MEITUAN(03690) 交银国际证券·2024-02-22 16:00Investment Rating - The report maintains a Buy rating for Meituan with a target price of HKD 93, implying a potential upside of 16.6% [1][2] Core Views - Meituan's revenue is expected to grow by 17% in 2024, driven by its strong position in the local services and food delivery sectors [1] - The company's core business is valued at 15x P/E, with a conservative approach excluding the valuation contribution from new businesses [1] - Meituan's competitive environment is considered better than that of e-commerce platforms like Alibaba and JD, with higher user stickiness and growth potential [1][2] - The report highlights that Meituan's valuation should be between Alibaba/JD (8-10x P/E) and Pinduoduo (20x P/E) [1][13] Business Performance and Outlook Local Services and Food Delivery - Meituan's food delivery business remains stable, with a unit economics (UE) of RMB 1.2 per order in 2023, expected to maintain RMB 1.15-1.2 per order in 2024 despite AOV (Average Order Value) pressure [41][46] - The food delivery GTV (Gross Transaction Value) is projected to grow by 18% in 2023, reaching RMB 940 billion, with 14% and 12% growth expected in 2024 and 2025, respectively [79] - Meituan's local services business is expected to grow by 35% in GTV in 2024, with a 10%+ profit growth, despite increased competition [51][76] New Businesses - Meituan's new businesses, including community group buying, are expected to continue reducing losses, with a projected loss of RMB 20.4 billion in 2023, slightly higher than the initial estimate of RMB 19.3 billion [40][87] - The community group buying business has reached 490 million users as of September 2023, but its contribution to the core business remains limited [87] Competitive Landscape - Meituan's market share in local services is estimated at 71%, compared to Douyin's 21%, with Meituan's scale being 3.4x larger than Douyin's after considering redemption rates [76][78] - The report emphasizes that Meituan's user stickiness and merchant loyalty are stronger than Douyin's, with Douyin's local life services contributing minimally to its overall profitability [2][53] Valuation and Market Comparison - Meituan's valuation is considered reasonable at 15-20x P/E for its core business, given its stable growth and competitive advantages [22] - The report compares Meituan's valuation with other internet platforms, noting that Meituan's PEG (Price/Earnings to Growth) ratio is below 1, similar to Pinduoduo and Kuaishou [91] Industry Insights - The local services market is estimated to have a RMB 10 trillion traditional industry size, with significant growth potential as online penetration increases [76] - The report highlights that Meituan's non-standardized services and small-to-medium local merchants are less likely to be impacted by competition compared to standardized services like branded restaurants and entertainment [98]