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]

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].