Event: The company released the 2021 Q3 results announcement. 2021Q3 achieved revenue of 48.83 billion yuan, up 37.9% year on year, adjusted eBITDA was -4.06 billion yuan, compared to 2,675 billion yuan for the same period last year; adjusted loss was 5.53 billion yuan. The year-on-year decline was mainly due to increased investment in new business.
Business data: As of the end of September 2021, the number of trading users was 670 million, the average number of transactions per year reached 34.4 million, an increase of 28.5% over the previous year, and the number of active merchants was 8.3 million, an increase of 28.2% over the previous year.
Takeout: Order volume, customer orders slightly exceed expectations, profit per order is slightly lower than expected. On a year-on-year basis, 21Q3 food and beverage takeout revenue was 26.49 billion yuan/ +28.0%, food and beverage takeout GTV was 1970.1 billion yuan/ +29.5%, the number of food and beverage takeout transactions was 4,013 billion/ +24.9%, the customer unit price was 49.1 billion yuan, and the take rate was 13.4%. Food and beverage takeout achieved an operating profit of 876 million yuan/ +14%, and an operating profit margin of 3.3% /-0.4pct. The company continued to enrich takeout supply, had strong performance for supper and afternoon tea, and both the number of consumers and order frequency rose to new highs; the business-side operation activity continued to grow, improving merchant operation efficiency with operating tools. The company held 110 rider symposiums and disclosed delivery algorithms, and improved the flexible space for delivery times in environments such as distance and weather. We believe that this season's data reflects the strong growth trend of the takeaway business; however, the food and beverage takeout business, which is dominated by small B, is different from online brand retail. Choosing one of two is not the long-term competitiveness of local lifestyle platforms. Although Hungry? The unit growth rate this season is slightly higher than Meituan, but with the deepening of operations, the company is expected to continue to lead the growth of the industry; in terms of regulation, rider protection has achieved remarkable results.
In-store wine travel: Revenue, profit margin, and profit slightly exceeded expectations. On a year-on-year basis, 21Q3 in-store wine travel revenue was 8.6 billion yuan/ +33.1%, and operating profit was 3.78 billion yuan. The number of overnight hotels in China was 119.8 million/ +5.2%. August was affected by the Delta variant, and wine trips to the store were affected. When it comes to restaurants and restaurants, the company operates in a hierarchical manner, and the number of merchants and the penetration rate of merchants are rising; in terms of promotions, holidays and promotions have driven consumption; in this quarter, transaction frequency and user stickiness have both increased. In terms of other in-store services, medical care, pets, parent-child, fitness, leisure and entertainment are growing rapidly, and there has been a breakthrough in sinking. In terms of the hotel business, short travel scenarios and structured advantages of local lodging have been strengthened, and at the same time, promotions and packages have been used to strengthen consumer mentality, and it has still achieved positive growth.
New business: New business revenue expectations are slightly lower and losses are slightly higher. 21Q3 revenue was 13.723 billion yuan, a year-on-year increase of 66.7%, and operating profit of 10.91 billion yuan. Both the retail business and the cycling business performed.
Meituan Preferred continues to improve infrastructure and upstream supply chain cooperation; Meituan's grocery delivery time has improved markedly, fresh food FMCG continues to expand, and the UE model continues to be optimized; flash sales are growing strongly. Among them, supermarkets and convenience stores have seen the highest increase in transaction amounts over the previous month. At the same time, it has launched a small yellow light business to provide online operation support for local pharmacies. The company believes that the end point of online retail is to move from all goods stores to everything home. The company's instant delivery network, platform advantages, and user size are opportunities to lead the transformation of the industry.
Investment suggestions: In major e-commerce platforms, Meituan's core business growth momentum is strong, and the long-term competitive pattern is less affected, but the short-term growth rate is disrupted by various factors such as the epidemic, supervision, and subsidy strategies; the stable core competitiveness of the original business and the expansion of multiple business lines are expected to bring new growth points, and subsequent growth momentum is expected to be further strengthened. It is estimated that in 2021-2023, the company will achieve revenue of 1816.2, 2489.2 billion yuan, and 318.24 billion yuan respectively, and adjusted profits of -136.9, -1.78 billion yuan, and 11.61 billion yuan.
We used the segmental valuation method to evaluate Meituan's business and then add it up. The total valuation of Meituan was 1670.9 billion yuan, corresponding to HK$1988.5 billion, and the target price was HK$32,539, giving it a “buy” rating.
Risk warning: The epidemic may continue to have an impact on the company's main business; competition in the industry is intense; relevant regulatory policies may affect the company's operations.