2024-06-11 06:01Investment Rating - The report maintains a "Buy" rating for the company, with an updated target price of HKD 131, up from HKD 119, based on a 17x 2024 price-to-earnings ratio for the food delivery and in-store travel business [1][3][47]. Core Insights - The company's Q1 performance exceeded market expectations, with total revenue increasing by 25% year-on-year to HKD 73.3 billion, surpassing market expectations by 6% and internal forecasts by 4% [19][50]. - The core local business and new business segments saw year-on-year revenue growth of 27% and 19%, respectively, reaching HKD 54.6 billion and HKD 18.7 billion [19][50]. - Adjusted net profit for Q1 was HKD 7.5 billion, significantly above market expectations of HKD 5.8 billion, reflecting better-than-expected revenue and cost control [50]. Financial Performance - The company's adjusted operating profit for the core local business was HKD 9.7 billion, exceeding market expectations of HKD 8.4 billion, with an operating margin of 17.8%, up 3.2 percentage points quarter-on-quarter [26][50]. - Instant delivery orders grew by 28% year-on-year, with daily average orders reaching 51.6 million, while the average order value (AOV) faced downward pressure [2][27]. - The company expects Q2 revenue to grow by 18.5% year-on-year, with a projected slowdown in food delivery order growth to 13% due to base effects [3][19]. Business Segments - The food delivery segment's revenue increased by 25% to HKD 21.1 billion, driven by strong growth in instant delivery orders [7][19]. - The in-store travel segment's gross transaction value (GTV) grew over 60% year-on-year, with revenue growth improving relative to GTV growth [8][45]. - The new business segment reported an adjusted operating loss of HKD 2.8 billion, better than the market expectation of HKD 3.2 billion, with a focus on high-quality growth strategies [20][28]. User Metrics - The number of active users in the food delivery segment increased to approximately 500 million, with high-frequency users showing faster transaction frequency growth than the average [2][27]. - The number of active merchants in the in-store travel segment reached a record high, contributing to the overall growth in user engagement [8][45].