Core Insights - Meituan's Q3 2025 financial results show a revenue of 95.49 billion, a 2.0% increase, but operating profit (OP) at -19.76 billion, a decline of 244.4%, and adjusted net profit at -16.01 billion, down 224.8% [1] - The intense competition in the food delivery sector has led to lower-than-expected revenue growth and profitability, although the company maintains a strong long-term outlook for its core domestic business and new growth opportunities overseas [1][3] Group 1: Food Delivery Business - In Q3, the food delivery segment experienced a peak in competition, resulting in revenue decline and significant operating losses, although the company outperformed competitors in high-value order market share [2] - The company anticipates a more rational competitive environment in Q4, with expectations of reduced growth rates in order volume and improved average losses per order [2] Group 2: New Business Developments - New business revenue reached 28.04 billion, a 15.9% increase, with an operating loss of 1.28 billion, showing a notable improvement in operating profit margin (OPM) [3] - The entry of Keeta into the Brazilian market is expected to increase losses in Q4 due to initial investment costs, despite improvements in profitability in existing markets like Hong Kong and Saudi Arabia [3] Group 3: Investment Recommendations - The company’s Q3 performance was significantly impacted by competition in the food delivery sector, but it retains a competitive edge in high-value user engagement and operational efficiency [3] - Long-term growth potential remains strong, with a projected core local business GMV of approximately 2.7 trillion for 2025, leading to a target price of 141.9 HKD, maintaining a "strong buy" rating despite short-term disruptions [3]

Core Insights - Meituan reported Q3 2025 revenue of 95.5 billion yuan, a 2% year-on-year increase, demonstrating resilience in its core local commerce segment despite intense industry competition [2] - The number of annual transacting users surpassed 800 million, indicating a broad consumer base and enhanced network effects on the platform [3] - CEO Wang Xing emphasized the unsustainability of the food delivery price war, asserting that it does not create value for the industry [2][3] User Growth and Engagement - The milestone of over 800 million annual transacting users reflects Meituan's extensive market coverage and improved user engagement, with monthly transaction users reaching a historical high [3] - The user structure is continuously optimizing, with more low-frequency users transitioning to high-frequency users, significantly increasing consumption frequency and user stickiness [3] Competitive Positioning - Meituan maintained a strong competitive position in the food delivery market, with a market share recovery, especially in the mid-to-high price order segment, where it holds over 70% of orders above 30 yuan [6] - The company achieved a favorable "battle loss ratio" of 1:2 to 1:3 compared to competitors, showcasing its operational efficiency and resource management [3] Instant Retail Performance - Meituan's instant retail segment, Meituan Flash, continues to lead the industry, with new user growth and increased transaction frequency among core users [4] - The peak daily order volume for instant retail exceeded 150 million in July, with an average delivery time of just 34 minutes, highlighting its competitive fulfillment capabilities [5] International Expansion - Meituan's international strategy has made significant strides, with the Keeta business in Hong Kong achieving profitability ahead of schedule and expanding into new markets like Qatar, Kuwait, UAE, and Brazil [6][7] - The company remains focused on long-term strategic investments to enhance user value and maintain customer loyalty amid competition [7] Ecosystem and Merchant Support - Meituan has increased its investment in rider welfare and merchant support, launching initiatives like the "Prosperity Plan" with 2.8 billion yuan allocated to assist merchants [8] - The company is also enhancing food safety measures through initiatives like the "Bright Kitchen" program, encouraging transparency and consumer trust [9] Technological Advancements - Meituan's R&D investment reached 6.9 billion yuan, a 31% year-on-year increase, with significant advancements in AI applications and logistics technology, including drone delivery services [11] - The company is leveraging technology to improve operational efficiency and enhance service offerings for both merchants and consumers [11] Future Outlook - As industry competition stabilizes, Meituan's long-term investments in user scale, technology, and ecosystem development are expected to translate into sustained competitive advantages [10]

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]

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]