Summary of Meituan (3690) Conference Call Company Overview - **Company**: Meituan (3690) - **Industry**: On-demand services, including food delivery and local services Key Points Demand Outlook - **Order Volume**: - 2Q order volume expected to grow by 14-15% YoY, slightly lower than March figures [1] - Flash purchase growth rate is approximately 2x better than food delivery [1] - **Revenue**: - On-demand revenue growth is projected to be in the mid-teens, 1 ppt higher than order volume growth [1] - Average Order Value (AOV) for food delivery decreased by over 5% YoY in 1Q, but average revenue per order only declined by RMB 0.05 due to increased ad monetization and optimized subsidies [1] - AOV decline in 2Q is expected to be less than 5% YoY, with continued improvements in ad monetization and subsidies [1] - Average revenue per order is expected to increase YoY in 2Q [1] - **User Experience (UE)**: - Temporary subsidy base is normalizing in 2Q [1] - With ample rider supply, average delivery costs are expected to decrease by a few cents [1] - UE is projected to increase by RMB 0.1 YoY in 2Q [1] Financial Outlook - **Full Year (FY) Outlook**: - On-demand operating profit is expected to grow by 18%-20% YoY [1] - Food delivery order volume is projected to grow in the low to mid-teens YoY [1] - UE improvements are anticipated, with adjustments in capacity structure expected to lower average delivery costs YoY [1] - The company will not increase subsidies due to macroeconomic factors, as it believes ROI is low and its market share is already high [1] - **In-store Services**: - Significant iterations in the in-store segment are planned for 2H, with new light meal options being introduced [1] - Some food delivery orders may switch to in-store pickups [1] - **Flash Purchase**: - Continued investment in marketing for growth is expected, despite maintaining losses [1] Competitive Landscape - **Competition with Douyin**: - The company is focusing on monetization and efficiency improvements under new leadership [2] - Meituan is expected to adopt a more measured approach to competition, focusing on market share rather than blindly following subsidy policies [2] Financial Performance - **1Q Losses**: - The company reported a loss of RMB 2.9 billion in 1Q [3] - Other business segments showed slight profitability [3] - **2Q and FY Outlook**: - 2Q revenue is expected to grow by 23-25% YoY, accelerating from 1Q due to the cessation of ride-hailing services [3] - Losses are projected to be around RMB 9 billion for FY24, with a focus on reducing losses in 2H [3] International Expansion - **Overseas Plans**: - Currently in the planning stage for international expansion, with a focus on Hong Kong and potential markets in Europe and Southeast Asia [3] - The company is taking a controlled approach to expansion, assessing market conditions before entering new regions [3] Capital Allocation - **Cash Management**: - The company has USD 4 billion in cash and is actively managing capital outflows [4] - No current plans for convertible bonds, and there is no immediate refinancing pressure [4] - **Share Buyback**: - The company is considering extending its share buyback program based on share price and capital outflow quotas [4] Conclusion - Meituan is navigating a competitive landscape while focusing on growth in its on-demand services and optimizing its financial performance. The company is strategically planning for international expansion and managing its capital effectively to support long-term growth.

Financial Data and Key Metrics Changes - Total revenue increased by 75% year-over-year to RMB73.3 billion [13] - Adjusted net profit rose by 36.4% year-over-year to RMB7.5 billion [46] - Cost of revenue ratio decreased by 1.3 percentage points year-over-year to 64.9% [44] - Total segment operating profit increased from RMB4.4 billion to RMB6.9 billion, with operating margin rising from 6.1% to 7.1% [46] Business Line Data and Key Metrics Changes - Core Local Commerce segment revenue grew by 27.4% year-over-year to RMB54.6 billion [48] - On-demand delivery order volume growth achieved 28.1% year-over-year [48] - Meituan Instashopping's order volume growth rate more than doubled that of food delivery [49] - In-store, hotel, and travel business GTV grew by over 60% year-over-year [23] Market Data and Key Metrics Changes - Annual active users of food delivery reached almost 500 million, with transaction frequency increasing notably [10] - Annual active users of Meituan Instashopping posted high-teen year-over-year growth [19] - GTV for in-store business continued its rapid growth trajectory, with both transaction users and merchant base hitting new records [55] Company Strategy and Development Direction - Company aims to strengthen digital transformation and innovation in local commerce [5][6] - Focus on integrated marketing solutions and operational efficiency to enhance collaboration among business units [66][68] - Emphasis on capturing growth opportunities in lower-tier cities and enhancing product offerings [30][102] Management Comments on Operating Environment and Future Outlook - Management noted that the local commerce industry is experiencing steady growth, driven by improved consumption [5] - Anticipated normalization of order volume growth in Q2 due to last year's low base [79] - Confidence in balancing growth with profitability, particularly in on-demand delivery and Meituan Instashopping [83] Other Important Information - Company streamlined organizational structure to drive synergies between on-demand delivery and in-store segments [14] - Continued expansion of Meituan InstaMarts, with around 7,000 locations by the end of Q1 [12] - Strategic focus on enhancing operational efficiency and reducing losses in new initiatives like Meituan Select [37][59] Q&A Session Summary Question: Operational changes from recent reorganization - Management is still in the process of reorganizing to better support the Core Local Commerce segment and expects gradual rollout of operational changes [65][66] Question: Developments in food delivery and Meituan Instashopping - On-demand delivery is expected to see a normalization in order growth, while Meituan Instashopping is projected to have significantly higher growth [79][81] Question: Impact of consumption downgrade on in-store business - Despite price sensitivity, demand remains strong, and the company is focused on enhancing price competitiveness and expanding merchant base [87][90] Question: Competition in hotel and travel business - Management sees substantial growth potential and plans to enhance supply offerings and service quality to maintain competitive edge [99][101] Question: Growth trends for Meituan Select - Management emphasized the importance of online grocery and plans to continue improving efficiency while narrowing losses [113][115] Question: Overseas expansion plans - Company is cautiously evaluating potential markets for expansion, including the Middle East and Europe, with a focus on financial discipline [120][122]

via our on-demand retail channel. 3GB grown categories such as liquid and average holiday gifts and daily necessities experienced remarkable growth, bringing higher revenue to offline retailers, especially for many AA merchants. We worked with high-quality brands and merchants during our consumer stay marketing campaign Those were flowers, beauty products, and mom and child products were particularly high. We also collaborated... I've been living in Shanghai for 7 years. I've been living in Shanghai for 7 y ...

Robert Way Meituan (OTCPK:MPNGY), having started out as China's premier on-demand food delivery platform, has branched out into adjacent service offerings like in-store hotel & travel, as well as various other new business initiatives. While this has allowed Meituan to build one of the richest app ecosystems in the country, it has also come at a heavy P&L cost (a key concern I outlined in my prior coverage) and prolonged equity underperformance. No surprise, then, that investors are a lot more optimistic fo ...

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