Meituan (3690 HK) Conference Call Summary Company Overview - **Company**: Meituan (3690 HK) - **Sector**: IT Services - **Market Cap**: HKD 573.63 billion (USD 73.7 billion) [7][15] Key Industry Insights - **Food Delivery (FD) Losses**: Expected to peak in Q3 2025 and narrow significantly by Q4 2025. However, increased investment intensity in the market may lead to higher near-term losses [2][11]. - **Competition**: Key competitor Alibaba is focusing on retaining its quick commerce market share, which may prolong the timeline for Meituan's FD to return to profitability [2][4]. Financial Performance and Projections - **3Q25 Expectations**: - Core Local Commerce (CLC) revenue projected to decline by 2% year-over-year (yoy) with operating losses widening to RMB 16 billion. - Food Delivery operating loss forecasted at RMB 20 billion, translating to RMB 2.9 loss per order [5][11]. - **Revenue Growth**: New initiatives revenue expected to grow by 18% yoy, but operating losses are anticipated to widen to RMB 2.35 billion [5]. Market Share and Competitive Position - **Rider Metrics**: - Market share of total rider app sessions increased to 54.9% in September from 53.5% in August [3][19]. - Market share of rider capacity rose to 66.7% in September [3][22]. - **Merchant Metrics**: - Market share of total sessions in quick commerce merchant apps stabilized at 55.5% [3][26]. - Daily Active Users (DAU) market share in merchant apps remained stable at 48.6% [3][28]. Strategic Advantages - **Merchant Coverage**: Meituan has a deep understanding of its 14.5 million annual active merchants, with direct business development teams enhancing responsiveness to merchant needs [4]. - **Technology Adoption**: The implementation of a restaurant management system improves operational efficiency, aiding in order preparation and distribution [4]. - **Membership Upgrades**: Continuous enhancements to membership offerings are expected to yield long-term benefits [4]. Risks and Challenges - **Intensified Competition**: Risks from competitors such as Alibaba, Douyin, and JD may impact market share and profitability [4][33]. - **Investment Impact**: Aggressive investments could pressure margins, and a potential consumption slowdown may further complicate recovery [33]. Valuation and Target Price - **Target Price Adjustment**: Target price reduced from HKD 125 to HKD 114, reflecting a 9.9% upside from the current share price of HKD 103.70 [7][33]. - **Earnings Projections**: Adjusted EPS estimates for 2025 show a significant decline to -1.62 from a previous estimate of -0.27 [8][32]. Conclusion - Meituan maintains a "Buy" rating despite challenges, with expectations of long-term benefits from its strategic investments and competitive positioning in the food delivery and quick commerce sectors [4][33].

Group 1 - The company is experiencing a promising moment due to a new contract with APR Energy, leading to an increase in both revenue and margins [1] - The recommendation is to buy the stock based on its current performance and potential [1] Group 2 - The analysis approach includes triangulation between valuation by multiples, discounted cash flow (DCF), and Dividend Yield [2] - Focus is on Consumer Discretionary and Consumer Staples sectors, prioritizing smaller capitalization companies with low institutional coverage for greater potential [2] - The investment philosophy combines income and value investing strategies, emphasizing the importance of a margin of safety in multiples and projected cash flow [2]

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