UBS Group issued a report stating that Meituan's second-quarter performance exceeded expectations in all aspects, with revenue and adjusted operating profit exceeding expectations by 3% and 32% respectively. This is due to the positive factors such as better-than-expected food delivery unit economics (UE) and faster narrowing of losses in Meituan's selected products. As a result, the company's earnings per share forecast for the next two years has been raised by 5% to 8%, and the target price has been raised from HKD 158 to HKD 172. UBS maintains a "buy" rating and includes Meituan as one of its new top picks.
UBS believes that the outlook for Meituan is positive because the impact of macroeconomic factors is limited and the momentum of growth in on-demand orders is expected to be sustained until the third quarter. At the same time, competition in the domestic market is stabilizing, and it is expected that Meituan's profit margin will continue to exceed expectations. UBS believes that the under-monetized platform, stable competition, and synergies from within the company should drive continuous improvement in the company's profit margin in the next fiscal year, with an expected compound annual growth rate of 53% from 2023 to 2025.