Ge Long Hui·2025-12-04 21:50Core Viewpoints - Q3 losses have materialized, and post-Double 11, industry subsidies have somewhat receded, indicating that the worst period for the company may have passed, although the focus on core users and high average order value (AOV) may prolong the duration of losses, necessitating ongoing attention to competitive dynamics [1] - The Q3 instant delivery business losses were largely in line with expectations, with future subsidies shifting towards higher AOV orders, potentially leading to sustained losses. The topline saw a significant increase in order volume driven by subsidies, with Q3 takeaway and flash purchase daily order volume growing by 21% year-on-year to approximately 93 million orders. However, competition negatively impacted AOV, resulting in a year-on-year decline in takeaway revenue of about 12% [1] - Q3 losses for takeaway and flash purchase combined were approximately 19 billion (with a loss of 2.5 yuan per takeaway order and 0.8 yuan per flash purchase order), compared to Alibaba's losses of approximately 360-380 billion during the same period, indicating a loss ratio of about 1:2 [1] Business Segment Performance - The in-store and travel segment's topline growth has slowed, with losses better than market pessimism. Q3 GMV for in-store travel grew by 18% and revenue by 11%, primarily affected by macroeconomic consumption weakness and the impact of the takeaway battle on advertising budgets for certain beverage categories. Operating profit margin (OPM) was approximately 28%, with operating profit down 11% year-on-year to 4.9 billion, which was better than the anticipated decline of 30%-40% [2] - For Q4, topline growth is expected to remain relatively weak, with ongoing factors from Q3 continuing to affect performance, alongside the need to dynamically monitor competition from Douyin and Alibaba. Q4 GMV is projected to grow by 14% and revenue by 11%, with OPM expected to be in the range of 25%-30% [2] New Business Developments - The new business segment saw a significant reduction in losses in Q3, performing better than expected, maintaining an annual loss forecast of 10 billion, with expectations for reduced losses in 2026. Q3 losses were 1.3 billion (compared to Bloomberg's consensus estimate of 2.3 billion), with Q4 losses expected to be 4 billion, primarily due to new openings in three Gulf countries and a pilot in Brazil [2] Earnings Forecast and Investment Recommendations - Considering short-term competitive impacts, the company has revised down its earnings per share forecasts for 2025-2027 to -3.21/-4.20/-0.11 yuan (previously -1.56/2.62/6.44 yuan). Using a segmented valuation approach, the company's reasonable valuation is calculated at 8.291 billion HKD, with a target price of 135.66 HKD, maintaining a "buy" rating [2]