Core Viewpoint - The article discusses a significant market opportunity in lower-tier cities, particularly for local businesses leveraging digital marketing through platforms like Douyin, highlighting the potential for growth and the challenges faced by local merchants in adapting to online operations [3][14]. Market Size and Untapped Local Demand - Douyin's monthly active users have reached 1 billion, with 54.7% of users from third-tier cities and below, indicating a vast market potential for local businesses [3][9]. - The average daily usage time on Douyin is over 1.55 hours, suggesting that users in lower-tier cities may spend even more time on the platform due to their relatively simple lifestyles [7][10]. - Lower-tier cities account for approximately 70% of the population, with county economies contributing to 38% of the national GDP, showcasing the economic significance of these markets [13]. Low Competition Intensity Among Local Businesses - Many local businesses in lower-tier cities rely on traditional operating methods and have not fully embraced online marketing, leading to a significant gap in online group-buying offerings [14][15]. - The competition in these markets is characterized by a lack of awareness and willingness among local merchants to adopt online strategies, creating a competitive advantage for those who do [16][17]. Unique "Micro-Innovation" Opportunities in Small Markets - Local businesses only need to master basic online operations to outperform the majority of their competitors, as the overall competition is still in its infancy [20][22]. - The penetration rate for local life services via group buying is only 38.4%, indicating substantial room for growth and the potential for new market entrants to thrive [22][23]. Strategies for Local Businesses - Local businesses can succeed by implementing three key strategies: 1. Setting up group-buying offers on Douyin with simple operational steps [21]. 2. Regularly posting engaging content related to their services to attract local customers [21]. 3. Building community engagement through social media to foster customer loyalty and repeat business [21].

Core Insights - The article highlights a significant market opportunity for local businesses in county towns, driven by the rise of digital marketing and platforms like Douyin [1][4][17] - It emphasizes the underdeveloped local demand and the potential for growth in the local lifestyle market, particularly in lower-tier cities [5][12][18] Market Size and Demand - Douyin's monthly active users have reached 1 billion, with 54.7% of users from third-tier cities and below, indicating a vast market potential for local businesses [4][8] - The average user spends over 46.54 hours per month on Douyin, suggesting high engagement levels that can be leveraged by local businesses [6][10] Competitive Landscape - The competition in county towns is relatively low, as many local businesses have not fully transitioned to online operations, leading to a significant gap in supply for Douyin's 500 million users [19][21] - Only 13% of local billiard halls have adopted Douyin's group buying feature, indicating a lack of digital presence among local merchants [21][26] Consumer Behavior - Consumers in county towns exhibit a unique consumption structure, balancing practicality with social display needs, which can be effectively targeted through Douyin's promotional tools [13][15] - The local culture favors businesses that present a personal touch, making Douyin's content-driven approach more appealing compared to traditional platforms like Meituan [14][17] Business Opportunities - Local businesses can gain a competitive edge by adopting simple online strategies, such as setting up group buying links on Douyin, which can lead to immediate sales [20][28] - The article suggests that even basic online operations can significantly enhance visibility and sales for local businesses, as many competitors are still in the early stages of digital adoption [27][33] Growth Potential - The penetration rate for local lifestyle services via group buying is currently at 38.4%, indicating substantial room for growth in this market [32][34] - The article posits that the current state of local businesses presents a "competition gap," creating a new window of opportunity for those willing to embrace digital marketing [33][34]

Investment Rating - The report assigns a rating of "Buy" for Meituan-W (3690) [1][9]. Core Insights - In Q1 2025, the core local business operating profit increased by 39% year-on-year, indicating strong performance despite anticipated profit fluctuations in Q2 due to competitive pressures in the food delivery sector. However, long-term competitive barriers remain solid [3][8]. - The company plans to invest 100 billion RMB over the next three years to enhance its ecosystem, which is expected to improve user engagement and frequency of purchases, particularly among mid-to-high frequency users [8][9]. Financial Summary - Revenue for Q1 2025 reached 86.56 billion RMB, a year-on-year increase of 18.1%, with adjusted net profit of 10.949 billion RMB, up 46.2% year-on-year. The operating profit margin improved by 5.1 percentage points to 12.2% [8]. - The core local business generated revenue of 64.325 billion RMB in Q1 2025, reflecting a 17.8% year-on-year increase, while operating profit rose by 39.1% to 13.491 billion RMB, with an operating profit margin of 21.0% [8]. - The financial projections for 2025-2027 have been adjusted, with expected revenues of 393 billion, 459 billion, and 536 billion RMB respectively, and adjusted net profits of 41.8 billion, 53.9 billion, and 68.5 billion RMB [9][12]. Valuation Methodology - The report employs a Sum-of-the-Parts (SOTP) valuation method, assigning a 20x PE ratio to the core local business and a 0.5x PS ratio to new businesses, resulting in a target price of 177 HKD for Meituan-W [9][10].

Investment Rating - The investment rating for Meituan-W (03690) is "Buy" (maintained) [2][7]. Core Views - Meituan, as a leader in local lifestyle services, is expected to maintain its core competitive advantages despite short-term competition in the food delivery sector. The company is projected to achieve revenues of CNY 390.41 billion, CNY 445.04 billion, and CNY 507.46 billion in 2025, 2026, and 2027 respectively, with year-on-year growth rates of 15.65%, 13.99%, and 14.03% [2][7]. Financial Performance Summary - In Q1 2025, Meituan's revenue increased by 18.1% year-on-year to CNY 86.557 billion, exceeding Bloomberg consensus estimates by 1.3%. Non-IFRS net profit rose by 46.2% to CNY 10.948 billion, also above expectations by 12.56% [6]. - The core local business revenue grew by 17.8% to CNY 64.325 billion, surpassing Bloomberg's consensus by 1.49%. Operating profit increased by 39.1% to CNY 13.491 billion, exceeding expectations by 10.21% [6]. - New business revenue rose by 19.2% to CNY 22.232 billion, also above consensus by 1.54%, with operating losses reduced by 17.54% to CNY -2.273 billion [6]. Expense Management - Sales expenses increased by 11.96% to CNY 15.55 billion, primarily due to promotional and advertising costs. The sales expense ratio decreased by 1 percentage point to 18% due to improved operational efficiency [6]. - R&D expenses rose by 15.44% to CNY 5.772 billion, reflecting increased investment in AI, while the R&D expense ratio slightly decreased by 0.16 percentage points to 6.67% [6]. Business Segments - The food delivery segment is expected to see healthy growth with significant investments planned for the next three years, totaling over CNY 100 billion to support various merchants [6]. - The flash purchase segment continues to show strong growth, particularly in low-tier markets, with a significant increase in order volume during key promotional periods [6]. - The in-store travel segment is experiencing robust growth in lower-tier markets, with the launch of a membership program aimed at increasing transaction frequency and cross-selling efficiency [6]. Future Outlook - For Q2 2025, the company is expected to maintain its core advantages and solidify its platform ecosystem, despite potential short-term profit fluctuations due to intensified competition in the food delivery sector [6].

Investment Rating - The investment rating for Meituan-W (03690) is "Buy" (maintained) [2][7]. Core Views - Meituan, as a leader in local lifestyle services, is expected to maintain its core competitive advantages despite short-term competition in the food delivery sector. The company is projected to achieve revenues of CNY 390.41 billion, CNY 445.04 billion, and CNY 507.46 billion for the years 2025, 2026, and 2027, respectively, with year-on-year growth rates of 15.65%, 13.99%, and 14.03% [2][7]. Financial Performance Summary - In Q1 2025, Meituan's revenue increased by 18.1% year-on-year to CNY 86.557 billion, exceeding Bloomberg consensus estimates by 1.3%. Non-IFRS net profit rose by 46.2% to CNY 10.948 billion, also surpassing expectations by 12.56% [6]. - The core local business revenue grew by 17.8% year-on-year to CNY 64.325 billion, with operating profit increasing by 39.1% to CNY 13.491 billion, both exceeding consensus estimates [6]. - New business revenue increased by 19.2% year-on-year to CNY 22.232 billion, with operating losses reduced by 17.54% to CNY -2.273 billion, outperforming expectations [6]. Expense Management - Sales expenses rose by 11.96% year-on-year to CNY 15.55 billion, primarily due to increased promotional and advertising costs. The sales expense ratio decreased by 1 percentage point to 18% due to improved operational efficiency [6]. - R&D expenses increased by 15.44% year-on-year to CNY 5.772 billion, driven by increased investments in AI. The R&D expense ratio slightly decreased by 0.16 percentage points to 6.67% [6]. Business Segments - The food delivery segment is expected to see healthy growth with a focus on refined operations, supported by a planned investment of CNY 100 billion over the next three years [6]. - The flash purchase segment continues to show strong growth, particularly in low-tier markets, with significant increases in order volume during promotional periods [6]. - The in-store travel segment is experiencing robust growth in lower-tier markets, with the launch of the "Meituan Membership" program aimed at enhancing transaction frequency and cross-selling efficiency [6]. Future Outlook - For Q2 2025, the company is expected to maintain its core advantages and solidify its platform ecosystem, despite potential short-term profit fluctuations due to intensified competition in the food delivery sector [6].

Core Insights - Meituan achieved operating revenue of 86.6 billion yuan in Q1 2025, a year-on-year increase of 18% [1] - Adjusted net profit reached 10.9 billion yuan, up 46% year-on-year, with an adjusted net profit margin of 13%, an increase of 3 percentage points [1] - The core local business generated revenue of 64.3 billion yuan, also up 18% year-on-year, with an operating profit of 13.5 billion yuan, reflecting a 39% increase [1] Local Business Performance - The restaurant delivery, flash purchase, and in-store travel businesses saw revenue growth of 14%, 33%, and 19% respectively [1] - The average order value (AOV) continued to decline at a reduced rate, while the take rate for restaurant delivery increased due to growth in delivery and advertising revenue [1] - The company plans to increase subsidies in Q2 2025 to address competition, with projected order volume growth of 9% and revenue growth of 5% [1] Flash Purchase Business - Flash purchase order volume grew by 30% year-on-year, with a record high profit margin [2] - Revenue from flash purchase commissions and advertising increased by approximately 33% [2] - The company is expanding its instant delivery network in various product categories and plans to increase subsidies during the 618 shopping festival [2] In-store Business - The in-store travel business's gross transaction value (GTV) grew by 33%, with revenue increasing by 21% year-on-year [3] - The company is focusing on expanding in lower-tier cities and enhancing its membership program to increase transaction frequency [3] - Future membership benefits will cover more categories, aiming to strengthen Meituan's position as a preferred platform for consumers [3] New Business Developments - New business revenue grew by 19% to 22.2 billion yuan, although operating losses increased to 2.3 billion yuan [3] - The company is actively expanding its overseas delivery services, particularly in Saudi Arabia and plans to enter the Brazilian market with a commitment of 1 billion USD over five years [3] Investment Outlook - The company maintains an "outperform the market" rating, with adjusted net profit estimates of 44.7 billion, 58.7 billion, and 71.8 billion yuan for 2025-2027 [4] - Despite increased competition, the company's operational capabilities and compliance improvements are expected to support long-term growth [4] - The valuation is considered attractive compared to the Hang Seng Technology sector, with potential for upward catalysts from dynamic competition [4]

Group 1 - The "Su Super" league in Jiangsu is significantly boosting the local consumption market [1] - Recent data from Meituan shows that the search volume for the "Su Super League" keyword has surged over 16 times compared to the previous week [1] - The cities of Suzhou, Wuxi, Changzhou, Nanjing, and Yancheng have the highest search interest in Jiangsu province [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 86.6 billion yuan in Q1 2025, representing an 18% year-on-year growth. Adjusted net profit reached 10.9 billion yuan, up 46% year-on-year, with an adjusted net profit margin of 13%, an increase of 3 percentage points [1][9][19] - The company is expected to increase subsidies starting Q2 2025 to respond to competition, with projected order volume growth of 9% and revenue growth of 5% in the same period [2][19] - The flash purchase business saw a 30% year-on-year increase in order volume in Q1 2025, with a historical high profit margin, and the company plans to increase subsidies during the 618 shopping festival to expand market reach [3][22] - The in-store business GTV grew by 33% in Q1 2025, with a revenue increase of 21% year-on-year, and the company is actively expanding in lower-tier cities [4][23] - New business revenue grew by 19% year-on-year to 22.2 billion yuan, with a focus on expanding overseas delivery services, particularly in Saudi Arabia and plans to enter the Brazilian market [27] Financial Performance Summary - In Q1 2025, Meituan's core local business achieved a revenue of 64.3 billion yuan, with a year-on-year growth of 18%. The operating profit for this segment was 13.5 billion yuan, reflecting a 39% increase year-on-year and an operating profit margin of 21% [1][17] - The company forecasts adjusted net profits of 44.7 billion yuan, 58.7 billion yuan, and 71.8 billion yuan for 2025, 2026, and 2027 respectively, with corresponding PE ratios of 16.6, 12.6, and 10.3 [7][29] - The adjusted EPS is projected to be 7.14 yuan for 2024, increasing to 9.50 yuan by 2027 [8][32]

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 - The collaboration between Marriott and Meituan aims to integrate resources in accommodation, dining, and local lifestyle, creating a comprehensive experience for consumers [1][2] - This partnership signifies a shift in the hospitality industry from merely selling rooms to offering a lifestyle experience, indicating a new competitive landscape focused on fulfilling diverse consumer scenarios [2][14] - The joint membership program is expected to enhance Marriott's member registration and attract a younger demographic, particularly those who are high-spending consumers on Meituan [5][6] Industry Trends - The hotel industry is witnessing a structural change, with brands like Marriott and Hilton targeting younger consumers and adapting to new market demands [2][4] - Data from STR indicates a decline in domestic hotel RevPAR by 4.3% year-on-year, highlighting the need for hotels to stabilize business travel while capturing leisure demand [4] - The collaboration is seen as a response to the evolving market dynamics, where traditional OTA models are being challenged by integrated lifestyle platforms [17] Membership and Consumer Behavior - Marriott has a global membership base of 219 million, primarily consisting of business travelers aged 30-40, while Meituan's young consumer base will complement this demographic [4][6] - The partnership allows for a high degree of synergy in consumer behavior and city distribution, with Meituan serving as a channel for Marriott to penetrate lower-tier cities [6][7] - The collaboration is expected to create a dual consumption cycle, where dining experiences can drive hotel bookings and vice versa, enhancing overall consumer engagement [10][12] Future Outlook - The partnership is viewed as a significant step towards creating a "super lifestyle membership ecosystem," moving beyond traditional loyalty programs [15][16] - Both companies aim to leverage their strengths to redefine user lifecycle value, transforming hotels into lifestyle hubs rather than mere accommodation providers [14][17] - The collaboration is anticipated to evolve further, with potential advancements driven by AI to enhance member services and operational efficiency [16]