Hua Er Jie Jian Wen·2025-08-28 01:19Core Insights - Meituan's latest quarterly results confirm market concerns about its profitability, with a shocking 87% year-on-year drop in non-IFRS operating profit to 1.84 billion RMB, significantly below Wall Street expectations [1] - Despite a 12% year-on-year revenue growth to 91.84 billion RMB, this figure also failed to meet market forecasts [1] - Management has warned of potential "significant losses" in its core local commerce (CLC) segment for Q3, contrasting sharply with a profit of 14.6 billion RMB in the same period last year [1][3] Financial Performance - The CLC segment's operating profit fell 76% year-on-year, 70% lower than market expectations, indicating severe profitability erosion [3] - Meituan's actual investment in delivery and flash purchase services exceeded previous forecasts by 10 billion RMB, suggesting more intense competition than anticipated [1][3] - The unit economics (UE) for Meituan's delivery business turned negative in Q2, recording -0.12 RMB, down from 1.9 RMB a year ago [4] Competitive Landscape - Meituan maintains a 70% market share in core food-related orders, but faces increasing pressure from Alibaba, which has grown its market share from 30% to over 40% [2][5] - The intense price war began with Alibaba's announcement of a 50 billion RMB subsidy plan, prompting Meituan to respond with its own subsidies [6] - The competition has negatively impacted Meituan's other business areas, with a slowdown in revenue growth for dine-in services from 20% to 15% [6] Future Outlook - Management's guidance indicates a challenging Q3, with expectations of a shift from profit to loss in the CLC segment [1][3] - New business losses narrowed by 43% year-on-year to 1.9 billion RMB, better than market expectations, but anticipated to widen to 2.3-2.4 billion RMB in Q3 due to restructuring costs and international expansion [6]