Meituan 3690 01 (Sep 18 - May 23)

[winston]

not vested

Back to high-growth trajectory

Revenue increased by 26.7% yoy to Rmb58.6bn in 1Q23 (up 21.4% yoy in 4Q22), slightly above our expectation, due to better revenue growth of core commerce, driven by a consumption recovery and effective marketing measures.

Adjusted NP reached Rmb5.5bn in 1Q23 vs. a loss of Rmb3.6bn in 1Q22, beating our expectation and consensus, due to better margins for core commerce and lower losses for new initiatives.

Management remains confident in a strong recovery of the delivery business in 2Q23F and FY23F, and aims to increase its market share of the in-store business market through effective marketing measures.

We expect Meituan to deliver top-line growth of 31% yoy in 2Q23F (i.e. 36% and 19% for core commerce and new businesses), and its adjusted NP margin to reach 9%.

Reiterate Add with a higher DCF-based TP of HK$266.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... F6B3DE135E

[winston]

vested

MEITUAN (3690 HK)

Recommendation : BUY
Fair Value : HKD 195.00


COMPETITIVE CONCERNS PRICED IN; POISED FOR STRONG GROWTH.

Strong revenue and earnings beat for 1Q23

Good operational trends into 2Q23

Headwinds ease, low expectations built-in and company poised to enjoy strong growth; Maintain fair value (FV) at HKD195

Meituan’s strong 1Q23 results reinforces our long-term thesis on the business.

Meituan remains a market leader in a rapidly expanding market and stronger than expected sales growth could partially offset lower margins due to higher sales and marketing costs.

As highlighted in our previous note, 4Q22’s lowered long-term margin guidance for instore, hotel and travel business, provided a reset of investor expectations on the company’s financials.

Over the long term, Meituan still has various levers to pull for margin expansion, such as operating leverage gains on a stable but growing food delivery business and narrowing of losses on its new initiatives.

Given the strong operational trends, we turn more positive on Meituan as headwinds ease and growth traction is likely to remain strong.

Source: OCBC

[winston]

Meituan (3690 HK)
1Q23: Robust Earnings Beat; Meituan FD Market Share Back To 3:1 Vs Its Rival’s

Meituan’s 1Q23 earnings exceeded expectations.

Total revenue grew 26.7% yoy to Rmb58.6b, in line with our and consensus estimates.

Core local commerce profit beat expectations with adjusted EBIT surging 100% yoy to Rmb9.4b, driven by strong food delivery and an expansion in in-store operating margin.

Non-IFRS net profit was Rmb5.5b, vs a loss of Rmb3.6b in 1Q22, which translated to a non-GAAP net profit margin of 9.4%.

Maintain BUY with a lower target price of HK$205.00.

Source: UOBKH

https://research.uobkayhian.com/content ... fcec05baff

[winston]

vested

Earnings First Take:1Q23 revenue increased by 27%, beat market expectations (+ve)

1Q23 revenue grew by 27% y-o-y to Rmb57bn, with core local commerce increasing by 25%

Adjusted net profit was Rmb5.5bn, well above market expectations of c.Rmb1.9bn

The strong beat in earnings was driven by better-than-expected improvement in core commerce operating margin

Solid performance of core commerce indicates that competition is likely better than market feared

Our View:

- We expect a positive share price reaction to the strong 1Q23 results.

- The strong beat in earnings was mainly due to the better-than-expected improvement in the core commerce operating margin, led by a strong rebound in order volume after reopening. The operating margin of core commerce reached 22% in 1Q23 vs 14% in 1Q22.

- Meituan is well positioned to benefit from the strong recovery in catering and other offline consumption scenarios post reopening. We expect the strong growth momentum to continue in 2Q23, along with a further recovery in catering.

- We believe the competition in local service is likely to be less severe than what the market feared. This is reflected in Meituan's stronger core commerce growth and record-high adjusted net margin this quarter, which showcases its strong capability to effectively navigate the competitive landscape.

- The company is trading at an undemanding valuation of 2x EV/Revenue, -1.7 S.D. below the historical average. We currently rate BUY with TP of HK$251.

Source: DBS

https://www.dbs.com/insightsdirect/comp ... ecid=14525

[winston]

vested

Brokers│Views

Credit Suisse│1Q food delivery business profit margin beat; focus on competition in local services segment

Jefferies│1Q total revenue & core revenue growth both ahead of forecasts

China Securities│Physical store business logged solid growth with profit contribution outstripping in-store & hotel segment; focus on revenue and market share changes

BOCOM International │1Q results stronger than expected; earnings growth expected to quicken on a lower base

Huatai Securities│Food delivery profit expected to become key driver for medium- to long-term
valuation; earnings forecasts ramped up

Citigroup│Fierce competition in short-video platform segment; fundamental strengths still intact and resilient

HSBC Global Research│Competition in physical store segment anticipated to remain ferocious; food delivery business performance to remain resilient

CCB International│1Q revenue and earnings beat

CITIC Securities│Expected to capitalize on sequential offline services recovery and summer holiday peak season window in 3Q

Goldman Sachs│1Q food delivery & in-store segments logged outstanding earnings performance

BOC International│1Q revenue growth beat; consumption recovery anticipated to continue

Macquarie│Upbeat on food delivery business but cautious on profitability of in-store business

UBS│Estimate-beating 1Q earnings fueled by strong revenue growth

JPMorgan│Revenue and profit outlook mixed as in-store business entered investment phase

BofA Securities│Faster offline recovery with optimistic growth outlook

CICC│1Q core revenue showed robust recovery with stabilizing market shares for food delivery/
hotel/ tourism segments

Nomura│In-store business profitability expected to decline in near term

Morgan Stanley│Faster growth anticipated to come in 2Q and 3Q with lower margins

China Merchants Securities│Sequential offline consumption recovery; rebound in in-store and food delivery business growth expected to continue

Daiwa│In-store business expected to face margin pressure; profit margins of in-store, hotel & tourism segments expected to drop to 30% in 2Q and 3Q

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

vested

Fitch Thinks Travel and Dining Recovery Could Help Boost MEITUAN Cash Flow

Fitch Ratings believed that a recovery in China’s travel, dining and other offline consumption, should support the 2023 cash flow generation of MEITUAN-W (03690.HK) and is expected to offset the measures the company is taking to defend its position against competition from rival platforms.

MEITUAN reported an RMB8.1 billion net operating cash inflow in 1Q23, growing almost 100% QoQ.

Fitch expected the company's ample operating cash flow and controllable capex to further boost free cash flow, and should enhance its ability to pay down debt.

Fitch expected MEITUAN to step up the marketing and promotion of its core local-commerce segment to fend off competition and drive transaction volume growth in the upcoming quarters.

MEITUAN's operating profit is also predicted to remain intact in light of higher business volume.

MEITUAN further cut the losses in its new initiatives segment, and Fitch forecasted the company to continue to enhance efficiencies and cost control to achieve better investment returns.

MEITUAN also launched an offshore food delivery operation under the brand Keeta in selected areas of Hong Kong in May 2023, but Fitch believed this new initiative should have a limited financial impact for 2023 due to its small scale.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN