Open Source Securities has raised its non-IFRS net income forecast for Meituan-W(03690) from 2024 to 2026 to 43.5/55.7/70.7 billion yuan.
Smart Finance APP learned that Open Source Securities released a research report stating that based on the improvement of the instant delivery advertising monetization rate and the optimization of delivery costs and subsidies, UE is expected to continue to improve, the community group buying business loss reduction is better than expected. It raised the non-IFRS net income forecast for Meituan-W (03690) from 2024 to 2026 to 43.5/55.7/70.7 billion yuan. The takeaway barriers are solid, the flash purchase business is resilient, and after the stabilization of the in-store competitive landscape, profit margins are expected to improve. A macro environment recovery is expected to drive profit growth rate upwards, maintaining a "buy" rating.
The major viewpoints of Open source Securities are as follows:
In 2024Q3, performance exceeded institutional expectations, with core business profit margins and new business losses better than expected.
Company revenue in 2024Q3 was 93.58 billion yuan, YOY +22.4%, slightly exceeding institutional consensus expectations (92 billion yuan); non-IFRS net income was 12.8 billion yuan, YOY +124%, surpassing institutional consensus expectations (11.7 billion yuan), with improvements in core business profit margins and new business better than expected. Core business: revenue increased by 20.2% year-on-year, instant delivery transaction volume increased by 14.5% year-on-year, delivery service revenue YOY +21%, benefiting from reduced income subsidies, more merchants using platform delivery, and changes in order structure; in-store order volume growth rate exceeded 50%. Core business operating profit margin was 21.0%, up 3.5pct year-on-year, with continuous improvements in delivery UE; New business: Xiaoxiang Supermarket and Fast Donkey drove revenue growth by 28.9% year-on-year.
Continuous improvement is expected in instant delivery UE, with increased investment in overseas business.
In the short term, (1) Core Business: Regarding instant delivery, the bank predicts that the order volume growth rate may slightly slow down due to seasonal factors, the advertising monetization rate continues to increase, and under the continuous optimization of delivery costs and subsidies, profit growth rate is expected to be faster than revenue growth rate and faster than order volume growth rate. In-store industry competition is partially weakening, with home and in-store traffic synergy, short-term investment to capture offline merchants and user mindshare, and profit margin may have slight fluctuations compared to the previous period. (2) New Business: For Meituan Select, Keeta launched in Riyadh in October 2024, with initial or continued investment. Delivery barriers are solid, and after the stabilization of the in-store landscape, profit margins are expected to improve, a macro environment recovery is expected to drive profit growth rate upwards.
