Daily Brief TMT/Internet: Meituan, Kanzhun, USD Coin and more

In today’s briefing:

Meituan: Scaling Back Ride-Hailing Business to Maintain Margins

Several news media outlets reported last week that Meituan (3690 HK) is restructuring its ride-hailing services business to cut down costs as top line growth is slowing down.
Meituan launched ride-hailing services as a stand-alone app in 2017, it was merged into Meituan Super App in 2019. Relaunched as a stand-alone app in 2021 following Didi’s app removal.
Meituan has increased its headcount to compete with Douyin while has started hiring riders to launch services in Hong Kong which would likely to further drag down margins.

We are concerned that BZ will incur higher sales marketing cost to maintain its increasingly sluggish MAU growth.
We expect BZ to post C4Q22 revenue 2% higher than consensus, but with non-GAAP net margin 5.7ppt lower, due to lower GM and higher S&M.
We downgrade BZ from BUY to SELL rating, and cut TP to US$12.4, imply 51x PE in 2023, and the stock currently trading at 76x PE in 2023.

In the hours following Sillicon Valley Bank’s collapse, news emerged that Circle, issuer of the USDC stablecoin, held $3.3bn of reserves in SVB, triggering panic that the stablecoin was no longer fully backed.
As of Sunday night, we know that Circle’s reserves are safe, but over the weekend both centralized and decentralized markets descended into chaos.
Today, we’ll walk you through what exactly happened.

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