2025-08-28 02:13Summary of Meituan's Conference Call Company Overview - Company: Meituan (3690.HK) - Industry: China Internet and Other Services Key Points and Arguments Financial Performance - Price Target Adjustment: Price target reduced from HK$150.00 to HK$135.00 due to ongoing losses and competitive pressures [1] - 3Q Loss Expectations: Anticipated on-demand operating profit (OP) loss of Rmb15 billion for 3Q, with a CLC OP loss of Rmb10 billion [3][5] - 2Q Performance: Total revenue increased by 12% YoY, but missed estimates; adjusted EBITDA was Rmb2.8 billion, significantly below expectations [27] - Core Local Commerce (CLC): CLC revenue grew by 8% YoY, but OP fell by 76% to Rmb3.7 billion, missing estimates due to intensified competition [27] - New Initiatives: Revenue from new initiatives rose by 23%, but operating loss was Rmb1.9 billion, better than expected due to overseas investments [27] Market Dynamics - Competition: Increased competition since May, particularly during the 618 festival, has led to significant losses in the on-demand segment [2][3] - Subsidy Impact: Anticipated acceleration in on-demand volume to high teens due to increased subsidies, but profitability is expected to decline due to price competition [3] - Market Share: Despite aggressive subsidies, Meituan maintains a solid GTV share of over 70% in high-quality orders [4] Long-Term Outlook - Cost Efficiency: Long-term competitiveness is believed to be intact due to cost efficiency, with per-order losses only one-third of competitors [4] - Future Projections: Long-term estimates for food delivery GTV margin projected at 2.3% and user efficiency (UE) at Rmb1.08 [54] - Investment Strategy: Focus on high-quality orders and effective investment in new initiatives expected to expand the addressable market [63] Risks and Challenges - Earnings Pressure: Near-term uncertainties and competitive pressures pose risks to earnings, making it difficult for Meituan to control competition pace [5][54] - Market Fragmentation: The quick commerce market is expected to split among multiple players, impacting Meituan's market share [54] Valuation and Recommendations - Valuation Methodology: Price target of HK$135 implies a target P/E of 17x for 2026 estimates, comparable to Tencent's 19x [31] - Investment Rating: Maintained an Overweight (OW) rating despite short-term challenges, with some earnings pressure already priced in [5] Additional Important Information - Share Repurchase: Meituan repurchased HK$391 million worth of shares in 2Q [27] - Market Capitalization: Current market cap is approximately US$92.66 billion [7] This summary encapsulates the key insights from Meituan's recent conference call, highlighting the company's current challenges, competitive landscape, and long-term strategies.