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].

Overall Performance - The company's performance exceeded expectations with Q1 2025 revenue of 86.6 billion CNY, a year-over-year increase of 18%, surpassing Bloomberg's consensus estimate of 85.4 billion CNY [1] - Adjusted operating profit for Q1 2025 was 11.2 billion CNY, exceeding the consensus estimate of 9.9 billion CNY, with an adjusted operating profit margin of 13.0%, up from 9.5% in Q1 2024 [1] - Adjusted net profit reached 10.9 billion CNY, also above the consensus estimate of 9.7 billion CNY, with an adjusted net profit margin of 12.6%, compared to 10.2% in Q1 2024 [1] Core Local Business - Core local business revenue for Q1 2025 was 64.3 billion CNY, a year-over-year increase of 17.8%, exceeding the consensus estimate of 63.5 billion CNY [1] - Adjusted operating profit for this segment was 13.5 billion CNY, surpassing the consensus estimate of 12.2 billion CNY, with an operating profit margin of 21%, reflecting a year-over-year increase of 3.2 percentage points [1] Delivery Business - The delivery segment is expected to see high single-digit growth in order volume, with improved user engagement and frequency of purchases [1] - The company plans to invest 100 billion CNY over the next three years to promote high-quality development in the industry [1] Flash Purchase - Flash purchase orders are projected to grow approximately 30% year-over-year in Q1 2025, with over 500 million transaction users and a 60% increase in non-food orders [2] - The segment is expected to achieve profitability in Q1 2025 due to effective brand advertising and operational efficiencies [2] In-store Travel and Accommodation - The in-store travel and accommodation segment saw a GTV growth of over 30% year-over-year in Q1 2025 [3] - Revenue growth is expected to lag behind GTV growth due to advertising impacts and lower penetration in lower-tier cities [3] New Business - New business revenue reached 22.2 billion CNY in Q1 2025, a year-over-year increase of 19%, aligning with Bloomberg's consensus estimate [4] - The company is actively expanding overseas, with plans to invest 1 billion USD in Brazil over the next five years [4] Valuation and Forecast - The company has adjusted its earnings per share forecasts for 2025-2027 to 6.04, 7.20, and 8.09 CNY respectively, down from previous estimates [4] - The company maintains a target price of 172.90 HKD, with a reasonable valuation of 1,056.4 billion HKD [4]

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]

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 "Buy" (maintained) [1] Core Insights - The report indicates that Meituan's Q1 2025 performance exceeded expectations, with total revenue reaching 86.557 billion yuan, a year-on-year increase of 18%. Adjusted net profit was 10.949 billion yuan, outperforming Bloomberg consensus estimates [8] - Core local business profits were better than expected, and the trend of reduced losses in new businesses continued. The core local business revenue for Q1 was 64.3 billion yuan (yoy +17.8%), with an operating profit of 13.5 billion yuan (yoy +39.1%), and the operating profit margin increased by 3 percentage points to 21.0% [8] - The report highlights that while competition may impact Q2 profits, the long-term outlook remains positive due to the company's advantages in fulfillment, supply, and operational efficiency [8] Financial Forecasts - Total revenue projections for Meituan are as follows: - 2023: 276.85 billion yuan - 2024: 337.59 billion yuan (yoy +21.94%) - 2025: 389.69 billion yuan (yoy +15.43%) - 2026: 442.51 billion yuan (yoy +13.55%) - 2027: 494.21 billion yuan (yoy +11.68%) [1] - Adjusted net profit forecasts are: - 2023: 13.86 billion yuan - 2024: 35.81 billion yuan (yoy +158.43%) - 2025: 35.91 billion yuan (yoy +0.28%) - 2026: 46.21 billion yuan (yoy +28.70%) - 2027: 60.46 billion yuan (yoy +30.82%) [1] - The report adjusts the 2025-2027 adjusted profit estimates down to 43.4 billion, 54.1 billion, and 68.4 billion yuan respectively, with corresponding adjusted P/E ratios of 18, 15, and 12 times [8] Business Segments - The core local business is expected to maintain healthy growth, particularly in the food delivery segment, with user engagement and purchase frequency improving. The company plans to invest 100 billion yuan over the next three years to promote high-quality industry development [8] - Instant retail business showed strong growth, with transaction users exceeding 500 million and daily active users peaking at nearly 6.5 million. Non-food category orders grew over 60% year-on-year [8] - The travel and hotel segment is also expected to grow rapidly, especially in lower-tier cities, supported by enhanced membership benefits [8] - The new business segment, particularly the overseas expansion through Keeta, is showing significant progress, with plans to invest 1 billion USD in the Brazilian market over the next five years [8]

Core Insights - Meituan's Q1 revenue and adjusted profit exceeded market expectations, with total revenue reaching 86.6 billion yuan, a year-on-year increase of 18% [1] - The core local business operating profit grew by 39% year-on-year, surpassing market expectations by 10% [1] - The company reported record high annual active users and merchants, indicating strong market presence [1] Financial Performance - Q1 total revenue was 86.6 billion yuan, slightly above market expectations by 1.4% [1] - Adjusted net profit for Q1 was 10.9 billion yuan, a 46% year-on-year increase, exceeding market expectations by 18% [1] - Core local business revenue increased by 18% year-on-year, with operating profit margin improving by 3 percentage points to 21% [1][2] Business Segments - Delivery, commission, and online marketing revenues grew by 22%, 20%, and 15% year-on-year, respectively [2] - The food delivery segment saw an increase in user order frequency, with daily order volume growth estimated at around 10% [2] - Instant retail and travel segments also showed strong growth, with non-food orders in instant retail increasing over 60% year-on-year [2] Competitive Landscape - Management emphasized commitment to compete effectively, planning to invest 100 billion yuan over the next three years to enhance supply chain and merchant digital transformation [2] - Despite competitive pressures, Meituan's food delivery segment maintained steady growth in daily order volume [2] Financial Forecast and Valuation - For Q2, total revenue is expected to grow by 13%, with core local business and new business revenues projected to increase by 10% and 21%, respectively [3] - The company anticipates a 15% year-on-year increase in total revenue for 2025, with adjustments made to core local business profit forecasts [3] - The valuation for core local business is set at 18 times the 2025 operating profit, with a target price adjustment to 177 HKD, indicating a potential upside of 34% from recent closing prices [3]

Core Viewpoint - In Q1 2025, Meituan achieved total revenue of 86.557 billion yuan, a year-on-year increase of 18.1%, and a Non-GAAP net profit of 10.949 billion yuan, up 46.2%, exceeding Bloomberg consensus expectations [1] Financial Performance - Meituan's core local commerce revenue reached 64.325 billion yuan in Q1, growing 17.76% year-on-year, with adjusted operating profit of 13.5 billion yuan, up 39.10% [1] - Delivery service revenue was 25.7 billion yuan, a 22.11% increase year-on-year, while commission revenue was 24.1 billion yuan, up 20.05% [1] - Online marketing service revenue was 11.9 billion yuan, growing 15.09% year-on-year [1] Market Competition - Increased competition in the delivery market, particularly from JD.com, is expected to impact Meituan's profits starting in Q2, with revenue growth anticipated to slow [1] - The long-term view suggests that irrational competition in the industry may not be sustainable, with Meituan's delivery business having higher barriers compared to in-store travel and dining [1] New Business Developments - Meituan's new business segment reported revenue of 22.2 billion yuan in Q1, a 19% year-on-year increase, but incurred an adjusted operating loss of 2.3 billion yuan, slightly widening due to increased investment in Keeta in the Middle East [2] - The long-term outlook for Keeta is positive, with potential for significant profit margins in overseas markets, particularly in Brazil [2] Profit Forecast and Valuation - Meituan's projected revenues for FY25 and FY26 are 388.997 billion yuan and 456.662 billion yuan, with growth rates of 15.23% and 17.39% respectively [2] - Non-GAAP profits are expected to be 40.986 billion yuan and 52.824 billion yuan, reflecting a year-on-year decline of 6.37% and an increase of 28.88% [2] - The company maintains a "buy" rating with a target price of 146.33 HKD, corresponding to a 20X PE for 2025 [2]

Investment Rating - The report maintains a "Buy" rating for Meituan (3690.HK) [1][4][6] Core Insights - Meituan's Q1 revenue and adjusted profit exceeded market expectations, with total revenue of 86.6 billion yuan, a year-on-year increase of 18%, and adjusted net profit of 10.9 billion yuan, up 46% year-on-year [2][4] - The core local business operating profit increased by 39% year-on-year, surpassing market expectations by 10% [1][2] - The company is prioritizing long-term ecological investments over short-term profit margins, which may lead to short-term fluctuations in profitability but is expected to strengthen market share and ecological balance in the long run [1][4] Financial Performance Summary - Q1 total revenue was 86.6 billion yuan, slightly exceeding expectations by 1.4% and 1.3% from the report and market respectively [2] - Adjusted net profit for Q1 was 10.9 billion yuan, exceeding expectations by 18% and 13% [2] - Core local business revenue grew by 18% year-on-year, with operating profit margin increasing by 3 percentage points to 21% [2][4] - New business revenue increased by 19% year-on-year, with losses narrowing to 2.3 billion yuan, a year-on-year reduction of 18% [2][4] Business Segment Analysis - Core local business maintained steady growth, with delivery, commission, and online marketing revenues increasing by 22%, 20%, and 15% year-on-year respectively [3] - The management emphasized a commitment to compete effectively in the instant retail sector, planning to invest 100 billion yuan over the next three years [3] - The company reported strong growth in the takeaway and flash purchase segments, with daily order volume growth accelerating to approximately 10% [3] Financial Forecast and Valuation - The report forecasts a 13% year-on-year revenue growth for Q2, with core local business and new business expected to grow by 10% and 21% respectively [4] - For the full year 2025, total revenue is projected to grow by 15%, with core local business and new business expected to grow by 13% and 20% respectively [4] - The target price is adjusted to 177 HKD, representing a potential upside of 34% from the recent closing price [4][6]

Investment Rating - The report maintains a "Buy" rating for Meituan-W (3690.HK) [10] Core Views - Meituan has established a robust competitive advantage in the local lifestyle service sector, leveraging its historical strengths from the group-buying era and its extensive merchant resources. The company is expected to achieve significant revenue growth, with projected revenues of 393.4 billion, 441.5 billion, and 488.1 billion CNY for 2025, 2026, and 2027 respectively, alongside adjusted net profits of 50.6 billion, 60.5 billion, and 72 billion CNY for the same years [3][10]. Summary by Sections Introduction: Who Dominates Local Life? - The entry of platforms like Douyin into local lifestyle services has shifted the competitive landscape, making it a key factor influencing Meituan's valuation. The report reviews Meituan's past strategic organization and business expansion to reaffirm its competitive moat in the local lifestyle sector [5][18]. Strategic Organizational Changes and Competitiveness - Meituan's strategic and organizational capabilities are encapsulated in a three-force model: strategic insight, organizational structure, and dynamic iteration. The company has undergone five organizational adjustments in 2024 to enhance its "Retail + Technology" strategy, focusing on streamlining its structure and improving synergy between its delivery and in-store services [6][26]. Three-Sided Transaction Network and Competitive Moat - Meituan has built a comprehensive ecosystem that connects users, merchants, and delivery services, creating a strong network effect. The company has a user base of 700 million annual transaction users and a vast merchant network, which enhances trust and reduces information asymmetry. The report highlights that Meituan's user engagement and merchant efficiency are superior, providing a significant competitive edge [7][8][36]. User Engagement and Community Ecosystem - The report emphasizes the maturity of Meituan's user community and transaction search mindset, which has been cultivated over years of engagement. Despite competitors like Douyin having larger public traffic pools, Meituan's effective distribution of local lifestyle transaction traffic remains competitive [7][8]. Merchant Efficiency and Category Expansion - Meituan's long-term operational efficiency and high potential for category expansion are noted. The company has established a strong marketing ROI for merchants, which is critical for their long-term investment decisions. New entrants face challenges in matching Meituan's established operational efficiencies and trust-based consumer relationships [8][36]. Fulfillment and Operational Barriers - The report discusses the high operational costs associated with building a self-owned delivery system, which creates significant barriers for new entrants. Meituan's investment in advanced algorithms for order dispatch and route optimization further solidifies its operational moat [8][36]. Investment Recommendations and Profit Forecasts - The report projects Meituan's overall revenue and adjusted net profit growth for 2025-2027, reinforcing the "Buy" rating based on the company's strategic positioning and market potential [3][10].