Meituan (3690.HK)_ 3Q24 First Take_ Solid 3Q print; eyes on merchant supportive measures and Keeta investments; Buy

Summary of Meituan (3690.HK) Earnings Call Company Overview - Company: Meituan (3690.HK) - Industry: E-commerce and Logistics in China Key Financial Highlights - 3Q24 Performance: - Revenue increased by 22% year-over-year (yoy) to Rmb93.6 billion [2] - Adjusted EBIT rose by 196% yoy to Rmb12.4 billion, exceeding expectations [2][11] - Core local commerce adjusted EBIT reached Rmb14.6 billion, a 44% yoy increase [2] - New initiatives EBIT losses reduced to Rmb-1.0 billion, better than consensus estimates [2] Core Business Insights - Food Delivery: - Food delivery profitability improved, with EBIT per order higher yoy despite a seasonal decline [2] - Transaction volumes for on-demand delivery (food delivery + instashopping) grew by 15% yoy [2] - Instashopping achieved an average of 10 million daily orders, growing at over 3X the rate of restaurant food delivery [7] - In-store, Hotel & Travel (IHT): - In-store order volumes increased by 50% yoy [8] - IHT gross transaction value (GTV) growth was in the mid-twenties percentage, affected by slower hotel growth and adjustments in attraction ticketing [2][8] Strategic Initiatives - Merchant Support Measures: - Meituan announced a Rmb1 billion investment to support quality restaurant development [3] - Focus on improving efficiencies in new initiatives, with other segments turning profitable [9] - Expansion Plans: - Plans to increase InstaMart warehouses from 30,000 to over 100,000 by 2027 [7] - Official launch of Keeta in Riyadh with ongoing investments planned into 2025 [9] Shareholder Returns - Share Repurchases: - Total of HK$14.2 billion (US$1.8 billion) in share repurchases during 3Q24, up from US$1.4 billion** in 2Q24 [10] - Aggregate buyback of **4.2$212, indicating a 25.7% upside from current levels [11] - Key Risks: - Potential for increased competition impacting growth and profitability turnaround [11] - Labor cost inflation and food safety concerns could pose challenges [11] Conclusion - Meituan demonstrated strong financial performance in 3Q24, driven by robust growth in food delivery and instashopping, alongside strategic investments in merchant support and expansion initiatives. The company remains committed to enhancing shareholder value through share repurchases while navigating potential market risks.