Investment Rating - The industry investment rating is "Buy" (maintained) [1] Core Insights - Offline retail: The company expects a net profit of -240 million yuan for H1 2025, with a non-recurring net profit of -830 million yuan. The number of store closures in Q2 reached 179, with only about 50 stores left to close. The impact of closures on performance is expected to peak in Q2, with a gradual improvement anticipated in Q3 as the number of closures decreases and the proportion of remodeled stores increases [10][14] - Online retail: Regulatory discussions with Ele.me, Meituan, and JD.com suggest a potential turning point in the competitive landscape of food delivery services. The end of the subsidy war is better than market expectations, and if subsidy intensity decreases, it can be inferred that the current user experience (UE) has bottomed out [14][30] Industry Data Tracking - GMV performance: In the fourth week of June, the combined GMV of Tmall and JD.com increased by 57.65% year-on-year [16] - Category performance: The top five categories in terms of growth for Tmall and JD.com in the fourth week of June were watches, toys, shoes and bags, home and decoration, and automotive and bicycles [2] Market Review - From July 14 to July 18, 2025, the Shanghai Composite Index, Shenzhen Component Index, CSI 300, Hang Seng Index, and Hang Seng Tech Index increased by 0.69%, 2.04%, 1.09%, 2.84%, and 5.53% respectively. The retail trade sector (Shenwan) rose by 0.23%, ranking fourth among nine major consumption sectors [19][23] Investment Recommendations - For offline retail, focus on Yonghui Supermarket, which is undergoing significant transformation towards a selective retail model. This new model has the potential for long-term rapid growth in the post-consumption era. Yonghui's unique competitive advantages include a strong focus on fresh produce, scale advantages in procurement, and financing advantages due to its public listing [28][29] - For online retail, Meituan is expected to maintain its competitive edge in user perception, rider management, and merchant relationships. The company is also expanding its satellite store model, which has shown significant operational efficiency improvements [30][15]

Core Insights - Meituan's food delivery service has partnered with 800 leading brands to establish over 5,500 brand satellite stores, aiming for a total of 10,000 stores by the end of 2025 [2] - The new satellite stores will implement "Internet + Bright Kitchen" live streaming in their kitchens, with the first 10,000 stores receiving a total of 400 million yuan in support from Meituan [2][3] - The collaboration with Meituan to build brand satellite stores has become a new trend in the restaurant industry, with major brands like Haidilao, Laoxiangji, Quanjude, Donglaishun, and Waipojia participating [2] Operational Value - The operational model of satellite stores has shown to help merchants reduce costs and ensure food quality, particularly in hot pot, barbecue, and Western-style fast food sectors [2] - By reducing dining area space and focusing solely on takeout, satellite store operators can lower overall operational costs by 50% to 70%, while improving labor and space efficiency by 70% [2] - The payback period for costs has been shortened from 24 months to 8-10 months compared to traditional stores [2] Support and Services - Meituan will provide a total of 400 million yuan in support for the first 10,000 merchants participating in the satellite store initiative by 2025, including store assistance funds and exclusive traffic subsidies [3] - An online and offline service system has been established to support satellite store operations, utilizing AI for business opportunity identification, operational diagnosis, and data analysis [3] - Since February, 117,000 merchants have activated the "Bright Kitchen" live streaming feature on Meituan, with expectations of over 200,000 merchants participating by the end of 2025 [3]

Core Insights - Meituan has launched a new delivery-focused model called "Brand Satellite Store" in 2024, aimed at reducing operational costs and enhancing service quality for restaurants [1][3] - The company plans to support the first batch of 10,000 participating merchants with a total of 400 million yuan in subsidies by 2025, including store assistance funds and exclusive traffic support [1][3] - The innovative operating model of satellite stores can lower overall operational costs by 50%-70% and reduce the cost recovery period from 24 months to 8-10 months [1] Industry Developments - Meituan has partnered with over 800 leading brands to establish more than 5,500 satellite stores, with a target of reaching 10,000 stores by the end of 2025 [3] - The shift towards a more refined and standardized approach in the delivery industry is evident, as traditional business models are no longer sufficient to meet market demands [3][7] - The introduction of "Mink Canteens" and the "Bright Kitchen, Bright Stove" initiative reflects a growing emphasis on food quality and transparency in the delivery sector [7] Operational Standards - Meituan has implemented strict operational standards for satellite stores, including the requirement for a transparent and traceable supply chain and the use of the same kitchen staff and standards as traditional dine-in locations [2] - The "Bright Kitchen, Bright Stove" initiative has seen 117,000 merchants activate live kitchen broadcasts since February, with expectations to exceed 200,000 by the end of 2025 [6] - Consumers can now view real-time kitchen operations through the Meituan app, enhancing transparency and allowing for immediate feedback on any irregularities [6][7]

Core Viewpoints - The article discusses four main themes regarding Meituan: market competition, instant retail, internationalization, and AI. Despite a solid quarterly financial report, market sentiment remains low due to management's inability to provide guidance and ongoing competition in the food delivery sector. However, Meituan's stock has shown resilience, aided by share buybacks and potential macroeconomic benefits [2][4]. Group 1: Market Competition - Meituan has adjusted its fee structure for merchants, separating commission, delivery fees, and advertising fees to enhance transparency [3]. - The company is expanding its rider insurance program nationwide and has initiated social security subsidies for riders in select cities, with plans for broader implementation [3]. - Meituan's competitive strategies include various promotional models to attract consumers, such as special benefits for high-tier members and innovative delivery services [3][15]. Group 2: Instant Retail - Instant retail is identified as Meituan's largest growth opportunity in the next five years, with two main platforms: Flash Purchase and Little Elephant, catering to different market needs [22][23]. - Flash Purchase is seen as a potential essential service, while Little Elephant focuses on fresh produce and is expanding into other categories [24][27]. - The penetration rate for instant retail is currently low, with significant growth potential as consumer habits evolve [28]. Group 3: Internationalization - Meituan's international expansion is compared to peers like Kuaishou and Didi, with a focus on non-mainstream markets such as South America and the Middle East [32][39]. - The company possesses strong technical capabilities in food delivery, which could provide a competitive edge in international markets [39]. - The article highlights the challenges and opportunities in the Brazilian market, where competition is fierce but presents significant potential for growth [38][39]. Group 4: AI - AI is viewed as a transformative force that will enhance efficiency and productivity across various sectors, including Meituan's operations [43][50]. - The integration of AI into business processes is expected to reshape consumer interactions and operational models, leading to new opportunities and risks [63]. - The article suggests that the future of local consumption may see the emergence of a "super AI" that could dominate the market, with Meituan positioned as a potential leader [65].

Overall Performance - Meituan's Q1 2025 revenue reached 86.6 billion yuan, exceeding Bloomberg consensus by 1.3% [1] - EBIT for Q1 2025 was 10.6 billion yuan, surpassing Bloomberg consensus by 24.83% [1] - Adjusted net profit was approximately 10.9 billion yuan, exceeding Bloomberg consensus by 12.6% [1] - Core local business revenue was 64.3 billion yuan, exceeding Bloomberg consensus by 1.5% [1] - New business revenue was 22.2 billion yuan, exceeding Bloomberg consensus by 1.4% [1] Core Local Business - Q1 2025 revenue for core local business was 64.3 billion yuan, exceeding expectations by 1.5% [1] - Delivery service revenue was 25.7 billion yuan, commission revenue was 24.1 billion yuan, and online marketing revenue was 11.9 billion yuan [1] - Operating profit for Q1 2025 was 13.5 billion yuan, exceeding Bloomberg consensus by 9.5% [1] Food Delivery - The company is expanding its product line and optimizing its 30-minute delivery network [2] - "Pin Hao Fan" and "Shen Qiang Shou" are continuously updated to meet diverse consumer needs [2] - Over 480 brands have opened more than 3,000 high-quality satellite stores on Meituan [2] - The company plans to invest 100 billion yuan over the next three years to support the food service industry [2] In-store Business - Meituan's in-store business has seen a year-on-year increase of over 25% in active merchants [2] - The upgraded "Meituan Membership" system integrates various lifestyle services [2] Travel and Hospitality - The company is enhancing operational capabilities and service quality in the travel and hospitality sector [3] - The "Meituan Membership" plan encourages cross-selling and brand recognition in the travel industry [3] New Business - New business revenue grew by 19.2% year-on-year to 22.2 billion yuan, exceeding Bloomberg consensus by 1.4% [3] - Operating losses narrowed by 17.5% year-on-year to 2.3 billion yuan, with an improved loss rate of 10.2% [3] - The company's overseas business has made significant strides, particularly in Saudi Arabia [3] Investment Outlook - Short-term competition may impact profitability, but long-term core competitiveness remains strong [4] - Projected revenues for Meituan from 2025 to 2027 are 391.3 billion, 463.2 billion, and 542.6 billion yuan respectively [4] - Projected net profits (Non-IFRS) for the same period are 33.8 billion, 47 billion, and 64.4 billion yuan respectively [4]

Investment Rating - The investment rating for Meituan-W (03690) is "Buy" with a target price not specified [5]. Core Views - Meituan's Q1 2025 performance exceeded expectations with revenue of 86.6 billion yuan, surpassing Bloomberg consensus by 1.3%. Adjusted net profit reached approximately 10.9 billion yuan, exceeding expectations by 12.6% [1]. - The core local commerce segment generated revenue of 64.3 billion yuan, also exceeding expectations by 1.5%, with significant contributions from delivery services and commission income [1]. - The new business segment saw a year-on-year revenue growth of 19.2% to 22.2 billion yuan, indicating a narrowing of operating losses [3][4]. Summary by Sections Overall Performance - In Q1 2025, Meituan reported total revenue of 86.6 billion yuan, EBIT of 10.6 billion yuan, and adjusted net profit of approximately 10.9 billion yuan, all exceeding Bloomberg consensus estimates [1]. Core Local Commerce - Revenue from core local commerce reached 64.3 billion yuan, with delivery service revenue at 25.7 billion yuan, commission income at 24.1 billion yuan, and online marketing revenue at 11.9 billion yuan. Operating profit for this segment was 13.5 billion yuan, surpassing expectations by 9.5% [1]. Food Delivery and Restaurant Services - Meituan is enhancing its food delivery services by diversifying its product line and optimizing delivery networks. The company plans to invest 100 billion yuan over the next three years to support the restaurant service industry [2]. Travel and Hospitality - The company is improving its operational capabilities in the travel and hospitality sector, with a new membership program that integrates various consumer services, enhancing brand recognition and cross-selling opportunities [3]. New Business Developments - The new business segment's revenue growth of 19.2% to 22.2 billion yuan indicates a positive trend, with a reduction in operating losses to 2.3 billion yuan [3][4]. The overseas business has also shown significant progress, particularly in Saudi Arabia [3]. Future Outlook - Despite short-term competitive pressures, Meituan's long-term competitive advantage lies in its strong merchant base and user reviews. Revenue projections for 2025-2027 are 391.3 billion yuan, 463.2 billion yuan, and 542.6 billion yuan respectively [4].

Core Insights - Meituan reported a revenue of 86.6 billion RMB for Q1 2025, representing an 18% year-on-year growth [1] - The core local commerce revenue grew by 18% to 64.3 billion RMB, with enhanced user engagement in the food delivery segment [1][2] - The company launched the "brand satellite store" model, assisting over 480 brands in opening 3,000 high-quality stores, diversifying the food delivery offerings [1] Revenue Breakdown - Core local commerce revenue reached 13,491.48 million RMB, accounting for 21.0% of total revenue, compared to 9,698.847 million RMB or 17.8% in the previous year [2] - New business revenue increased by 19.2% to 22.2 billion RMB, with operating losses narrowing by 17.5% to 2.3 billion RMB [5] User Engagement and Growth - Meituan's instant retail service, Meituan Flash Purchase, has over 500 million cumulative transaction users, with daily order volume exceeding 18 million in non-food categories [1][2] - The increase in non-food delivery orders has contributed to higher earnings for delivery riders, with average monthly incomes rising significantly [3][4] Investment in Technology - The company invested 5.8 billion RMB in R&D during Q1 2025, marking a 15% increase year-on-year [5] - Meituan's self-developed fourth-generation drone has received operational certification, with 55 routes established in major cities [5]

Core Viewpoint - Meituan continues to focus on the "retail + technology" strategy, investing in technological innovation to enhance efficiency in the retail industry, with a quarterly R&D expenditure of 5.8 billion yuan and record high annual transaction users and active merchants [1][4]. Financial Performance - In the first quarter, Meituan reported revenue of approximately 86.557 billion yuan, a year-on-year increase of 18.1%, and a profit attributable to equity holders of approximately 10.057 billion yuan, up 87.3% [3]. - The core local commerce segment's revenue grew by 17.8% year-on-year to 64.3 billion yuan, with operating profit increasing by 39.1% to 13.5 billion yuan [3][6]. - The first quarter saw operating cash inflow of 10.1 billion yuan, with cash and cash equivalents and short-term investments totaling 115 billion yuan and 65.4 billion yuan, respectively, as of March 31, 2025 [4]. Business Development - The core local commerce segment achieved steady growth, with revenue increasing by 18% to 64.3 billion yuan and operating profit reaching 13.5 billion yuan, a 39.1% year-on-year increase [6]. - The takeout business maintained healthy growth, with user stickiness and purchase frequency further enhanced. Meituan's "brand satellite store" model has helped over 480 brands open 3,000 high-quality satellite stores [6]. - Meituan's flash purchase service saw significant growth, with daily order volume nearly doubling on Valentine's Day, and cumulative transaction users exceeding 500 million, primarily among young consumers [6]. New Business Initiatives - The new business segment's operating loss narrowed to 2.3 billion yuan year-on-year, with international business making progress, particularly in Saudi Arabia and plans to enter Brazil [7]. - The average monthly income for high-frequency riders ranged from 7,230 yuan to 10,100 yuan, with skilled riders in major cities earning up to 12,593 yuan [9]. - Meituan has initiated pilot programs for rider social security, with plans to expand coverage to over one million riders nationwide [9][10].

Group 1 - The core viewpoint of the article highlights Meituan's strong financial performance in Q1, with revenue of 865.6 billion RMB, a year-on-year increase of 18.1%, and adjusted net profit of 109.5 billion RMB, up 46.2% year-on-year [1][2] - Meituan's core local commerce segment achieved an operating profit of 135 billion RMB in Q1, representing a 39.1% increase from 97 billion RMB in the same period last year [1][2] - The new business segment's operating loss narrowed from 28 billion RMB in the previous year to 23 billion RMB in Q1 [2] Group 2 - As of March 31, 2025, Meituan held cash and cash equivalents of 1,150 billion RMB and short-term investments of 654 billion RMB [2] - Meituan is innovating in the food delivery sector with products like "Pin Hao Fan" and "Shen Gao Shou" to meet consumer demand for cost-effective options, while the "Brand Satellite Store" model aids chain restaurants in regional expansion [2] - CEO Wang Xing expressed satisfaction with the increasing choice of users and merchants for Meituan, emphasizing ongoing innovation in supply and service models to enhance user experience and industry development [2]

Core Insights - The restaurant industry is facing intense competition, prompting leading companies to adapt by exploring new business models such as brand "satellite stores" to reduce rental costs and leverage delivery services for efficient operations [1][4] - The partnership between the well-known brand "Fish You Together" and Meituan Waimai aims to innovate brand satellite stores, providing AI support for site selection, product selection, and operational guidance [1][3] - The brand satellite store model is designed to meet the growing consumer demand for value-for-money dining options, effectively covering areas that standard stores cannot reach [1][4] Company Developments - "Fish You Together" has opened over 20 brand satellite stores in cities like Beijing, Xi'an, Shanghai, and Shenzhen, with another 20 in the preparation stage, showcasing strong single-store profitability [2][3] - The average profit margin for brand satellite stores has reached 14.8%, with a significant increase in order volume compared to traditional stores [2] - The brand has been recognized as the leading brand in the global sauerkraut fish market, with 2 billion yuan in delivery sales achieved in August 2024, marking a 51% year-on-year growth [3] Industry Trends - The brand satellite store model is emerging as a strategic engine for growth in the chain restaurant sector, enabling companies to tap into untapped market potential and optimize cost structures [4] - The collaboration between "Fish You Together" and Meituan Waimai represents a new exploration of light-asset entrepreneurial models, aiming to reshape the growth landscape of the restaurant industry [4]