Core Viewpoint - Meituan's CEO Wang Xing reiterated the company's long-term profit margin target of approximately 3% per order, emphasizing that subsidies are not a sustainable strategy in the fiercely competitive food delivery market [1] Group 1: Financial Performance - Meituan maintains its long-term profitability assumption of "1 yuan per order" and a profit margin of about 3% despite increased strategic investments in the third quarter, which may pressure some financial metrics in the short term [1] - The management believes that competition will eventually return to rationality, indicating confidence in the company's financial strategy [1] Group 2: Market Competition - The current food delivery market is experiencing intensified competition, and Meituan is committed to defending its market position [1] - Wang Xing stated that Meituan has grown through competition and has achieved its leading position in the market through continuous competitive efforts [1]

Core Insights - Meituan reported a revenue of 91.8 billion RMB for Q2 2025, representing a year-on-year growth of 11.7%, but adjusted net profit fell by 89% to 1.49 billion RMB due to "irrational competition" starting in the quarter [1] - The core local commerce segment saw a significant decline, with operating profit dropping from 15.2 billion RMB in Q2 2024 to 3.7 billion RMB in Q2 2025, a decrease of 75.6%, and operating profit margin falling from 25.1% to 5.7% [1] - The increase in sales and marketing expenses, which rose by 51.5% year-on-year to an additional 7.7 billion RMB, reflects the intense competition in the food delivery and instant retail sectors [1] Industry Context - The competitive landscape in the food delivery market has intensified, leading to significant profit declines across major players, with JD's net profit halving and Meituan's net profit dropping by 89% [2] - Market attention is focused on Alibaba's upcoming Q2 financial results, as the industry anticipates how it will respond to the ongoing competitive pressures [2]

Core Insights - Meituan's Q2 2025 revenue reached 91.8 billion RMB, a year-on-year increase of 11.7%, but adjusted net profit plummeted by 89% to 1.49 billion RMB due to irrational competition starting in the quarter [2] - The core local commerce segment's operating profit dropped from 15.2 billion RMB in Q2 2024 to 3.7 billion RMB in Q2 2025, a decline of 75.6%, with the operating profit margin falling from 25.1% to 5.7% [2] - The surge in sales and marketing expenses, which increased by 51.5% year-on-year to 7.7 billion RMB, reflects the intense competition in the food delivery and instant retail sectors [2] Competition Impact - The fierce competition in the food delivery market, referred to as the "takeaway three-country kill," has led to significant profit declines across major players, with JD's net profit halving and Meituan's net profit dropping by 89% [3] - Market attention is focused on Alibaba's upcoming Q2 financial report, as it is expected to be influenced by the same competitive pressures affecting Meituan and JD [3]

Core Viewpoint - The company is expected to face significant pressure on profits due to intensified competition in the food delivery and instant retail sectors, despite an increase in order volume. Group 1: Financial Projections - For Q2 2025, the company anticipates adjusted net profit to be 7.7 billion yuan, with revenue expected to grow by 13% year-on-year to 92.9 billion yuan, resulting in an adjusted net profit margin of 8.3% [1] - The company's core local business operating profit is projected to decline by 33% year-on-year to 10.2 billion yuan, with an operating profit margin (OPM) of 15.2% [1] - The overall operating profit margin for the core local business is expected to decrease to 12.6% for the full year, with a total operating profit of 35.3 billion yuan, reflecting a 33% year-on-year decline [2] Group 2: Competitive Landscape - The food delivery market is experiencing heightened competition, particularly with competitors like JD.com and Taobao launching aggressive subsidy campaigns, which have led to a significant increase in order volume [1] - The company has responded to competition by implementing various promotional strategies, including large consumer coupons and new product offerings, which have resulted in a 14% year-on-year increase in food delivery order volume for Q2 2025 [1] - Instant retail orders have also surged, with peak order volume reaching 150 million, driven by the company's participation in promotional events [2] Group 3: New Business Developments - The company has decided to further scale back its Meituan Youxuan business, leading to a reduction in expected losses for new businesses from 10.4 billion yuan to 6.7 billion yuan for the year [2] - Despite the reduction in losses, the revenue growth forecast for new businesses has been adjusted down to 10% due to limited contributions from overseas expansion and the closure of operations in many regions [2] Group 4: Valuation Adjustments - The company has revised its adjusted net profit forecasts for 2025 and 2026 down by 30% and 19% respectively, now projecting 28.6 billion yuan and 43.8 billion yuan [2] - The target price has been lowered by 12.4% to 155 HKD, reflecting a 20 times adjusted price-to-earnings ratio for 2026, with a potential upside of 23.5% [2]

Core Viewpoint - Alibaba is aggressively entering the food delivery market with a substantial subsidy of 50 billion, aiming to surpass Meituan in order volume, which is perceived as an irrational competition by Meituan's CEO [1] Group 1: Competitive Landscape - Meituan's CEO believes Alibaba's strategy is designed to intimidate them, banking on the assumption that Meituan cannot match the financial resources [1] - Alibaba has set an ambitious target to exceed Meituan's order volume, indicating a high-stakes competition in the food delivery sector [1] Group 2: Financial Implications - Meituan reported a record single-day order volume of 150 million, countering speculation that they incurred a loss of 800 million on that day [1] - Meituan's actual expenditure is significantly lower than Alibaba's, suggesting a more efficient use of resources in the competitive landscape [1]

Investment Rating - The investment rating for Meituan-W (03690.HK) is "Outperform the Market" [5] Core Insights - The core local business of Meituan has shown excellent profit release, with a revenue of 866 billion yuan in Q1 2025, representing an 18% year-on-year growth. The adjusted net profit reached 109 billion yuan, a 46% increase year-on-year, with an adjusted net profit margin of 13%, up 3 percentage points [1][9] - The company is expected to increase subsidies starting Q2 2025 to maintain its competitive edge amid rising competition, particularly in the food delivery segment [2][19] - The flash purchase business has seen a 30% increase in order volume year-on-year, with a historical high in profit margins, and the company plans to enhance subsidies to expand market reach [3][22] - The in-store business is experiencing strong growth, particularly in lower-tier cities, with a 33% increase in GTV year-on-year [4][23] - New business segments, particularly overseas food delivery, are actively expanding, with a 19% increase in revenue year-on-year, although operating losses have also increased [27] Summary by Sections Financial Performance - In Q1 2025, Meituan achieved a revenue of 866 billion yuan, with a year-on-year growth of 18%. The core local business generated 643 billion yuan in revenue, also up 18% year-on-year. The operating profit for the core local business was 135 billion yuan, a 39% increase year-on-year, with an operating profit margin of 21% [1][9][17] Business Segments - The food delivery segment saw a 10% increase in order volume year-on-year, with a revenue growth of 14%. The average order value (AOV) decline has continued to narrow [2][19] - The flash purchase segment's revenue grew approximately 33%, with operating profit reaching 800 million yuan [3][22] - The in-store business's revenue increased by 21% year-on-year, with a focus on expanding in lower-tier cities [4][23] Future Outlook - The company maintains a positive long-term outlook, expecting adjusted net profits of 447 billion yuan, 587 billion yuan, and 718 billion yuan for 2025, 2026, and 2027, respectively [7][29] - The competitive landscape is anticipated to remain challenging, but Meituan's operational capabilities and compliance improvements are expected to support sustainable growth [7][29]

Core Insights - Meituan reported that the average monthly income of high-frequency delivery riders ranges from 7,230 to 10,100 yuan, with skilled riders in major cities like Beijing, Shanghai, Guangzhou, and Shenzhen earning up to 12,593 yuan [1] - The company has disclosed rider income and protection data for nine consecutive months, emphasizing transparency and public oversight [1] - There has been a significant quarter-on-quarter increase in rider income, with first-quarter earnings in major cities rising approximately 12% compared to the previous quarter [1] - The growth in rider income is attributed to the traditional peak season for food delivery around the Lunar New Year and strong demand for non-food delivery orders in various new consumer categories [1] Company Positioning - Meituan considers itself the largest player in the food delivery industry, having been deeply involved for over a decade and believes it is well-positioned to succeed in the current competitive landscape [2] - The CEO of Meituan highlighted the competitive environment, noting that many internet participants are willing to invest heavily, indicating that the eventual winner will capture significant market value [1]