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

Meituan (3690 HK): Strong Bottom Line Growth Will Prove to Be Short-Lived

[Meituan (3690 HK, BUY, TP HK$165) TP Change]: Competition with Douyin Continues, Cut TP to HK$165

Meituan (3690 HK, BUY, TP US$170) Target Price Change: Consolidating Market Share… Maintain BUY

Meituan’s Recent Expansion in Hong Kong: A Review

China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>Meituan reported CY2Q23 rev./non-IFRS net income in-line/70% vs. cons., and in-line/28% vs. our estimate. Increased spending on in-store competition was offset by abundant rider supply that lowered food delivery cost. </li>
<li>We raise our 3Q net margin est. by 3ppts as (1) the in-store counterattack against Douyin has been a success, (2) CGB spending to counter Duoduo Maicai has remained restrained.</li>
<li>Initial results of the in-store counterattack showed positive results, while FD margin continues to benefit from ample riders. We maintain Meituan’s BUY rating and HK$ 165 TP.</li>
</ul>


Meituan reported CY2Q23 rev./non-IFRS net income in-line/70% vs. cons., and in-line/28% vs. our estimate. Increased spending on in-store competition was offset by abundant rider supply that lowered food delivery cost. 
We raise our 3Q net margin est. by 3ppts as (1) the in-store counterattack against Douyin has been a success, (2) CGB spending to counter Duoduo Maicai has remained restrained.
Initial results of the in-store counterattack showed positive results, while FD margin continues to benefit from ample riders. We maintain Meituan’s BUY rating and HK$ 165 TP.


[Meituan (3690 HK, BUY, TP HK$165) Earnings Review]: Counterstrike Remains Effective… Maintain BUY