Ge Long Hui·2025-08-30 04:13Core Viewpoint - In Q2 2025, Meituan achieved total revenue of 91.84 billion yuan, a year-on-year increase of 11.7%, but Non-GAAP net profit fell by 89% to 1.493 billion yuan, with both revenue and profit below Bloomberg consensus expectations [1][2] - The impact of intensified competition in the home delivery business on CLC profits is becoming evident, with expectations of significant deterioration in Q3 [1][2] - Long-term, the irrational competition in the industry may not be sustainable, and Meituan's food delivery profit margins are expected to return to reasonable levels [2][3] Revenue and Profit Analysis - Meituan's core local business generated revenue of 65.347 billion yuan in Q2, a year-on-year increase of 7.69%, with adjusted operating profit of 3.721 billion yuan, down 76% year-on-year [1] - Delivery service revenue was 23.7 billion yuan, up 2.76%, commission revenue was 25 billion yuan, up 12.86%, and online marketing service revenue was 13.5 billion yuan, up 10.48% [1][2] Market Competition and Future Outlook - The second quarter saw intensified competition in the food delivery market, with a rise in order volume but a decline in average order value (AOV) and revenue due to subsidies [2] - The expectation is that the food delivery unit economics (UE) will turn negative in Q2, with further declines anticipated in Q3 due to increased competition [2] - In the hotel and travel segment, GTV continued to grow rapidly, but revenue growth lagged behind due to structural impacts and decreased advertising spending by merchants [2] New Business Developments - Meituan's new business segment reported revenue of 26.5 billion yuan in Q2, a year-on-year increase of 23%, but incurred an adjusted operating loss of 1.9 billion yuan [3] - The launch of Keeta in Brazil is expected to create a new growth curve for Meituan, with long-term profit potential in overseas markets where AOV and profit margins are higher than in the domestic market [3] Financial Forecasts - Revenue projections for Meituan for FY25-27 are 372.105 billion yuan, 450.261 billion yuan, and 537.467 billion yuan, with growth rates of 10.22%, 21.00%, and 19.37% respectively [3] - Non-GAAP profits are expected to be -3.268 billion yuan, 26.677 billion yuan, and 46.477 billion yuan for the same periods [3] - The company maintains a "buy" rating with a target price of 150.00 HKD, corresponding to an 18X PE for 2027 [3]