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<Research>G Sachs Cuts MEITUAN-W TP to $144; Greater-than-Expected Profit Impact from Competition
Recommend 32 Positive 41 Negative 22 |
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Goldman Sachs released a report on MEITUAN-W (03690.HK), of which 2Q25 results fell short of expectations, with revenue growing 12% YoY and adjusted net profit slipping 89% YoY, compared to Goldman Sachs' original estimates of a 16% rise and a 54% drop. Since May, intensified competition in the food delivery business has given rise to greater-than-expected losses in 2Q25. Food delivery profit decreased by approximately RMB10 billion, compared to Goldman Sachs' estimates of absolute losses of over RMB13 billion for JD-SW (09618.HK) and RMB10 billion for BABA-W (09988.HK) in the same period. The initial market reaction was negative, possibly due to 2Q25 results miss and the deeper loss forecast for 3Q25. Given Meituan's underperformance in stock price YTD, the broker maintained a Buy rating on Meituan, citing that its stock price already reflected the expected decline in long-term market share and profit per order. The 12-month target price was lowered from HKD159 to HKD144. The broker remained optimistic about the profit recovery potential for FY2026-27, expecting Alibaba and JD.com's high subsidies to normalize gradually in FY2026. The broker remained confident in Meituan's leadership in overall local services, including the food delivery business, the stable landscape of the still rapidly growing in-store local services segment, the growth momentum of fast instant shopping retail, the application of artificial intelligence, and the new growth trajectory brought by Keeta, as well as a robust balance sheet. AASTOCKS Financial News Website: www.aastocks.com |
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