Group 1 - The Hong Kong stock market indices collectively rose, with the Hang Seng Index increasing by 0.24%, the Hang Seng China Enterprises Index by 0.50%, and the Hang Seng Tech Index by 0.98% as of December 30, 2025 [1] - The Hang Seng Internet ETF (513330) saw an increase of 0.58%, with a latest price of 0.517 yuan and a trading volume of 9.02 billion yuan, resulting in a turnover rate of 2.60% [1] - Among the constituent stocks, notable gainers included Maifushi up 10.00%, UBTECH up 7.20%, Baidu Group-SW up 7.14%, and Yujian up 5.31%, while leading decliners included Dongfang Zhenxuan down 2.27% and Xinyi Network Group down 1.30% [1] Group 2 - The valuation of the Hang Seng Internet ETF is currently at a price-to-earnings ratio (PE-TTM) of 22.87, which is in the 21.77% percentile over the past 10 years, indicating that the valuation is lower than 78.23% of the time in the last decade [1] - The index tracked by the Hang Seng Internet ETF is heavily weighted in sectors such as Media (40.94%), Retail (21.65%), Social Services (11.44%), Electronics (10.77%), and Computers (9.34%) [2] - In terms of sub-sectors, the index is concentrated in Internet E-commerce (21.65%), Digital Media (15.40%), Social II (14.91%), Local Life Services II (11.10%), and Consumer Electronics (10.77%) [2]

Investment Rating - The investment rating for Meituan-W (03690.HK) is "Buy" (maintained) [1] Core Views - The report indicates that Meituan is increasing short-term investments to consolidate market share amid intensified competition, with expectations of profitability returning in 2026 and a projected net profit growth of 68.4% in 2027 [6][8] - The company's non-IFRS net profit forecasts for 2025-2027 have been revised down to -19.9 billion, 32.2 billion, and 54.2 billion CNY respectively, reflecting the competitive landscape and increased subsidies [6] - The report highlights that while the core business is facing challenges, new business segments are showing improvement, particularly in Hong Kong and the Middle East [7] Financial Summary and Valuation Metrics - Revenue for 2023 is reported at 276.7 billion CNY, with a year-over-year growth of 25.8%. Projections for 2025 and 2026 are 365.4 billion and 433.5 billion CNY respectively, with expected growth rates of 8.2% and 18.6% [10] - Adjusted net profit for 2025 is expected to be a loss of 19.9 billion CNY, improving to a profit of 32.2 billion CNY in 2026 and 54.2 billion CNY in 2027, with corresponding year-over-year growth rates of -145.5%, 261.4%, and 68.4% [10] - The report provides a diluted EPS forecast of -3.2, 5.2, and 8.7 CNY for 2025, 2026, and 2027 respectively, with P/E ratios of -29.1, 18.0, and 10.7 for the same years [10]

Investment Rating - The investment rating for Meituan-W (03690.HK) is "Buy" (maintained) [1][12] Core Insights - The report indicates that the short-term competition in the instant delivery industry is intensifying, leading to increased user, rider, and merchant subsidies. The company is expected to face challenges in profit recovery due to order structure impacts on profit margins. However, there is optimism for profit growth driven by macroeconomic recovery and improvements in competitive dynamics in the medium term [5][6] - The company's revenue for Q2 2025 was 918 billion CNY, showing a year-over-year increase of 11.7%, but it fell short of Bloomberg's consensus estimate of 937 billion CNY. The non-IFRS net profit was 14.9 billion CNY, a significant decline of 89% year-over-year, primarily due to fierce competition in the delivery sector [6][7] - The report projects a non-IFRS net profit forecast for 2025-2027 to be -26 billion, 358 billion, and 588 billion CNY respectively, with an expected EPS of -0.4, 5.8, and 9.4 CNY for the same years. The current stock price corresponds to a PE ratio of 16.1 and 9.8 for 2026 and 2027 respectively [5][8] Financial Summary and Valuation Metrics - The financial metrics for Meituan-W are as follows: - Revenue (in million CNY): 2023A: 276,745; 2024A: 337,592; 2025E: 371,566; 2026E: 437,688; 2027E: 506,029 - Non-GAAP Net Profit (in million CNY): 2023A: 23,254; 2024A: 43,772; 2025E: -2,577; 2026E: 35,807; 2027E: 58,778 - Gross Margin (%): 2023A: 35.1; 2024A: 38.4; 2025E: 32.3; 2026E: 32.2; 2027E: 34.3 - Net Margin (%): 2023A: 8.4; 2024A: 13.0; 2025E: -0.7; 2026E: 8.2; 2027E: 11.6 - ROE (%): 2023A: 9.6; 2024A: 16.8; 2025E: -0.9; 2026E: 10.5; 2027E: 14.3 - EPS (diluted, CNY): 2023A: 3.7; 2024A: 7.0; 2025E: -0.4; 2026E: 5.8; 2027E: 9.4 - P/E (times): 2023A: 25.1; 2024A: 13.2; 2025E: NA; 2026E: 16.1; 2027E: 9.8 - P/B (times): 2023A: 4.2; 2024A: 3.8; 2025E: 2.9; 2026E: 2.3; 2027E: 1.8 [8]

Investment Rating - The report maintains a "Buy" rating for Meituan-W (03690.HK) [4][6]. Core Views - The company is actively investing to strengthen its ecosystem and is optimistic about its long-term competitive advantages [1]. - The core local business has shown healthy growth with a significant investment of 100 billion RMB to support merchants, leading to a 17.8% year-on-year increase in revenue for Q1 2025 [2]. - New business segments are improving losses and expanding overseas, with a 19.2% increase in revenue for Q1 2025 [3]. Summary by Sections Financial Performance - In Q1 2025, Meituan achieved revenue of 865.6 billion RMB, a year-on-year increase of 15.92%, and a net profit of 100.57 billion RMB, up 87.33% year-on-year [1]. - The core local business generated revenue of 643 billion RMB, with an operating profit of 135 billion RMB, reflecting a 39.1% increase year-on-year [2]. - The new business segment reported revenue of 222 billion RMB, with operating losses narrowing to 23 billion RMB, a 17.5% year-on-year improvement [3]. Business Segments - The food delivery segment is experiencing healthy growth through refined operations, with a focus on high-quality products and services [2]. - The flash purchase segment continues to grow strongly, with an increase in the number of flash warehouses and order proportions [2]. - The company launched a "Meituan Membership" program to enhance cross-selling and transaction frequency in lower-tier markets [2]. Financial Metrics and Projections - The report projects net profits of 418.3 billion RMB, 534.6 billion RMB, and 638.6 billion RMB for 2025, 2026, and 2027 respectively [4]. - Adjusted net profits are expected to be 499.8 billion RMB, 616.1 billion RMB, and 720.1 billion RMB for the same years, with corresponding valuations of 15.9, 12.9, and 11.0 times [4]. - The company’s gross margin improved to 37.45% in Q1 2025, with a decrease in sales and management expense ratios [3].

Investment Rating - The report maintains a "Buy" rating for Meituan-W (03690.HK) [6] Core Views - The company demonstrated robust growth in its core business, with a significant increase in revenue and net profit for 2024, achieving operating revenue of 337.6 billion yuan, a year-on-year increase of 21.94%, and a net profit of 35.81 billion yuan, a year-on-year increase of 158.4% [1] - The core local business showed steady growth, with Q4 2024 revenue reaching 65.57 billion yuan, up 18.9% year-on-year, and operating profit of 12.9 billion yuan, up 60.9% year-on-year, indicating a significant optimization in profit margins [1][3] - New business segments are solidifying market positions and expanding overseas, with Q4 2024 new business revenue reaching 22.92 billion yuan, a year-on-year increase of 23.5%, and a substantial reduction in operating losses [2][3] Summary by Sections Core Local Business - Instant delivery orders and in-store travel orders saw significant growth, with Q4 2024 core local business revenue at 65.57 billion yuan, up 18.9% year-on-year [1] - The company implemented various initiatives to enhance customer demand and support merchants, contributing to the growth in low-tier cities [2] New Business and International Expansion - New business revenue reached 22.92 billion yuan in Q4 2024, with a notable reduction in operating losses from 48.3 billion yuan to 21.8 billion yuan [2] - The international expansion strategy includes launching Keeta in Riyadh, Saudi Arabia, with rapid growth in user base and order volume [2] Financial Performance - The company achieved a gross margin of 37.8% in Q4 2024, an increase of 3.9 percentage points year-on-year, driven by improved margins in grocery retail and operational efficiency [3] - Operating profit for Q4 2024 was 6.7 billion yuan, a year-on-year increase of 280.7%, with core local business profitability significantly contributing to this growth [3] Future Projections - The report forecasts net profits of 42.98 billion yuan, 52.73 billion yuan, and 62.56 billion yuan for 2025, 2026, and 2027 respectively, with adjusted net profits expected to be 51.13 billion yuan, 60.88 billion yuan, and 70.71 billion yuan [4][5]