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

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

Equity Bottom-Up

<ul>
<li>Meituan reported C2Q24 revenue 1.4%/2.3% higher than our estimate/consensus and adjusted net income 17%/28% higher than our estimate/consensus, thanks to lower rider cost and less subsidies to users;</li>
<li>Although poor economy has plunged Meituan's merchant base to the loss-making zone, we expect Meituan's take rate to persist as take-out order represents incremental revenue to offset merchants' fixed cost.</li>
<li>We reiterate BUY rating and raise TP to HK$165/share. Catalysts are reduced competition, expansion of Pinhaofan, and overseas expansion.</li>
</ul>


Meituan reported C2Q24 revenue 1.4%/2.3% higher than our estimate/consensus and adjusted net income 17%/28% higher than our estimate/consensus, thanks to lower rider cost and less subsidies to users;
Although poor economy has plunged Meituan's merchant base to the loss-making zone, we expect Meituan's take rate to persist as take-out order represents incremental revenue to offset merchants' fixed cost.
We reiterate BUY rating and raise TP to HK$165/share. Catalysts are reduced competition, expansion of Pinhaofan, and overseas expansion.


[Meituan (3690 HK, BUY, TP HK$165) TP Change]: Better Margin Outlook from Rider Cost and Execution