Core Viewpoint - The company's 2Q25 revenue and adjusted net profit fell short of market expectations, primarily due to intensified competition in the food delivery sector, leading to increased user subsidies, rider incentives, and advertising expenses [1][2]. Revenue and Profit Analysis - 2Q25 revenue increased by 12% year-on-year to 91.8 billion yuan, but was 2% below market expectations; adjusted net profit was 1.49 billion yuan, significantly lower than expected, with adjusted net profit margin dropping from 16.5% in the same period last year to 1.6% [1]. - Core local business revenue grew by 8% year-on-year to 65.3 billion yuan; however, the food delivery segment's revenue growth was flat due to the impact of subsidies [1][2]. - The company expects a 13% decline in food delivery revenue in 3Q25 due to ongoing competitive pressures and a decrease in average order value (AOV) [1]. Business Segment Performance - The food delivery segment saw a 36% year-on-year increase in order volume in 2Q25, with expectations for continued strong growth in 3Q25 [1]. - The in-store and travel segment experienced over 40% year-on-year growth in order volume, with projected GTV and revenue growth of 27% and 13% respectively in 3Q25 [1]. - New business revenue grew by 23% year-on-year to 26.5 billion yuan in 2Q25, but operating losses widened to 1.8 billion yuan due to increased overseas investments [2]. Profitability Forecast - The core local business operating profit margin (OPM) fell from 25.1% to 5.7% year-on-year, with expectations for further declines in 3Q25 [2]. - The company has revised its adjusted net profit forecast for 2025 from 28.6 billion yuan to a loss of 5.9 billion yuan, and reduced the 2026 profit forecast by 21% to 34.7 billion yuan [2]. - Despite the challenges, the company maintains a positive outlook on the resilience of its food delivery business as the industry shifts focus from market share to profitability [2].

Core Viewpoint - Meituan's actual investment in food delivery and flash purchase exceeded predictions by 10 billion yuan, indicating more intense irrational competition than expected [1][2][3] - The core risk lies in Meituan's limited financial resources compared to Alibaba, potentially placing it at a disadvantage in a prolonged cash-burning battle [1][2][7] Financial Performance - Meituan's Q2 operating profit under Non-IFRS dropped 87% year-on-year to 1.84 billion yuan, significantly below Bloomberg's market consensus by over 80% [2][4] - Despite a 12% year-on-year revenue growth to 91.84 billion yuan, this figure also failed to meet expectations [2][4] - The core local commerce (CLC) segment is projected to incur "significant losses" in Q3, contrasting sharply with a profit of 14.6 billion yuan in the same period last year [2][5] Competitive Landscape - The core local commerce segment's operating profit fell 76% year-on-year, 70% lower than market expectations [3][5] - Meituan's unit economics (UE) for food delivery turned negative in Q2, recording -0.12 yuan, down from 1.9 yuan a year ago and 1.5 yuan in Q1 [5][6] - Meituan's market share in the broader food delivery and flash purchase market may have declined from 70% to over 50%, while Alibaba's share increased from 30% to over 40% [6][7] Strategic Response - Meituan's management aims to maintain its core advantage in the food-related order segment, claiming a 70% market share despite competitive pressures [6][7] - The intense price war began with Alibaba's announcement of a 50 billion yuan subsidy plan, prompting Meituan to respond with its own subsidy measures [6][7] - New business losses narrowed by 43% year-on-year to 1.9 billion yuan, better than market expectations, although restructuring costs and overseas expansion are expected to increase losses in Q3 to 2.3-2.4 billion yuan [7]

Core Viewpoint - The recent statements from multiple food delivery platforms advocate for healthy competition and responsible business practices in response to regulatory guidance aimed at promoting fair competition and sustainable market practices [1][2]. Group 1: Industry Response and Regulation - The market regulatory authorities have previously engaged with major platforms like JD, Meituan, and Ele.me to encourage legal and fair business operations [1]. - The emphasis on avoiding unsustainable competitive practices, such as "zero-yuan purchases" and selling below cost to gain market dominance, reflects the industry's commitment to social responsibility [1][2]. Group 2: Market Dynamics and Consumer Behavior - In the platform economy, merchants face market pressures not only from direct competition but also from the platforms themselves, which leverage data and scale to respond to market changes [2]. - The potential for service consumption growth is significant, as increasing frequency of service usage can lead to substantial consumption increases, aligning with national policies to boost domestic demand [2]. Group 3: Economic Impact of Subsidies - A study from Peking University indicates that effective subsidy strategies can stimulate platform consumption and generate significant spillover effects, with every 1 yuan of effective flash purchase subsidy leading to an additional 6.76 yuan in consumer spending [3]. - The estimated total consumption increase from platform subsidies could reach 676 billion yuan, representing 1.4% of the projected total retail sales of consumer goods in 2024 [3]. Group 4: Balancing Efficiency and Diversity - The harsh realities of market competition can lead to the closure of small businesses that provide unique value, highlighting the need for platforms to balance efficiency with the preservation of market diversity [3]. - Platforms are encouraged to utilize data analytics to identify and support unique merchants, ensuring their survival during challenging market conditions [3]. Group 5: Sustainable Development and Social Responsibility - The food delivery market is becoming a crucial driver of consumption upgrade, employment, and public service, necessitating a focus on service quality and the balanced interests of platforms, merchants, delivery personnel, and consumers [4]. - Achieving sustainable industry development requires a multi-faceted approach that considers both economic and social benefits [4].

Summary of Meituan's Earnings Call Company Overview - **Company**: Meituan - **Industry**: Food delivery and local e-commerce Key Points and Arguments Market Competition and Subsidy Strategy - Meituan has increased its subsidy efforts, particularly in South China, with daily subsidies reaching 160 to 200 million yuan, and a national estimate of 800 to 1,000 million yuan, to counter competitors like JD.com and maintain market leadership. However, these subsidies are expected to reduce earnings by 0.3 to 0.4 yuan per order [2][3][8] - The company does not have a fixed subsidy budget and adjusts based on market conditions, exercising caution to minimize unnecessary expenditures [2][7] Order Volume and Business Performance - In July, Meituan's order volume saw significant growth, reaching 150 million orders in a week, driven by summer demand and effective communication with riders and merchants [3] - The daily order volume for Meituan's flash purchase business has surged to between 20 million and 30 million, more than doubling year-on-year, primarily due to subsidies [4][21] Product Contribution and Growth - Among the 150 million orders, approximately 120 million are from food delivery, while non-food delivery accounts for about 25 million. The "Pin Hao Fan" and "Shen Qiang Shou" products have significantly increased their contribution, with "Pin Hao Fan" growing from 12-15% to four to five times its previous share [6][12] - The average daily order volume for flash purchase has reached 1.3 to 1.4 million, with promotional periods seeing numbers close to 2 million, nearing 60% of JD.com's peak order volume [4][20] Rider and Delivery Structure - Meituan has around 1.4 to 1.5 million dedicated riders online daily, with an additional 2 million crowd-sourced riders, of which 600,000 to 700,000 are active [14][17] - Third-party delivery services account for approximately 25% to 30% of total orders [15] Future Outlook and Market Position - Meituan aims to maintain a market share of 65% to 70% and plans to increase daily order volume to 20 million by mid-2026, potentially achieving this goal earlier due to competitive pressures [4][31] - The company is focused on enhancing its brand perception and user loyalty through targeted activities and subsidies, ensuring its position as a leading local life platform [27][28] Challenges and Strategic Responses - The entry of competitors like JD.com and Alibaba into the food delivery space has intensified competition, prompting Meituan to adapt its strategies to maintain market share [18][26] - Meituan has implemented measures to address fulfillment capacity bottlenecks during order surges, including limiting order flow to ensure operational stability [19] User Experience and Retention - Meituan's user retention is strong, with a high level of platform loyalty compared to competitors, attributed to its dedicated delivery model and service quality [29][30][25] Cross-Selling Opportunities - Currently, there are no significant cross-selling opportunities identified, but as traffic increases, potential for such initiatives may arise in the future [33] Additional Important Insights - Meituan's flash purchase business is evolving with the establishment of lightning warehouses, enhancing logistics efficiency and expanding product offerings [22] - The company is cautious about the long-term impact of aggressive subsidy strategies on its overall business lines, ensuring stability across various sectors [32]