MEITUAN(HK:03690) First Shanghai Securities·2024-03-25 16:00Investment Rating - The report maintains a "Buy" rating for Meituan-W (3690) and sets a target price of HKD 130, reflecting a potential upside of 47% from the current price of HKD 88 [5][26]. Core Insights - Meituan's revenue and profit exceeded market expectations, driven by a strong recovery in local commerce and robust performance in core local business and new initiatives. In Q4 2023, revenue reached RMB 737 billion, a year-on-year increase of 22.6%, with a net profit of RMB 22 billion and a net profit margin of 3.0% [2][32]. - For the full year 2023, Meituan reported revenue of RMB 2,767 billion, up 25.8% year-on-year, with a net profit of RMB 139 billion and a net profit margin of 5.0% [2][32]. Summary by Sections Financial Performance - In Q4 2023, Meituan's core local business revenue was RMB 551 billion, up 26.8% year-on-year, with an operating profit of RMB 80 billion and an operating profit margin of 14.5% [10][12]. - For the full year 2023, core local business revenue was RMB 2,069 billion, a 28.7% increase year-on-year, with an operating profit of RMB 387 billion, reflecting a 31.2% year-on-year growth [10][12]. New Initiatives - New business revenue in Q4 2023 was RMB 186 billion, an 11.5% year-on-year increase, with operating losses narrowing to RMB 48 billion [21][31]. - For the full year 2023, new business revenue reached RMB 698 billion, up 18.0% year-on-year, with operating losses reduced to RMB 202 billion [21][31]. Market Position and Strategy - Meituan's local commerce business is expected to maintain its leadership position, supported by its ecosystem and competitive pricing strategies. The report notes that if Douyin does not significantly enter the food delivery market, Meituan's food delivery business could retain a market share of 70% [25][26]. - The management plans to focus on improving core competencies and user experience rather than merely expanding market share, aiming to significantly reduce operational losses in the new business segment [15][31]. Cost Management - Sales and marketing expenses increased by 55.3% year-on-year to RMB 167 billion in Q4 2023, reflecting a strategic shift to capture market share and enhance user engagement [17][33]. - Research and development expenses remained stable at RMB 54 billion, while general and administrative expenses showed a slight decrease, indicating a focus on operational efficiency [17][24].