2025-08-28 02:13Summary of Meituan's 2Q25 Earnings Call Company Overview - Company: Meituan (3690.HK) - Industry: China Internet and Other Services Key Financial Highlights - Total Revenues: Increased by 12% YoY to Rmb91.84 billion, slightly missing consensus estimates of Rmb93.175 billion and Rmb93.949 billion [1][1][1] - Adjusted EBITDA: Reported at Rmb2.8 billion, significantly below Morgan Stanley estimates of Rmb6.5 billion and consensus of Rmb11.4 billion [1][1][1] - Core Local Commerce (CLC) Revenues: Grew by 8% YoY to Rmb65.347 billion, missing estimates by 2-4% [1][1][1] - Operating Profit (CLC): Dropped 76% to Rmb3.7 billion, missing estimates of Rmb8 billion and Rmb11 billion due to intensified market competition [1][1][1] - Operating Profit Margin (OPM): Declined to 5.7%, down 19 percentage points [1][1][1] - Net Profit: Decreased by 97% to Rmb365 million, missing estimates of Rmb2.937 billion and Rmb7.227 billion [1][1][1] - Adjusted Net Profit: Fell by 89% to Rmb1.493 billion, below estimates of Rmb4.744 billion and Rmb9.250 billion [1][1][1] Market Reaction and Analyst Insights - Thesis Impact: The significant profit decline weakens the investment thesis for Meituan, leading to a meaningful revision lower in expectations [1][1][1] - Stock Rating: Maintained at Overweight, but the price target has been revised to HK$150.00 from previous estimates [1][1][1] - Current Share Price: HK$116.30, indicating a potential upside of 29% to the new price target [1][1][1] Segment Performance - New Initiatives: Revenues increased by 23% to Rmb26.493 billion, in line with expectations; however, operating loss was Rmb1.9 billion, which was better than expected mainly due to overseas investments [1][1][1] - Share Repurchase: Meituan repurchased shares worth HK$391 million in 2Q25 [1][1][1] Risks and Considerations - Competitive Landscape: Intensified competition in food delivery and quick commerce sectors poses risks to profitability [1][1][1] - Macro Conditions: Weaker-than-expected macroeconomic conditions could further impact performance [1][1][1] - Regulatory Environment: Potential antitrust regulations may pose additional risks [1][1][1] Conclusion Meituan's 2Q25 results reflect significant challenges, particularly in profitability due to competitive pressures. While revenues showed growth, the substantial decline in operating and net profits raises concerns about the company's future performance and market positioning. The revised price target and ongoing risks highlight the need for cautious monitoring of Meituan's strategic responses to market dynamics.