Investment Rating - The report maintains a "Buy" rating for Meituan, with a target price adjusted to HKD 120, indicating a potential upside of 17% from the current price of HKD 102.7 [4][7][20]. Core Views - The report highlights that Meituan's revenue for Q2 2025 grew by 11.7% year-on-year to RMB 91.8 billion, which was below market expectations by 2.0%. The gross margin decreased by 8.1 percentage points to 33.1% due to increased rider subsidies and overseas business costs [2][3]. - The competitive landscape in the food delivery industry remains intense, with expectations of increased losses in Q3 2025. The core local business revenue grew by 7.7% year-on-year, significantly lower than market expectations, and operating profit dropped by 76% to RMB 3.7 billion [3]. - Meituan is focusing on enhancing its user experience (UE) and operational efficiency, which is expected to strengthen its competitive position despite the ongoing market challenges. The report anticipates that losses will improve in Q4 2025 as industry subsidies decrease [3][4]. Financial Summary - For FY25E, the report projects revenue of RMB 368.1 billion and a net profit loss of RMB 12.8 billion. The adjusted net profit is expected to be RMB -7.2 billion, with a significant recovery anticipated in FY26E [6][11]. - The report provides a detailed financial forecast, indicating a revenue increase to RMB 469.7 billion by FY27E, with a gradual recovery in operating profit and net profit margins over the forecast period [6][11]. Business Strategy - Meituan is strategically shifting its focus from underperforming segments like Meituan Youxuan to other new retail businesses, while also expanding its international presence through Keeta, which has shown strong growth in order volume and transaction value [4][3]. - The report emphasizes the importance of maintaining competitive pricing and high-quality product offerings to cater to diverse consumer needs, which is crucial for sustaining market share in a highly competitive environment [3][4].

Core Perspective - The article discusses the innovative business model of Shanghai WoDian, which has gained attention in the local life service sector by creating a new ecosystem that connects consumers, merchants, and the platform, breaking traditional commercial frameworks [1] Group 1: Core Structure of Shanghai WoDian Model - The model features a collaborative online and offline operational system that integrates functions and processes, allowing users to order online and pick up in-store, thus creating a seamless consumption experience [5] - A dynamic points incentive mechanism is introduced, where points earned can increase in value up to five times over a 36 to 40 period cycle, transforming into usable vouchers for future purchases [6] - The platform employs a merchant self-discounting cooperation model, allowing merchants to set their discount rates between 3% and 20%, which are converted into points for consumers, fostering deeper ties between merchants and the platform [7] Group 2: Value Creation of Shanghai WoDian Model - For consumers, the model reduces actual spending through dynamic points and vouchers, enhances convenience by integrating various services, and allows users to earn rewards for referring new customers, increasing their engagement [10] - For merchants, the model alleviates the pressure of high commission rates typical in traditional platforms, provides targeted traffic support, and enables cross-industry profit-sharing through user binding [11] - The platform benefits from a differentiated competitive barrier through its unique model, leveraging data analytics for marketing support, and rapidly expanding its merchant base across regions [12]

Core Viewpoint - A resignation letter from a former senior business specialist has exposed the internal issues of Gaode Map's cultural tourism division, leading to its rumored dissolution and highlighting significant operational failures and strategic misalignments within the company [2][4][8]. Group 1: Operational Failures - The cultural tourism division of Gaode Map was launched with high ambitions in early 2025, aiming to create a smart tourism infrastructure by collaborating with various provincial tourism departments and travel agencies [4][19]. - Despite initial successes, including a 35% penetration rate for joint tickets and a 120% increase in secondary consumption in a pilot project, the entire initiative was abruptly halted just before signing contracts, leaving the team to bear the consequences of government accountability and partner claims [4][20]. - The division's blind imitation of Meituan's advertising model led to a staggering 82% loss rate among merchants, with some travel agencies reporting zero transactions over five months [5][22]. Group 2: Strategic Misalignment - The strategic shift within Alibaba's "big consumption ecosystem" marginalized Gaode Map's cultural tourism efforts, relegating it to a "sacrificial pawn" in organizational adjustments [7][12]. - Significant disparities in resource allocation were noted, with substantial funding directed towards tunnel navigation projects while the budget for the cultural tourism data platform was drastically cut [7][22]. - The company’s decision to sell all effective advertising slots to Ctrip and impose high promotional fees on travel agencies further eroded its original mission of facilitating travel [7][22]. Group 3: Internal Conflicts - Gaode Map's official response to the resignation letter claimed the author was an outsourced sales personnel with poor performance, contradicting the author's assertion of being part of the direct team [8][12]. - The resignation process was marked by dramatic shifts in HR's stance, from attempts to retain the employee to a sudden insistence on termination regardless of performance metrics [8][12]. - The author highlighted that many employees in the cultural tourism division had been let go, despite the company's claims of not having terminated the business [8][12]. Group 4: Financial Performance - Gaode Map's revenue heavily relies on advertising, with total revenue exceeding 12 billion yuan in 2024, of which 7.8 billion yuan came from online advertising, accounting for 65% of total revenue [12][14]. - Despite achieving profitability for the first time, the underlying financial stability remains uncertain, as the local life group reported an adjusted EBITA loss of 596 million yuan for the last quarter of 2024 [12][14]. - The company faces challenges in monetizing its user base, as evidenced by the low average daily usage time of 12 minutes for 70% of its users, primarily focused on navigation [15][18].

Core Viewpoint - The resignation letter from a former senior business specialist at Gaode Map has exposed the internal issues of its cultural tourism division, highlighting the blind replication of business models leading to significant merchant losses and project failures [2][4][5]. Group 1: Overview of the Cultural Tourism Division's Downfall - The Gaode cultural tourism division was launched with high ambitions in early 2025, aiming to create a smart tourism infrastructure network by collaborating with various provincial tourism departments and travel agencies [4]. - A successful pilot project in Guizhou showed promising results, with ticket penetration rates reaching 35% and secondary consumption increasing by 120% [4]. - However, the project was abruptly halted just before signing, with management stating "cannot do it," leading to significant risks for the frontline team [4][5]. Group 2: Critique of Business Strategy - The division's strategy of blindly copying Meituan's advertising model ignored the critical element of trust in tourism consumption, resulting in an 82% loss rate for merchants and some travel agencies recording zero transactions over five months [5][7]. - The strategic shift within Alibaba's "big consumption ecosystem" marginalized Gaode's cultural tourism efforts, leading to a significant imbalance in resource allocation [7][8]. - Gaode's decision to sell all effective advertising slots to Ctrip and charge high promotion fees to travel agencies has been criticized for undermining its original mission of facilitating travel [7][8]. Group 3: Dispute Over Employment Status - Gaode Map responded to the allegations by claiming the whistleblower was an outsourced sales personnel with poor performance, contradicting the claim of being a formal employee [8]. - The whistleblower argued that despite being contracted through a third party, their role and compensation were aligned with Gaode's official employees, indicating a lack of clarity in employment status [8]. - The whistleblower's departure was marked by a sudden change in HR's stance, from encouraging retention to enforcing termination regardless of performance [8]. Group 4: User Engagement and Financial Performance - Despite the controversies, Gaode Map maintains a strong user base, with over 800 million monthly active users, ranking fourth among mobile internet applications in China [10][12]. - However, the revenue model heavily relies on advertising, with 2024 revenues exceeding 12 billion yuan, of which 7.8 billion yuan came from online advertising, accounting for 65% of total revenue [12][14]. - The financial struggles are evident, as the local life group, which includes Gaode, reported an adjusted EBITA loss of 596 million yuan for the last quarter of 2024 [12][14]. Group 5: Broader Industry Context - The challenges faced by Gaode Map reflect broader issues in the navigation and local services market, where profitability remains elusive even for major players like Google Maps [13][14]. - The ongoing complaints about Gaode's services, particularly regarding refunds and service quality, highlight operational deficiencies in its local life services [15][16]. - The competitive landscape shows that Gaode is significantly trailing behind Didi in the ride-hailing market, with Didi holding a 75% market share compared to Gaode's 10% [17].

Investment Rating - The report maintains a "Buy" rating for Meituan-W (3690.HK) [1] Core Insights - The report highlights that intensified competition in the food delivery sector has pressured profits, while the company is expected to release long-term value [2][6] - Meituan's Q2 2025 revenue reached 91.8 billion RMB, reflecting a year-on-year growth of 12% and a quarter-on-quarter growth of 6% [11] - The report anticipates that the company's core local business will continue to face challenges due to increased competition and overseas expansion losses [10][18] Summary by Sections Recent Performance - In Q2 2025, Meituan achieved a revenue of 91.8 billion RMB, with operating profit of 200 million RMB (YoY -98%, QoQ -98%) and net profit of 400 million RMB (YoY -97%, QoQ -96%) [11] - Non-GAAP EBITDA was 2.8 billion RMB (YoY -81%, QoQ -77%), and Non-GAAP net profit attributable to shareholders was 1.5 billion RMB (YoY -89%, QoQ -86%) [11] Business Segments - **Food Delivery Business**: Q2 2025 saw a steady growth in food delivery, with estimated order volume increasing by 10% YoY. The company is enhancing supply through various models to boost user engagement [7] - **Flash Purchase Business**: Strong growth in order volume and transaction value was noted, with significant increases during promotional periods. The establishment of over 50,000 flash warehouses supports local store digital transformation [7] - **In-store and Travel Business**: This segment performed well, with order volume growing over 40% YoY and revenue increasing by 15% YoY [7] Financial Forecasts - The report revises revenue forecasts for 2025-2027 to 370.2 billion RMB, 417.9 billion RMB, and 475.5 billion RMB respectively, with Non-GAAP net profit estimates of 5 billion RMB, -5.02 billion RMB, and 26.2 billion RMB [10][18] - The target market capitalization for 2026 is set at 735.1 billion RMB, corresponding to a target price of 120 RMB per share [10][19]

Core Viewpoint - Meituan reported a robust growth trajectory in its Q2 2025 earnings, with revenue reaching 91.8 billion RMB, a year-on-year increase of 11.7%, and a monthly active user base exceeding 500 million [2] Group 1: Financial Performance - In Q2, Meituan's core local commerce segment generated revenue of 65.3 billion RMB, reflecting a 7.7% year-on-year growth [2] - The new business segment achieved revenue of 26.5 billion RMB, marking a 22.8% year-on-year increase, while losses narrowed to 1.9 billion RMB [4] - The company reported a cash reserve of 171.1 billion RMB, providing a solid foundation for long-term investments [6] Group 2: User Engagement and Market Expansion - Meituan's app saw monthly active users surpassing 500 million, with peak daily orders in instant retail exceeding 150 million in July [2] - The company has established over 50,000 "flash warehouses" nationwide to support local small businesses in their digital transformation [4] - Meituan's international expansion is evident with Keeta's strong growth in order volume and market presence, particularly in Hong Kong and Qatar [4] Group 3: Business Innovations and Partnerships - Meituan has partnered with over 800 leading restaurant brands to open more than 5,500 brand satellite stores, aiming to exceed 10,000 by year-end [2] - The company is enhancing its rider support system, including full coverage of work injury insurance and expanding pension subsidies to over one million riders by year-end [5] - Meituan is implementing "Internet + Bright Kitchen" initiatives, with 117,000 merchants participating, aiming for over 200,000 by the end of 2025 [6] Group 4: Commitment to Sustainable Development - The company is focused on building a sustainable and responsible industry ecosystem, with initiatives to support merchants and riders [5] - Meituan's R&D investment reached 6.3 billion RMB, a 17.2% increase year-on-year, emphasizing its commitment to technological innovation [6] - The company aims to redefine future business models through ecological win-win practices, enhancing its competitive edge in the local service market [6]

Core Insights - The intense competition in the food delivery industry has significantly impacted Meituan's performance in Q2 2025, leading to a stark contrast between soaring market expenses and plummeting profits [1][2][3] - The report raises three critical questions regarding the impact of the delivery war on Meituan, the strength of its competitive moat, and changes in its operational logic due to fierce competition [1][2] Financial Performance - In Q2 2025, Meituan's core local business revenue reached 65.3 billion yuan, reflecting a year-on-year growth of 7.7%, down from 17.8% in the previous quarter, indicating severe effects from the ongoing delivery war [2][3] - Market expenses surged by 51.8% year-on-year to 22.5 billion yuan, constituting 24.5% of total revenue, a significant increase from 18% in the previous quarter, highlighting the pressure from competitors [6][3] Competitive Landscape - The competition has shifted to a "zero-sum game" as the internet user growth has plateaued, leading to increased pressure on leading companies like Meituan [2][3] - The delivery war has caused a substantial disruption in Meituan's operational efficiency, with high market spending failing to translate into revenue growth [6][3] Business Strategy - Meituan's strategy has involved heavy subsidies to attract users, creating a closed loop of "users - traffic - merchants," but this approach has become increasingly costly amid fierce competition [3][6] - The company is now focusing on its flash purchase and hotel business segments as potential growth areas, with flash purchase showing strong order volume and transaction growth [13][14] Future Outlook - The ongoing delivery war is expected to continue impacting Meituan's core local business, with significant losses anticipated in Q3 2025 as the company prioritizes market share over profitability [15][17] - The period from September to October 2025 is critical for Meituan to maintain its market share, with a psychological threshold of 50% being crucial for sustaining user and merchant loyalty [17][16]

Core Viewpoint - Meituan is committed to improving the experience of its delivery riders by eliminating overtime penalties by the end of 2025 and implementing positive incentives instead [1][2]. Group 1: Overtime Penalty and Incentives - Meituan plans to fully eliminate overtime penalties for delivery riders by the end of 2025, focusing on optimizing algorithms and improving delivery assessment mechanisms [1]. - The company has conducted pilot programs in over ten cities to compare different management models, ensuring stable income for riders while enhancing user experience [1]. - The "Anzhun Card" system, which replaces overtime penalties with a system of points for timely deliveries, was first piloted in Quanzhou in December 2024 [1]. Group 2: Community and Delivery Efficiency - Meituan has collaborated with authorities to implement "Rider-Friendly Communities," improving access for riders in 24,700 communities across 150 cities, benefiting over 680,000 riders monthly [2]. - To address issues with inaccurate user addresses, Meituan will introduce measures such as user location sharing and smart address recommendations starting in 2025 [2]. Group 3: Rider Health and Work Balance - A fatigue prevention measure was introduced, alerting riders after 8 hours of work and mandating a break after 12 hours, with 18% of riders receiving the 8-hour alert and only 0.28% being forced offline [2]. - The platform aims to balance income and health for riders with strategies tailored for those with high order volumes [2]. Group 4: Algorithm Transparency - Meituan has established an algorithm transparency section on its official website and WeChat, providing accessible information to riders and the public [3]. - The company actively seeks external feedback on its algorithms through interviews and surveys to facilitate continuous improvement [3].

Investment Rating - The report maintains a "Strong Buy" rating for Meituan-W (03690.HK) [1][3] Core Views - The Q2 performance of Meituan was impacted by increased competition, with revenue of 91.84 billion (+11.7%) and adjusted net profit of 1.49 billion (-89.0%) [1][6] - Despite the competitive pressures, the long-term outlook for the company's core domestic business remains positive due to its competitive advantages and growth potential, while overseas operations present new growth opportunities [1][6] Financial Data and Valuation - Revenue projections for the upcoming years are as follows: - 2023: 276.85 billion - 2024: 337.59 billion - 2025E: 370.60 billion - 2026E: 428.95 billion - 2027E: 493.90 billion - Adjusted net profit estimates show significant fluctuations, with a projected loss of 15.60 billion in 2025E, followed by a recovery in subsequent years [2][8] - The target price is set at 141.90 HKD, with the current stock price at 116.3 HKD, indicating potential upside [3][6] Business Segment Performance - Core local commerce revenue growth slowed to 7.7% in Q2, while new business revenue increased by 22.8% [6] - The food delivery segment experienced stable growth in order volume, but profitability was affected by increased competition and subsidies [6] - The in-store segment showed a GTV growth of over 20%, but revenue growth is expected to decline due to competitive pressures [6] Future Outlook - The report anticipates that Q3 will see continued competitive intensity, leading to increased losses in the food delivery segment [6] - Long-term growth potential remains strong, with expectations for core local business GMV to reach approximately 2.7 trillion in 2025E [6][7]

Core Insights - The article discusses the impact of the ongoing food delivery war on Meituan's financial performance and operational strategy, particularly focusing on the Q2 2025 earnings report [1][3]. Financial Performance - In Q2 2025, Meituan's core local commerce revenue grew by 7.7% year-on-year, reaching 65.3 billion yuan, a significant decline from the previous quarter's growth rate of 17.8%, indicating severe impacts from the competitive landscape [3][5]. - Market expenses surged by 51.8% year-on-year to 22.5 billion yuan, constituting 24.5% of total revenue, up from 18% in the previous quarter, reflecting the increased pressure from competitors [5][6]. - The delivery service revenue growth fell to 2.8%, while commission and online marketing services maintained double-digit growth, highlighting a shift in revenue dynamics [7][9]. Competitive Landscape - The competition has intensified, with rivals employing aggressive subsidy strategies, leading to a "zero-sum game" environment where market share is prioritized over profitability [3][5]. - Meituan's market share and user retention are under threat, necessitating increased marketing expenditures to maintain its competitive position [5][10]. Strategic Outlook - Despite short-term challenges, Meituan's flash purchase and travel businesses show potential for long-term growth, which could help mitigate the negative effects of the food delivery war [10][11]. - The management emphasizes the importance of maintaining a market share above 50% to ensure user and merchant loyalty, with Q3 2025 expected to be critical for defending this position [13][14]. Future Considerations - The upcoming months are crucial for Meituan as it navigates the competitive landscape, with expectations of a potential industry cooldown post-Q3 2025 [13][14].