Investment Rating - The report maintains an "Overweight" rating for Meituan (3690.HK) with a revised price target of HK$160, down from HK$200, implying a 24% upside from the current price of HK$129.40 [6][8][36] Core Views - The food delivery volume growth is expected to sustain at 10.5% in Q2 2025, but operating profit (OP) is anticipated to decline due to intensified competition [1][3] - Despite near-term margin pressures and widening losses from new initiatives, the long-term competitive moat of Meituan in food delivery remains strong [1][6] - The report highlights a successful expansion in Hong Kong and ongoing efforts in the Middle East, particularly in Saudi Arabia [4][6] Financial Performance - In Q1 2025, total revenue grew by 18% year-over-year, with adjusted EBITDA of Rmb12.3 billion, exceeding market expectations [30] - The core local commerce (CLC) revenue also increased by 18%, with an operating profit of Rmb13.5 billion, reflecting a 39% year-over-year growth [30] - New initiatives revenue rose by 19%, but operating losses were recorded at Rmb2.3 billion, attributed to narrowing losses from Meituan Select and increased overseas investments [30] Revenue and Profit Estimates - For Q2 2025, CLC revenue is estimated at Rmb67 billion, a 10% year-over-year increase, while OP is projected to decline by 24% year-over-year to Rmb7.7 billion due to higher investments and a challenging comparison base [3][31] - The report has cut revenue estimates by 2% and non-IFRS net profit estimates by 14-19% for 2025-26, reflecting the impact of competition and new initiative losses [31][32] Market Dynamics - The competitive landscape has intensified since May 2025, particularly with peers launching promotional activities for the 618 festival, which is expected to affect Meituan's operating profit [3][5] - The report notes that while regulatory changes regarding platform fees are being implemented, Meituan's take rates and subsidies have remained stable [5][6] Expansion and Initiatives - The report anticipates stable losses from new initiatives in Q2 2025, estimated at Rmb2.5 billion, but warns of potential further downside in FY25 due to the Brazil expansion [4][6] - The focus for expansion remains on the Gulf Cooperation Council (GCC) region, with successful operations in Saudi Arabia [4][6]
摩根士丹利：美团