November 28, 2025 09:14 AM GMT Meituan | Asia Pacific M Update 3Q25 Miss on CLC Rev and OP Reaction to earnings Weakens our thesis Modest shortfall Modest revision lower Impact to our thesis Financial results versus consensus Direction of next 12-month consensus EPS Source: Company data, Morgan Stanley Research Key Takeaways | Exhibit 1: | 3Q25 results review | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | MS Estiamtes vs Co | | | | | | | | 3QFY-2025E | | | Financials (Rmb ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **food delivery industry** in the **EMEA** region, particularly in relation to **Meituan's** Q3 results and its implications for competitors like **Delivery Hero**, **talabat**, **Jahez**, and **Prosus** in **Latin America** and **MENA** regions [1][2]. Company Insights 1. **Meituan's International Expansion** - Meituan is actively expanding its operations in the **GCC** and **Brazil**, competing with local players such as Delivery Hero and Jahez in Saudi Arabia, and talabat in Qatar and Kuwait. The company launched pilot operations in Brazil in October 2025 [2][3]. - The company sees significant growth potential in food delivery penetration in the **GCC** and Brazil, where platforms like WhatsApp are commonly used for food orders [2][3]. 2. **Financial Performance** - Meituan reported an adjusted EBITDA of **$(2.1) billion** in Q3 2025, a significant decline from **+$2.1 billion** in Q3 2024, indicating intensified competition and operational challenges [10][8]. - The New Initiatives segment, which includes grocery retail and overseas expansion, showed a narrowing of operating losses quarter-over-quarter, although the exact financial split remains unclear [3][8]. 3. **Market Position and User Data** - In Saudi Arabia, Meituan has become the second-largest player by user count, with Jahez experiencing a decline in users year-over-year [4][9]. - In the UAE, Meituan is gaining traction, although it is still in the early stages of its launch. In Kuwait, Jahez has been negatively impacted, while talabat's daily active users (DAUs) have increased year-over-year [4][12][19]. 4. **Competitive Landscape** - The competition in the food delivery sector is described as "irrational," with Meituan suggesting that the competition may have peaked in Q3 2025 [10]. - The sentiment in the EMEA food delivery market remains weak, influenced by the competitive dynamics in China and the performance of global food delivery companies [10]. Additional Insights - **Keeta**, a grocery delivery service under Meituan, achieved profitability in Hong Kong after 29 months of operation, following the exit of Deliveroo from that market [3]. - Regulatory challenges in Qatar affected talabat, which faced a temporary ban in September 2025, impacting its user base [4][28]. Conclusion - Meituan's aggressive expansion strategy in the EMEA region presents both opportunities and challenges, with significant competition from established players. The financial performance indicates a need for improved operational efficiency and market positioning to navigate the competitive landscape effectively.

Group 1 - Luo Yonghao revealed that the recording with Hua Shan contains no significant revelations, but highlights Hua's inconsistent behavior, leading to confusion about his dual nature [5][6] - The recording includes a lot of profanity, making it unsuitable for direct upload to social media, prompting Luo to consider alternative sharing methods [6] - The dispute originated from Hua Shan's support for a rival restaurant, which angered Luo, leading him to demand a public apology [6] Group 2 - Reports indicate that China FAW is set to acquire a stake in Leap Motor, with a preliminary shareholding of around 5% expected [8] - Leap Motor's chairman, Zhu Jiangming, emphasized the importance of maintaining control within the founding team, even with external investments [8][9] - Leap Motor's financial performance shows a significant project launch expected to contribute to future sales, with a strategic partnership already established with China FAW [9] Group 3 - Chery has seen a recent influx of former executives from Great Wall Motors, indicating a strategic shift in its management team [10] - The company reported a 13% year-on-year increase in sales, with a total of 2.289 million vehicles sold from January to October [10] Group 4 - Chang'an Automobile announced plans to invest 2.25 billion yuan to establish a robotics company, focusing on humanoid robot technology [12][13] - The new company aims to develop multiple robotics sectors, with the first vehicle-mounted robot expected to be unveiled in the first quarter of next year [12] Group 5 - The CEO of Meituan, Wang Xing, expressed strong opposition to "involutionary" competition in the food delivery market, asserting that price wars are unsustainable [18] - Meituan has seen a steady recovery in market share, particularly in higher-priced order segments, holding over 70% of orders above 30 yuan [18] Group 6 - The IPO counseling for Yushu Technology has been completed, indicating readiness for the IPO application process, which could be one of the largest tech listings in recent years [19] - Yushu Technology has undergone significant preparatory work, including a name change to align with national branding strategies [19] Group 7 - Former Tesla executives revealed that the company had dismantled several Chinese electric vehicles to learn from their designs, particularly in parts reuse [31][32] - This practice has influenced Tesla's own vehicle models, showcasing the competitive landscape in the electric vehicle sector [31] Group 8 - Coupang, a major South Korean e-commerce platform, experienced a significant data breach affecting approximately 33.7 million accounts, marking one of the largest cyber incidents in the country [46][47] - The company has taken steps to enhance security measures and is cooperating with authorities in the ongoing investigation [47]

Group 1 - The top three stocks with the highest short-selling ratios are New World Development Co. Ltd. (80016), SenseTime Group Inc. (80020), and Geely Automobile Holdings Ltd. (80175), all at 100.00% [1][2] - The highest short-selling amounts are recorded for Alibaba Group Holding Ltd. (09988) at 1.502 billion, Meituan (03690) at 1.131 billion, and Tencent Holdings Ltd. (00700) at 531 million [1][2] - The stocks with the highest deviation values are Geely Automobile Holdings Ltd. (80175) at 54.50%, Bank of China (Hong Kong) Ltd. (82388) at 45.83%, and GF Securities Co. Ltd. (01776) at 40.23% [1][2] Group 2 - The top ten short-selling ratios include stocks like Li Ning Company Limited (82331) and JD Health International Inc. (86618), all at 100.00% [2] - The top ten short-selling amounts also feature stocks such as Pop Mart International (09992) at 499 million and China Construction Bank Corporation (00939) at 391 million [2] - The top ten deviation values include stocks like SenseTime Group Inc. (80020) at 38.77% and JD Group (89618) at 31.32% [2]

Core Insights - The top three stocks with net inflows are Alibaba-W (09988) with 1.522 billion, Pop Mart (09992) with 385 million, and China Merchants Bank (03968) with 330 million [1] - The top three stocks with net outflows are the Tracker Fund of Hong Kong (02800) with -2.261 billion, Tencent Holdings (00700) with -1.182 billion, and Hang Seng China Enterprises (02828) with -833 million [1] - In terms of net inflow ratios, China National Freight (00598) leads with 73.90%, followed by Southern Eastern Select (03441) with 64.44%, and COSCO Shipping Ports (01199) with 60.69% [1] - The stocks with the highest net outflow ratios include Ruian Real Estate (00272) at -64.09%, CNOOC Services (02883) at -62.56%, and Haitian International (01882) at -55.09% [1] Net Inflow Rankings - The top ten stocks by net inflow include: - Alibaba-W (09988): 1.522 billion, 8.82% [2] - Pop Mart (09992): 385 million, 19.66% [2] - China Merchants Bank (03968): 330 million, 32.52% [2] - CSPC Pharmaceutical Group (01093): 241 million, 20.20% [2] - Vanke Enterprises (02202): 196 million, 35.18% [2] - Yangtze Optical Fibre and Cable (06869): 180 million, 11.11% [2] - China Life Insurance (02628): 168 million, 15.04% [2] - UBTECH Robotics (09880): 148 million, 21.68% [2] - Bilibili-W (09626): 135 million, 20.46% [2] - Lion Group (02562): 132 million, 17.89% [2] Net Outflow Rankings - The top ten stocks by net outflow include: - Tracker Fund of Hong Kong (02800): -2.261 billion, -16.10% [2] - Tencent Holdings (00700): -1.182 billion, -13.16% [2] - Hang Seng China Enterprises (02828): -833 million, -10.01% [2] - Meituan-W (03690): -365 million, -2.74% [2] - China Mobile (00941): -268 million, -23.21% [2] - SMIC (00981): -255 million, -7.67% [2] - Hua Hong Semiconductor (01347): -227 million, -10.96% [2] - China Hongqiao Group (01378): -196 million, -18.31% [2] - BYD Company (01211): -153 million, -5.55% [2] - HSBC Holdings (00005): -153 million, -14.03% [2] Net Inflow Ratios - The top stocks by net inflow ratio include: - China National Freight (00598): 73.90%, 13.0298 million [3] - Southern Eastern Select (03441): 64.44%, 3.7299 million [3] - COSCO Shipping Ports (01199): 60.69%, 11.5153 million [3] - Qingdao Bank (03866): 54.25%, 11.6628 million [3] - China Power (02380): 51.21%, 15.0679 million [3] - Tanwan (09890): 47.54%, 2.8146 million [3] - Power Development (01277): 47.25%, 9.1556 million [3] - Shougang Resources (00639): 45.84%, 15.6165 million [3] - Dashi Holdings (01405): 44.46%, 5.6236 million [3] - Qingdao Port (06198): 44.08%, 2.5357 million [3] Net Outflow Ratios - The top stocks by net outflow ratio include: - Ruian Real Estate (00272): -64.09%, -1.9067 million [3] - CNOOC Services (02883): -62.56%, -56.8889 million [3] - Haitian International (01882): -55.09%, -10.1836 million [3] - Hong Kong and China Gas (00003): -54.67%, -129 million [3] - Angelalign Technology (06699): -48.57%, -34.5458 million [3] - Anhui Wanshan Expressway (00995): -46.19%, -22.9518 million [3] - 361 Degrees (01361): -42.89%, -3.5273 million [3] - Greentown Management Holdings (09979): -42.86%, -5.2056 million [3] - Weigao Group (01066): -42.55%, -44.5428 million [3] - Fenbi (02469): -41.23%, -14.4094 million [3]

E-commerce and New Retail - Alibaba Group donated 20 million HKD following a fire in Hong Kong, while ByteDance and Didi contributed 10 million HKD each. Pinduoduo also donated 10 million HKD and launched a public welfare section for firefighting supplies [1] - Alibaba's Q2 revenue for FY2026 reached 247.8 billion CNY, a 5% year-on-year increase, with cloud revenue growing 34% and AI-related products seeing triple-digit growth for nine consecutive quarters [2] - JD Industrial has received approval for an IPO on the Hong Kong Stock Exchange, with projected revenues of 14.135 billion CNY in 2022, increasing to 20.4 billion CNY in 2024 [3] Logistics and Supply Chain - Jitu Express launched its first industrial-grade automated sorting system in Thailand, improving sorting efficiency by over 100% and achieving a sorting accuracy of over 99% [4] Life Services - Meituan reported a Q3 loss of 14.1 billion CNY in its core local business segment due to irrational competition in the food delivery industry, with expectations of continued losses in Q4 [5][6] - Didi's Q3 order volume reached 4.685 billion, a 13.8% year-on-year increase, with a net profit of 1.5 billion CNY [7] - Taobao Flash Sale announced the cancellation of late fee deductions, expanding to 60 cities, aiming to enhance rider protection and user experience [8] Innovation and Investment - Ruiyun Cold Chain completed nearly 100 million CNY in A+ round financing, focusing on digital capabilities and international expansion [9] - Soul App submitted a listing application to the Hong Kong Stock Exchange, reporting a revenue CAGR of over 15% from 2022 to 2024 and achieving stable profitability since 2023 [10][11]

Core Viewpoint - The intense competition in the food delivery market has led to significant financial losses for major players like Meituan, Alibaba, and JD, with aggressive subsidy strategies impacting profitability and market dynamics [1][3][11]. Group 1: Market Dynamics - In Spring 2024, JD entered the food delivery sector, prompting Alibaba's Taobao to follow suit, leading to a fierce competition that forced all players to increase spending [1]. - By Summer, the market saw unprecedented subsidy levels, with consumers benefiting from numerous promotions, while businesses struggled with the financial implications of these strategies [3]. - The competition has resulted in a significant increase in marketing expenses for all three major companies, with Meituan's spending rising from 18 billion to 34.3 billion, and Alibaba's from 32.5 billion to 66.5 billion year-on-year [3][11]. Group 2: Financial Performance - Meituan reported a core local business operating loss of 14.1 billion in Q3, with expectations of continued losses into Q4, indicating a challenging financial landscape [5]. - Alibaba's CFO indicated that the company would tighten its spending on flash purchase business after a peak in Q3, suggesting a potential shift in strategy to mitigate losses [5][9]. - All three companies reported significant losses in Q3, with Meituan losing 16 billion, while Alibaba and JD also faced substantial financial challenges, leading to a bleak outlook for the industry [15][17]. Group 3: Competitive Strategies - Meituan's market share remains strong, particularly in mid-to-high price orders, with two-thirds of orders over 15 yuan and 70% of orders over 30 yuan being processed through its platform [7]. - Despite the ongoing competition, Meituan's leadership emphasized a commitment to avoiding low-quality, price-driven competition, focusing instead on long-term value creation [13][15]. - The industry is witnessing a shift towards more sustainable practices, with companies beginning to reconsider their aggressive subsidy strategies in light of regulatory pressures and financial realities [9][17].

Investment Rating - The report maintains a "Buy" rating for Meituan [3][13] Core Insights - Meituan reported Q3 2025 revenue of Rmb95.5 billion, a 2.0% year-on-year increase, but below consensus expectations of Rmb97.5 billion. The operating profit was Rmb-19.76 billion, significantly lower than Rmb13.69 billion in the same period last year [8][9] - The report indicates that industry competition has peaked, with core local commerce experiencing significant losses in Q3 but expected sequential improvement in Q4. Core local commerce revenue declined by 2.8% year-on-year to Rmb67.4 billion, with an operating margin of -20.9% [9][10] - Meituan Instashopping achieved strong growth, leading the industry, with a focus on enhancing supply and user engagement. The platform launched "Branded Flagship InstaMart," which saw a 300% sales increase on its first day during the "11.11" shopping event [10][11] - New initiatives showed improved profitability, with revenue from new initiatives rising 15.9% year-on-year to Rmb28.0 billion, although operating losses widened to Rmb1.3 billion. Keeta, a new initiative, achieved profitability in Hong Kong ahead of schedule [11][12] Financial Summary - For 2023, Meituan's revenue is projected at Rmb276.7 billion, with a year-on-year growth rate of 25.8%. Adjusted net profit is expected to be Rmb23.3 billion [6][16] - The adjusted net profit forecast for 2025 has been revised down to Rmb-16.6 billion, reflecting the impact of intensified competition on short-term margins [13][16] - The report anticipates a long-term recovery in profitability, with a projected revenue of Rmb365.98 billion in 2025 and Rmb485.30 billion by 2027 [6][16]

Investment Rating - The investment rating for Meituan-W (03690.HK) is "Outperform the Market" [5] Core Views - The report indicates that the impact of the fierce competition in the food delivery sector on the company's revenue and profit is expected to gradually diminish. The company achieved a revenue of 95.5 billion yuan, with a year-on-year growth of 2%, primarily affected by intensified competition in its core local business. Adjusted losses reached 16 billion yuan, with a net profit margin of -17%, indicating a shift from profit to loss [1][8] - The company maintains its long-term goal of achieving a high daily order volume of 100 million and believes that as the industry returns to rationality, the profitability of the food delivery business will return to reasonable levels [1][8] Summary by Sections Overview - The report highlights that the competition in the food delivery market has significantly impacted the company's revenue and profit, with a revenue of 95.5 billion yuan for the quarter. Revenue breakdown shows a year-on-year decline of 17% in instant delivery services, a 1% increase in transaction commissions, and a 6% increase in marketing services [1][8] - The gross margin, sales expense ratio, and R&D expense ratio have all weakened, leading to an adjusted loss of 16 billion yuan, with a continued increase in losses quarter-on-quarter [1][8] Core Local Business - The core local business revenue decreased by 3% year-on-year, resulting in an operating loss of 14.1 billion yuan and an operating profit margin of -21.0%, a decline of 42 percentage points year-on-year. The company plans to continue significant investments in membership and promotional budgets in Q4 2025 [2][23] - Instant delivery saw a total order volume growth of 17%, with average losses per order of 2.6 yuan for food delivery and 1.1 yuan for flash purchase. The restaurant delivery order volume grew by approximately 15% [2][24] - The in-store travel and accommodation segment experienced a revenue growth of 13% year-on-year, but the operating profit margin decreased to 29% due to increased advertising costs and subsidies [2][28] New Business - New business revenue grew by 16% year-on-year to 28 billion yuan, with an operating loss of 1.3 billion yuan. The management noted that the user experience in Hong Kong's Keeta turned positive in October, leading to improved user retention and higher average prices [3][30] - The company plans to expand its overseas business by opening three new locations in Gulf countries and piloting in Brazil, although significant losses are expected to increase [3][34] Financial Forecasts - Revenue projections for 2025-2027 are adjusted to 360.5 billion yuan, 427 billion yuan, and 509.2 billion yuan, reflecting a slight decrease in growth expectations. Adjusted net profit forecasts for the same period are -16 billion yuan, 12.4 billion yuan, and 33.2 billion yuan, indicating a significant downward adjustment [3][35] - The report also provides detailed financial metrics, including adjusted EPS and profit margins, indicating a challenging outlook for the core local business due to competitive pressures [4][38]

Core Insights - The article highlights the expansion of various Chinese companies into international markets, showcasing their growth and strategic initiatives in different regions [5][6][7][9][10]. Group 1: Didi's International Expansion - Didi's international business has expanded to 14 countries and regions across Latin America, Asia-Pacific, and Africa, with a year-on-year order volume growth of 13.8% in Q3 2025, reaching 4.685 billion orders [5]. - The international segment continues to grow at over 20%, driven by investments in key markets like Brazil and Mexico [5]. Group 2: Logistics and E-commerce Developments - Cainiao has launched a cross-border small package service covering eight African countries, with plans to expand to South Africa and Egypt by the end of December, offering competitive pricing and enhanced logistics efficiency [6]. - Temu has partnered with the UK Royal Mail to enhance its local fulfillment system, adding over 24,000 package drop-off points, aiming for 80% of its European sales to come from local sellers [6]. Group 3: Automotive Industry Moves - Leap Motor has officially entered the South American market, launching its electric vehicles in Brazil and Chile, with plans to establish a network of dealerships across 27 cities in Brazil by 2025 [9]. - Avita has also entered the Latin American market, launching its Avita 11 model in Brazil, supported by local partnerships for market entry and sales [9]. Group 4: Technology and Innovation - WeRide and Uber have initiated a Level 4 autonomous Robotaxi service in Abu Dhabi, marking the first of its kind in the Middle East [6]. - JD FinTech has partnered with Banking Circle to provide cross-border payment solutions for global enterprises, enhancing financial flexibility and compliance [7]. Group 5: Robotics and AI Developments - The global humanoid robot market is projected to see annual sales exceed 10 million units by 2035, with a market size reaching $260 billion, indicating significant growth potential in the coming years [15]. - Beijing's government is actively supporting humanoid robot companies to expand internationally, fostering global collaboration and innovation in the robotics sector [15].