Jinwu Financial News | According to First Shanghai Research and Development, Meituan (03690) 24Q3 revenue reached 93.6 billion yuan (YoY +22.4%), and the market expected 91.7 billion yuan. Operating profit of 13.7 billion yuan, operating profit margin of 14.6%, adjusted net profit of 12.8 billion yuan, higher than the agreed estimate of 11.7 billion yuan. The adjusted net profit margin was 13.7%, mainly due to continued improvement in the profitability of core local businesses, optimization of operational efficiency and significant loss reduction in new businesses. The company continues to optimize costs and strive to improve operating cost efficiency. The gross margin increased by 3.3% to 38.6% year-on-year, and the operating profit margin increased by 10.2% to 14.6%. 24Q2 achieved operating cash inflows of 15.2 billion yuan (YoY +36.0%) in the third quarter and 40.3 billion yuan (YoY +33.7%) in the first three quarters, holding cash and cash equivalents and wealth management investments of 42.5 billion yuan and 91.7 billion yuan respectively.

According to the bank, the company's 24Q3 new business revenue was 24.2 billion yuan (YoY +28.9%, QoQ +12.2%), and operating losses narrowed to 1 billion year over year. Among them, Meituan Preferred had a loss of 1.6 billion yuan, and losses continued to narrow month-on-month. All other new businesses made a profit of 0.6 billion yuan, and the operating loss rate narrowed 23 pct to 4.2% year over year. In October of this year, the company's takeout platform Keeta was officially launched in Riyadh, the capital of Saudi Arabia. The company continues to promote overseas layout, and it is expected that the overall overseas business expansion will be manageable. Additionally, the company wants to increase shareholder returns through business growth and balanced capital allocation.

The bank said that the company's 24Q3 performance far exceeded expectations, and the profitability of Meituan's core local businesses continued to improve, once again verifying the high barriers of Meituan takeout and the long-term growth potential of local life. Although the short-term company's business is inevitably affected by weak domestic macroeconomics, Meituan's business remains steady, the competitive landscape continues to improve, the level of corporate governance continues to improve, and management's efforts to focus on shareholder returns have made the growth potential of Meituan's business sustainable. In the future, Meituan Takeout and Local Life are expected to continue to release operating profits. Combined with the current general valuation of Hong Kong stock internet companies in the 10-15 times range, considering the absolute leading position of Meituan's takeaway business and the long-term growth potential and profitability of the on-site wine tourism business, a certain valuation premium was given, and Meituan takeout and on-site wine tourism businesses were given 30 times and 20 times PE valuations of the 24-year tax deductible profits, respectively, raising the target price to HK$220 and maintaining the purchase rating.