Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>Meituan has navigated through its most challenging period since IPO as competition moderates and reorg comes close to completion. </li>
<li>1Q results should kick off an upward earnings cycle through to the end of 2024 when the company’s efforts to revamp loss-making new initiative businesses gather pace. </li>
<li>That said, lack of clear topline driver remains the key reason for our cautious view about the sustainability of re-rating. Maintain neutral.</li>
</ul>


Meituan has navigated through its most challenging period since IPO as competition moderates and reorg comes close to completion. 
1Q results should kick off an upward earnings cycle through to the end of 2024 when the company’s efforts to revamp loss-making new initiative businesses gather pace. 
That said, lack of clear topline driver remains the key reason for our cautious view about the sustainability of re-rating. Maintain neutral.


Meituan (3690 HK): Lack of Clear Topline Driver Remains a Concern

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Total revenue grew by 22.6% YoY in 4Q23, three percentage points higher than we expected.</li>
<li>MT’s operating profit broke even for the fiscal year 2023.</li>
<li>We conclude an upside of 113% and a price target of HK$188. Buy.</li>
</ul>


Total revenue grew by 22.6% YoY in 4Q23, three percentage points higher than we expected.
MT’s operating profit broke even for the fiscal year 2023.
We conclude an upside of 113% and a price target of HK$188. Buy.


MT / Meituan (3690 HK): 2023 - Broke Even for First Year

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>Meituan reported C4Q23 revenue beat our estimate/consensus by 0.7%/1.4%; operating profit beat our estimate/consensus by 37.3%/48.6%, mainly due to order volume surprise, which is unsustainable in our view.</li>
<li>However, we think Meituan’s near term pressures did not change: (1) core biz OPM drop due to rising low-price orders and subsidies; (2) resuming competition from Eleme/Douyin/PDD</li>
<li>We maintain the stock as SELL rating but raise TP by HK$13 to HK$70 to factor in the loss cutting commitment in the community group buying biz.</li>
</ul>


Meituan reported C4Q23 revenue beat our estimate/consensus by 0.7%/1.4%; operating profit beat our estimate/consensus by 37.3%/48.6%, mainly due to order volume surprise, which is unsustainable in our view.
However, we think Meituan’s near term pressures did not change: (1) core biz OPM drop due to rising low-price orders and subsidies; (2) resuming competition from Eleme/Douyin/PDD
We maintain the stock as SELL rating but raise TP by HK$13 to HK$70 to factor in the loss cutting commitment in the community group buying biz.


[Meituan (3690 HK, SELL, TP HK$70) TP Change]: Margin Reflects Persistent Competitive Pressure

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Meituan reported (22 Mar) its 4Q23 results: revenue was RMB73.7bn, up 23% YoY, 1% higher than Bloomberg consensus estimate.</li><li>Adjusted net profit during 4Q23 reached RMB4.4bn, better than consensus at RMB2.9bn, due to both better-than-expected operating profit (OP) generated from core local commerce (CLC) business, and narrower-than-expected loss generated from new business.</li><li>Management highlighted that it will make strategic changes and refine business model of Meituan Select in 2024, aiming to significantly reduce the operating loss, which we believe should drive c.49% YoY non-IFRS net profit growth in 2024E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Meituan reported (22 Mar) its 4Q23 results: revenue was RMB73.7bn, up 23% YoY, 1% higher than Bloomberg consensus estimate.Adjusted net profit during 4Q23 reached RMB4.4bn, better than consensus at RMB2.9bn, due to both better-than-expected operating profit (OP) generated from core local commerce (CLC) business, and narrower-than-expected loss generated from new business.Management highlighted that it will make strategic changes and refine business model of Meituan Select in 2024, aiming to significantly reduce the operating loss, which we believe should drive c.49% YoY non-IFRS net profit growth in 2024E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Meituan (3690 HK) - Expect Significant Loss Reduction for New Businesses

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Meituan has released FY 2023 numbers that were excellent in our view, with significantly improved profitability and solid cash generation. The financial risk profile has strengthened further, with a large and growing net cash position coupled with robust leverage and coverage ratios. Liquidity is sound. We expect FY 2024 to be a better year for the company. We revise our Credit Bias on Meituan to “Positive” from "Stable", given the material increase in profitability and strong cash-flow generation following the pandemic. That said, we do not expect ratings upgrades in the near future.

  Meituan has released FY 2023 numbers that were excellent in our view, with significantly improved profitability and solid cash generation. The financial risk profile has strengthened further, with a large and growing net cash position coupled with robust leverage and coverage ratios. Liquidity is sound. We expect FY 2024 to be a better year for the company.   We revise our Credit Bias on Meituan to “Positive” from "Stable", given the material increase in profitability and strong cash-flow generation following the pandemic. That said, we do not expect ratings upgrades in the near future. 

Meituan - Earnings Flash - FY 2023 Results - Lucror Analytics

China

Meituan operates as a web based shopping platform for locally found consumer products and retail services. The Company offers deals of the day by selling vouchers on local services and entertainment, dining, delivery, and other services. Meituan provides its services throughout China.

Meituan (3690 HK)

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Blue Lotus Research Institute

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CMB International

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Meituan has released FY 2023 numbers that were excellent in our view, with significantly improved profitability and solid cash generation. The...

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Eric Chen

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In 4Q23, the revenue growth rate was three percentage points higher than we expected. MT’s operating profit broke even for the first year. We...

Ming Lu

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​Meituan beats revenue and profit estimates, but unsustainable order volume surprise. Near-term pressures remain, stock maintained as SELL with...

Blue Lotus Research Institute

Meituan (3690 HK) - Expect Significant Loss Reduction for New Businesses

Adjusted net profit during 4Q23 reached RMB4.4bn, better than consensus at RMB2.9bn, due to both better-than-expected operating profit (OP)...

CMB International

Meituan - Earnings Flash - FY 2023 Results - Lucror Analytics

Meituan has released FY 2023 numbers that were excellent in our view, with significantly improved profitability and solid cash generation. The...

Lucror Analytics

While we expect 1Q24 to kick off an upward earnings cycle for Meituan, lack of clear topline driver remains a concern given its valuation premium...

Meituan beats revenue and profit estimates, but unsustainable order volume surprise. Near-term pressures remain, stock maintained as SELL with...