Core Viewpoints - Q3 losses have materialized, and post-Double 11, industry subsidies have somewhat receded, indicating that the worst period for the company may have passed, although the focus on core users and high average order value (AOV) may prolong the duration of losses, necessitating ongoing attention to competitive dynamics [1] - The Q3 instant delivery business losses were largely in line with expectations, with future subsidies shifting towards higher AOV orders, potentially leading to sustained losses. The topline saw a significant increase in order volume driven by subsidies, with Q3 takeaway and flash purchase daily order volume growing by 21% year-on-year to approximately 93 million orders. However, competition negatively impacted AOV, resulting in a year-on-year decline in takeaway revenue of about 12% [1] - Q3 losses for takeaway and flash purchase combined were approximately 19 billion (with a loss of 2.5 yuan per takeaway order and 0.8 yuan per flash purchase order), compared to Alibaba's losses of approximately 360-380 billion during the same period, indicating a loss ratio of about 1:2 [1] Business Segment Performance - The in-store and travel segment's topline growth has slowed, with losses better than market pessimism. Q3 GMV for in-store travel grew by 18% and revenue by 11%, primarily affected by macroeconomic consumption weakness and the impact of the takeaway battle on advertising budgets for certain beverage categories. Operating profit margin (OPM) was approximately 28%, with operating profit down 11% year-on-year to 4.9 billion, which was better than the anticipated decline of 30%-40% [2] - For Q4, topline growth is expected to remain relatively weak, with ongoing factors from Q3 continuing to affect performance, alongside the need to dynamically monitor competition from Douyin and Alibaba. Q4 GMV is projected to grow by 14% and revenue by 11%, with OPM expected to be in the range of 25%-30% [2] New Business Developments - The new business segment saw a significant reduction in losses in Q3, performing better than expected, maintaining an annual loss forecast of 10 billion, with expectations for reduced losses in 2026. Q3 losses were 1.3 billion (compared to Bloomberg's consensus estimate of 2.3 billion), with Q4 losses expected to be 4 billion, primarily due to new openings in three Gulf countries and a pilot in Brazil [2] Earnings Forecast and Investment Recommendations - Considering short-term competitive impacts, the company has revised down its earnings per share forecasts for 2025-2027 to -3.21/-4.20/-0.11 yuan (previously -1.56/2.62/6.44 yuan). Using a segmented valuation approach, the company's reasonable valuation is calculated at 8.291 billion HKD, with a target price of 135.66 HKD, maintaining a "buy" rating [2]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 135.66 HKD, based on a reasonable valuation of 829.1 billion HKD [3][12]. Core Insights - The company is experiencing significant competition, leading to a focus on high-value orders and a prolonged period of losses. The report suggests that the worst phase of losses may have passed, but the ongoing competition will likely extend the duration of losses [9][12]. - The company's Q3 performance showed a substantial increase in order volume driven by subsidies, but this has negatively impacted average order value (AOV), resulting in a revenue decline of approximately 12% year-on-year [9]. - The report highlights that the company's market share in high-value orders (AOV above 15 HKD) is over two-thirds, indicating a strategic focus on maintaining this segment despite competitive pressures [9]. Financial Forecasts - Revenue projections for the company are as follows: - 2023: 276,745 million HKD - 2024: 337,592 million HKD - 2025: 366,600 million HKD - 2026: 406,302 million HKD - 2027: 462,787 million HKD - The year-on-year growth rates are expected to decline significantly, with 2025 showing only an 8.59% increase [4][16]. - The company is projected to incur losses in the coming years, with net profit estimates for 2025 at -19,633 million HKD and -25,640 million HKD for 2026 [4][16]. Segment Valuation - The report employs a segmented valuation approach, estimating the following for 2026: - Delivery and Flash Purchase: 2,097 billion CNY in revenue, valued at 4,516 billion HKD - In-store and Hotel Travel: 170 billion CNY in after-tax operating profit, valued at 2,437 billion HKD - New Business: 1,216 billion CNY in revenue, valued at 1,338 billion HKD - The total estimated market value for the company is 8,291 billion HKD [11][12].

Core Viewpoint - The ongoing "takeout war" among major platforms has led to significant financial investments in subsidies, resulting in record-breaking order volumes, but it has also created a complex competitive environment that may harm smaller businesses and reduce market diversity [1][2][3] Group 1: Market Dynamics - Since April, platforms have invested nearly 1 trillion yuan in subsidies to attract customers, leading to a surge in order volumes [1] - The initial benefits of subsidies included increased market share for platforms and sales for merchants, but many restaurants report that they are not profiting, leading to a "loss-leader" situation [1][2] - The competition has shifted from a marketing strategy to a prolonged battle, altering the landscape of the restaurant market [1] Group 2: Impact on Small Businesses - Smaller businesses face an unequal competitive environment, where they must choose between participating in subsidies, which erodes profits, or risking marginalization by not participating [2] - The reliance on a single platform for revenue can limit the operational autonomy of smaller restaurants, increasing their financial pressure [2] - The ongoing price wars may force unique small eateries out of the market, as they struggle to maintain profitability [2] Group 3: Long-term Implications - The "takeout war" may reduce market diversity, as consumer choices become limited to a few large brands offering standardized products, potentially impacting local culinary culture [3] - The heavy reliance of many businesses on a few platforms could weaken the overall resilience of the restaurant retail system [3] - The focus should shift from a simplistic "winner vs. loser" perspective to understanding the long-term effects on the entire restaurant ecosystem [3] Group 4: Call for Change - There is a need for platforms to transition from a "traffic-driven" mindset to a "coexistence-driven" approach, ensuring that all types of businesses can thrive [3] - The ultimate goal should be to create a healthy ecosystem where large, medium, and small businesses can grow, consumers receive sustainable quality service, and delivery personnel are respected and protected [3] - True success for platforms will be measured by their ability to connect their achievements with the prosperity of the broader economic ecosystem [3]

Core Insights - The competition among instant retail and food delivery platforms, represented by Meituan, Taobao Flash Purchase, and JD, has intensified since 2025 due to large-scale subsidy strategies aimed at boosting consumer spending [1][7][27] - Research indicates that Taobao Flash Purchase coupons significantly stimulate additional spending on the Ele.me platform, with every 1 yuan of effective subsidy generating approximately 1.65 yuan in extra consumption [1][13][14] - The study highlights a notable spillover effect, where each 1 yuan of effective subsidy leads to an additional 6.76 yuan in overall consumer spending through Alipay, with 3.11 yuan attributed to e-commerce purchases [1][20] Group 1: Market Dynamics - Instant retail has seen rapid growth, with online retail sales reaching 74,295 billion yuan in the first half of the year, a year-on-year increase of 8.5% [5][6] - The Ministry of Commerce and other departments have initiated plans to promote online and offline integration in instant retail, emphasizing its role in expanding consumption and creating jobs [6][7] - The competitive landscape has led to daily peak subsidies exceeding 2 billion yuan, significantly increasing order volumes from 100 million to 250 million [7][27] Group 2: Consumer Behavior - The study found that the average additional spending per consumer who used the coupons was 24.55 yuan per week, indicating a strong consumer response to the subsidies [14][18] - The effectiveness of the coupons varies by category, with retail orders showing a higher multiplier effect compared to food orders [14][16] - The research also indicates that the use of flash purchase coupons does not cannibalize dine-in sales, as there is no statistical evidence of a negative impact on traditional restaurant revenues [21][22] Group 3: Merchant Impact - Participating merchants experienced an average weekly revenue increase of 1,744.69 yuan, representing a growth rate of approximately 101.5% [21][22] - The positive impact of the flash purchase coupons is more pronounced for small and medium-sized merchants, highlighting the platform's role in empowering these businesses [23][24] - The study suggests that the integration of online and offline sales through flash purchase initiatives has led to increased visibility and sales for smaller merchants [24][25] Group 4: Regulatory Considerations - Regulatory bodies are advised to monitor potential unfair competition practices among platforms, ensuring that merchants are not coerced into participating in subsidy programs [28][29] - The industry is encouraged to self-regulate to prevent issues such as food waste and ensure fair competition [29][30] - Platforms are urged to leverage their capabilities to foster new service-oriented e-commerce scenarios, enhancing consumer experiences and market sustainability [30][31]

Core Viewpoint - The recent regulatory actions against major food delivery platforms like Ele.me, Meituan, and JD.com signal the government's intent to regulate market order and promote healthy development in the food service industry [1][7]. Group 1: Market Dynamics - A significant subsidy war has erupted among major food delivery platforms since July, leading to record-breaking order volumes, with Meituan reaching 1.5 billion orders and Ele.me surpassing 80 million daily orders [2][3]. - The "0 yuan purchase" promotions have attracted considerable consumer attention, with users actively sharing their experiences on social media [3]. Group 2: Impact on Stakeholders - Delivery riders have seen a notable increase in their earnings, with some reporting a rise in daily deliveries from 40-50 to 60-70, resulting in potential monthly earnings of an additional 2,000 yuan [4]. - However, the surge in orders has placed immense pressure on merchants, leading to staffing shortages and operational challenges, with some stores needing to temporarily suspend their delivery services [4][5]. Group 3: Sustainability Concerns - The reliance on subsidies raises questions about the sustainability of this growth model, as many merchants report operating at a loss due to the high costs of fulfilling discounted orders [4][6]. - The potential for a "vicious cycle" of subsidies leading to market imbalance is a concern, with warnings from industry insiders about the long-term implications for service quality and food safety [6]. Group 4: Regulatory Response - The government has taken steps to curb "zero-sum" competition by mandating the cessation of certain promotional activities, indicating a push towards more sustainable practices in the industry [7].

Group 1 - The large subsidies on food delivery platforms have not disappeared despite regulatory discussions, indicating ongoing competitive practices among major players like Ele.me, Meituan, and JD [1] - The food delivery battle is shifting from short-term bursts to a more normalized cyclical competition, with low-priced tea drinks becoming a key tool for platforms to boost order volumes [2][4] - The expectation of a "win-win-win" scenario for platforms, merchants, and consumers has not been realized, raising questions about the role of chain tea brands in this competitive landscape [3] Group 2 - Merchants face opaque cost structures behind discount orders, with platform subsidies often tied to merchant concessions, leading to increased operational costs [5][6] - The "explosive red envelope" subsidy model requires merchants to bear a minimum cost per order, complicating their financial outcomes [6][7] - The current phase of the food delivery competition has intensified, with platforms directly targeting each other to suppress competitors like Taobao Flash Sale [8] Group 3 - The surge in low-priced orders is squeezing normal product sales, leading to a decline in actual revenue for merchants despite high order volumes [16][12] - Merchants are increasingly reliant on external platforms, which may undermine their offline business efficiency and raise operational costs [31] - The average price of tea drinks has dropped significantly, with industry profit margins declining from 21.4% in 2023 to an estimated 14.7% in 2024 [29] Group 4 - The competitive landscape is marked by a high store opening and closing ratio, indicating a challenging environment for new tea brands [30] - The reliance on platform subsidies may provide temporary relief for merchants but could lead to long-term sustainability issues once subsidies are reduced [32] - The ongoing price competition is reshaping consumer perceptions, with lower price points becoming the new norm in the market [33]

Core Viewpoint - The recent regulatory discussions with major platforms like JD.com, Meituan, and Ele.me highlight the need for fair competition and the unsustainability of excessive subsidies in the food delivery industry [1][4][19] Group 1: Regulatory Actions - The National Regulatory Administration and multiple departments have urged platforms to comply with laws and regulations to ensure fair competition and protect the rights of consumers, merchants, and delivery riders [1][4] - The discussions signal a significant shift in the regulatory landscape, aiming to promote a healthy and orderly development of the platform economy [1][4] Group 2: Competition Dynamics - The food delivery sector has seen intense competition, primarily driven by subsidies, which has become unsustainable in the current macroeconomic environment [4][7] - Platforms like Meituan and Ele.me have historically relied on subsidies to attract users, but this approach is increasingly viewed as detrimental to long-term industry health [7][19] Group 3: Impact on Stakeholders - The subsidy wars not only affect platform competition but also have broader implications for millions of merchants and delivery riders, leading to potential declines in profits and income [5][13] - The reliance on subsidies creates a vicious cycle where merchants are pressured to lower prices, ultimately harming their profitability and the overall market [13][14] Group 4: Market Size and Consumer Behavior - The high-frequency food delivery market is limited to approximately 75 million individuals in China, primarily those with monthly incomes above 5,000 yuan [8][11] - Once subsidies are removed, consumer demand for food delivery is expected to decline, raising concerns about the sustainability of the current business model [8][11] Group 5: Long-term Viability - The article emphasizes that relying solely on subsidies is not a viable long-term strategy for platforms, as it undermines the profitability of merchants and the overall market [16][17] - The need for rational competition and a return to common sense in business practices is highlighted as essential for the future of the food delivery industry [18][19]