November 28, 2025 09:14 AM GMT Meituan | Asia Pacific M Update 3Q25 Miss on CLC Rev and OP Reaction to earnings Weakens our thesis Modest shortfall Modest revision lower Impact to our thesis Financial results versus consensus Direction of next 12-month consensus EPS Source: Company data, Morgan Stanley Research Key Takeaways | Exhibit 1: | 3Q25 results review | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | MS Estiamtes vs Co | | | | | | | | 3QFY-2025E | | | Financials (Rmb ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **food delivery industry** in the **EMEA** region, particularly in relation to **Meituan's** Q3 results and its implications for competitors like **Delivery Hero**, **talabat**, **Jahez**, and **Prosus** in **Latin America** and **MENA** regions [1][2]. Company Insights 1. **Meituan's International Expansion** - Meituan is actively expanding its operations in the **GCC** and **Brazil**, competing with local players such as Delivery Hero and Jahez in Saudi Arabia, and talabat in Qatar and Kuwait. The company launched pilot operations in Brazil in October 2025 [2][3]. - The company sees significant growth potential in food delivery penetration in the **GCC** and Brazil, where platforms like WhatsApp are commonly used for food orders [2][3]. 2. **Financial Performance** - Meituan reported an adjusted EBITDA of **$(2.1) billion** in Q3 2025, a significant decline from **+$2.1 billion** in Q3 2024, indicating intensified competition and operational challenges [10][8]. - The New Initiatives segment, which includes grocery retail and overseas expansion, showed a narrowing of operating losses quarter-over-quarter, although the exact financial split remains unclear [3][8]. 3. **Market Position and User Data** - In Saudi Arabia, Meituan has become the second-largest player by user count, with Jahez experiencing a decline in users year-over-year [4][9]. - In the UAE, Meituan is gaining traction, although it is still in the early stages of its launch. In Kuwait, Jahez has been negatively impacted, while talabat's daily active users (DAUs) have increased year-over-year [4][12][19]. 4. **Competitive Landscape** - The competition in the food delivery sector is described as "irrational," with Meituan suggesting that the competition may have peaked in Q3 2025 [10]. - The sentiment in the EMEA food delivery market remains weak, influenced by the competitive dynamics in China and the performance of global food delivery companies [10]. Additional Insights - **Keeta**, a grocery delivery service under Meituan, achieved profitability in Hong Kong after 29 months of operation, following the exit of Deliveroo from that market [3]. - Regulatory challenges in Qatar affected talabat, which faced a temporary ban in September 2025, impacting its user base [4][28]. Conclusion - Meituan's aggressive expansion strategy in the EMEA region presents both opportunities and challenges, with significant competition from established players. The financial performance indicates a need for improved operational efficiency and market positioning to navigate the competitive landscape effectively.

Core Insights - Meituan reported its first loss in nearly three years, with an EPS of -0.64, which was below the estimated EPS of -0.52 [2][5] - The company's revenue for Q3 2025 was approximately $13.49 billion, falling short of the estimated $13.79 billion, indicating financial strain from aggressive discounting strategies [2][5] Financial Performance - The price-to-sales ratio of Meituan is 1.54, and the enterprise value to sales ratio is 1.40, reflecting the market's valuation of the company's sales performance [4] - The enterprise value to operating cash flow ratio stands at 10.73, indicating how the market values its cash-generating ability [4] - Meituan maintains a relatively low debt-to-equity ratio of 0.28, and a current ratio of 1.93 suggests a strong ability to cover short-term liabilities [4] Strategic Discussion - Key figures from Meituan, including Scarlett Xu, Xing Wang, and Shaohui Chen, discussed the company's financial performance and strategic direction during the Q3 2025 earnings call [3] - Analysts from major financial institutions, including Goldman Sachs and Morgan Stanley, attended the earnings call, highlighting the significance of Meituan's financial results and future plans [3]

Core Viewpoint - Delivery Hero SE is under pressure from major shareholders to conduct a strategic review due to increasing consolidation in the food delivery industry and poor stock performance [1][2]. Group 1: Shareholder Pressure - Investors, including Aspex Management, Delivery Hero's second-largest shareholder with over 5% stake, are urging management to consider selling the company or parts of its business [2][4]. - Other investors, such as Broad Peak Investment Advisers and PSquared Asset Management, have expressed frustration over the company's lack of progress in improving its loss-making operations and shareholder value [4]. Group 2: Stock Performance - Delivery Hero's shares have decreased approximately 50% over the past year and nearly 90% from their peak in 2021 [2]. - In recent trading, shares of Delivery Hero rose as much as 15%, reaching a market value of €5.9 billion ($6.9 billion) [3]. Group 3: Strategic Options - Analysts from Barclays noted that there is a growing sentiment among investors for a strategic review and potential asset sales [5]. - Potential buyers for Delivery Hero's assets could include competitors like Meituan, Grab Holdings, or Uber, with the Korean business Baedal Minjok being particularly attractive [5]. Group 4: Governance Implications - Disgruntled investors owning over 5% of Delivery Hero could call for a shareholder meeting and potentially withdraw support for management under German regulations, which could negatively impact executive confidence [6].

Core Insights - The Chinese shopping-and-delivery platform is aggressively offering discounts to attract customers, which is seen as a necessary strategy to defend its market share against competitors like Alibaba's Ele.me and JD.com [1] Company Strategy - The platform's discounting strategy is aimed at increasing customer acquisition and retention in a highly competitive market [1] Competitive Landscape - The competitive pressure from Alibaba's Ele.me and JD.com is significant, prompting the platform to enhance its promotional efforts to maintain its position in the market [1]

Core Insights - Meituan reported a significant quarterly loss due to intense competition with Alibaba, leading to modest revenue growth and eroded margins [1][3] Financial Performance - Revenue for the quarter reached 95.5 billion yuan (approximately US$13.3 billion), marking a 2% year-on-year increase but falling short of analysts' expectations of 97.5 billion yuan [1] - The company experienced an operating loss of 19.8 billion yuan, a stark contrast to the operating profit of 13.7 billion yuan reported in the same quarter last year [2] - Net loss amounted to 18.6 billion yuan, compared to a profit of 12.9 billion yuan in the previous year, exceeding analysts' predictions of a 14.8 billion yuan loss [3] Competitive Landscape - The loss is attributed to a price war with Alibaba, where Meituan has been heavily subsidizing products like milk tea and lunchboxes to attract consumers [3] - Meituan's core local-commerce segment, which includes food delivery and in-store business, saw a revenue decline of 2.8% to 67.4 billion yuan, with an operating loss of 14.1 billion yuan due to intensified competition [6] - The new initiatives division, covering grocery retail and the overseas delivery service Keeta, reported a revenue increase of 15.9% to 28 billion yuan, although its operating loss widened by 24.5% to 1.3 billion yuan [7] Market Outlook - The company indicated that profit pressure is expected to continue in the short term, with ongoing heated market competition likely to result in persistent operating losses into the fourth quarter [5]

Economic Indicators and Corporate Performance - China's services trade deficit has widened to $164.4 billion for the January-October period, with a deficit of $11.2 billion in October alone, indicating ongoing challenges in balancing international trade in services [2][10] - Meituan reported a disappointing third quarter with an adjusted net loss of 16.0 billion yuan, which is significantly wider than the estimated loss of 13.96 billion yuan, and its revenue of 95.5 billion yuan fell short of the 97.47 billion yuan estimate [4][10] Regulatory Developments - The Industry Ministry of China plans to regulate excessive competition in the battery sector and aims to guide battery firms in expanding overseas in a "reasonable and orderly" manner, indicating a strategic effort to consolidate and globalize the industry [3] Global Economic Trends - Germany's labor market showed mixed signals with a slight increase in unemployment by 1,000, while the unemployment rate remained stable at 6.3%, and inflation data indicated a monthly decline of 0.2% in November [5][10] - Taiwan's economy demonstrated robust performance with a preliminary Q3 GDP growth of 8.21% year-over-year, exceeding the estimated 7.60%, and the 2026 GDP growth forecast was revised upwards to 3.54% from 2.81% [8][10] Market Trends - Gold is experiencing a significant rally, poised for its fourth consecutive monthly gain, driven by optimism over potential Federal Reserve interest rate cuts, which typically boosts the appeal of non-yielding assets like gold [11]

Meituan posted a net loss of 16 billion yuan for the September quarter, versus the 14 billion yuan average projected by analysts https://t.co/XgyT0LcF7U ...

Core Insights - Alibaba Group Holding Ltd. reported a 34% growth in its cloud business, which helped offset a decline in profit due to increased spending on consumer subsidies and data centers to capitalize on the AI boom [1][4] Financial Performance - The cloud division, which includes the Qwen platform, contributed to a 5% increase in overall revenue, reaching 247.8 billion yuan ($35 billion) in the September quarter, slightly exceeding expectations [2][6] - Chinese e-commerce revenue rose by 16%, indicating strong performance amid competition with JD.com Inc. and Meituan [2] - Net income fell to 20.99 billion yuan during the period, impacted by discounting and rising AI development costs, with sales and marketing expenses more than doubling [7] Market Position and Strategy - The strong results are expected to bolster investor confidence in Alibaba as a leader in AI development, with the company accelerating the release of AI models and relaunching its Qwen mobile app [3][4] - CEO Eddie Wu dismissed concerns about an AI investment bubble, asserting that the company plans to pursue aggressive investments to meet growing market demand and competition [4][5] Industry Context - Alibaba's performance comes amid skepticism regarding the sustainability of AI infrastructure investments, with concerns about whether data center construction is outpacing demand [4][6] - The company joins JD.com and PDD Holdings Inc. in reporting better-than-expected results, benefiting from Beijing's stimulus measures and substantial subsidies [7]

Core Insights - Meituan is facing significant challenges this year primarily due to intense competition in the market [1] Group 1: Competitive Landscape - The competitive threat to Meituan was initially underestimated, but recent developments have highlighted the severity of the competition [1]