 5.2 RMB per order [3][6] - The competition is expected to intensify, with concerns that if rivals continue to invest heavily, Meituan's profit margins could be pressured [2][6] Group 3: Future Scenarios - The optimistic scenario suggests a potential price target of 152 HKD, contingent on verifying several conditions [4] - The pessimistic scenario indicates a potential drop to 77 HKD due to ongoing competitive pressures and losses [4] - Meituan's strong cash position allows it to endure prolonged competition, while rivals may face significant financial strain [6] Group 4: Market Dynamics - Meituan's market share is expected to recover as irrational subsidy wars normalize, allowing it to regain lost market share in low-ticket orders [3] - The long-term EBIT expectation for Meituan's food delivery business has been revised down from 0.8 RMB to 0.7 RMB per order due to increased competition [3] - The long-term profit margin expectation for the in-store, hotel, and tourism (IHT) business has been reduced from 30% to 27% due to competitive pressures from Douyin and Gaode Map [3]

Meituan (3690.HK) 3Q25 Review Summary Company Overview - **Company**: Meituan (3690.HK) - **Market Cap**: HK$639.4 billion / $82.1 billion - **Enterprise Value**: HK$464.2 billion / $59.6 billion - **Current Price**: HK$102.50 - **Target Price**: HK$120.00 - **Upside Potential**: 17.1% [7][3] Key Financial Highlights - **3Q25 Adjusted Operating Loss**: -Rmb17.5 billion (better than expected vs. GSe of -Rmb18.8 billion) [1] - **Food Delivery and Instashopping Losses**: Estimated at -Rmb19 billion [1] - **New Initiatives Loss**: -Rmb1.3 billion (better than GSe/VA of -Rmb2.3 billion) [1] - **Expected 4Q Losses**: Substantial food delivery losses anticipated, but a rebound expected in 1Q26 due to CNY seasonality [1] - **3Q On-Demand Losses**: Peaked, with narrower losses expected for 4Q25E/1Q26E [1] Market Position and Competitive Landscape - **Market Share**: Meituan maintains leading GTV market share with higher AOV orders [1] - **Comparison with Competitors**: Meituan's losses per order are -Rmb2.6 compared to Alibaba's -Rmb5.2 [1] - **Competition**: Increased competition from Douyin and Amap affecting in-store, hotel, and travel margins [1] Strategic Insights - **Path to Profitability**: Increased visibility for international business, with Keeta turning profitable in Hong Kong [1] - **User Subsidies**: Focus on protecting high-quality users to support higher ROI and lifetime value [19] - **Investment in New Initiatives**: Continued investment in Instashopping and overseas expansion, with expected losses in the short term [30] Future Outlook - **Revenue Growth Forecast**: - **2024**: Rmb337,591.8 million - **2025E**: Rmb366,000.0 million - **2026E**: Rmb408,093.2 million - **2027E**: Rmb451,767.9 million [7] - **EBITDA Forecast**: - **2024**: Rmb49,119.6 million - **2025E**: -Rmb13,207.4 million - **2026E**: Rmb20,824.3 million - **2027E**: Rmb53,882.2 million [7] Risks and Challenges - **Competition Risks**: Potential for prolonged losses from competitors like Alibaba, which could suppress Meituan's margins [21] - **Market Dynamics**: Shift from capital-driven competition to efficiency-driven competition expected [29] - **Regulatory Risks**: Food safety concerns and stricter regulations could impact operations [30] Valuation Scenarios - **Base Case Valuation**: HK$120 per share, reflecting a more fragmented long-term landscape with reduced market share [25] - **Bull Case Valuation**: HK$152 per share, assuming continued leadership and ability to capture high-quality users [20] - **Bear Case Valuation**: HK$77 per share, if competition significantly impacts margins and growth [21] Conclusion - Despite near-term profitability challenges, Meituan's leadership in local services and potential for recovery in food delivery and Instashopping positions it favorably for future growth. The company maintains a Buy rating based on its strategic initiatives and market position [26]

Summary of Meituan's Earnings Call Company Overview - **Company**: Meituan (3690.HK) - **Industry**: Food delivery and local services in China Key Points Financial Performance and Forecasts - Meituan's Q4 2025 earnings forecast has been reduced by 31% due to declining profitability in its in-store business [1][12] - Revenue estimates for 2025 and 2026 have been adjusted downwards by 2% and 5% respectively, reflecting the impact of intensified competition on revenue and profits [16] - Adjusted earnings per share (EPS) for 2025 is now projected at -3.11 CNY, down from -2.59 CNY, indicating a 20% decrease [16] - The target price for Meituan is set at 95 HKD, based on a 15x multiple of the expected 2027 earnings [20][19] Competitive Landscape - Meituan maintains a leading position in the mid-to-high price order market for food delivery, but faces increasing competition from Alibaba, which is gradually capturing high-value consumer segments [2][12] - The competition is expected to intensify, particularly with Alibaba enhancing its 88VIP membership benefits, indicating that the battle for high-value users will be crucial in the Chinese food delivery and local services market [2][12] Business Segments - **Food Delivery**: The worst period is believed to be over, with management noting improvements in unit economics due to a better competitive landscape. However, price competition is expected to ease gradually [5][12] - **In-store Business**: The core local business saw a year-on-year decline in operating profit of 29 billion CNY, attributed to increased competition from Alibaba and Douyin [6][12] - **New Ventures**: Meituan's international food delivery brand "Keeta" has expanded into Qatar, Kuwait, Dubai, and Brazil, which is expected to increase losses in the short term but shows long-term potential [5][12] Risks and Uncertainties - Significant uncertainties exist regarding the sustainability of profitability in the in-store business, the intensity and duration of subsidy wars in food delivery, and the capital intensity and return cycles of overseas investments [1][12][19] - Downside risks include a weaker-than-expected consumer environment and slower-than-expected narrowing of losses in community group buying [21][19] Market Performance - Meituan's stock has underperformed, with a year-to-date decline of 32.4% and a 12-month decline of 40.5% [9][12] - The stock's valuation upside is considered limited until clearer evidence of improved profitability and rational competition emerges [12][19] Conclusion - The overall outlook for Meituan remains cautious, with a "Neutral" rating maintained until more predictable profit trends and rational competition in the core food delivery business are observed [12][19]