Daiwa issued a research report that recently it was reported that$Meituan-W (03690.HK) $Meituan's selection withdrew from Beijing, Qinghai, Ningxia and Xinjiang in the first half of 2022, and the current coverage of provinces and cities has been reduced from 30 to 26. On the other hand, JD.com (09618) provides services in only three cities. Meanwhile, Meituan began laying off staff in April to save costs, and in June JD.com may break up the Jingxi business group and merge it into the retail business. This means that the above two enterprises are taking measures to reduce costs and increase efficiency.

Taking into account the recent changes in the macro environment and company-level growth strategy, the bank adjusted its forecast for the community group-buying business. It is now expected that the losses of major companies will be significantly narrowed in the second half of 2022: Meituan's operating loss will narrow from 26.3 billion yuan in 2021 to 17.4 billion yuan in 2022; the operating loss of Pinduoduo Buy more will fall from 6.8 billion yuan in 2021 to 3.8 billion yuan in 2022.

The first choice of the bank's Internet industry is Meituan (03690) and Pinduoduo (PDD). At the same time, due to the small shareholding of investors, BABA (09988) is expected to have an advantage in the recent rise in share prices. The bank added that Pinduoduo was one of the few companies whose profits were expected to rise in 2023, thanks to narrowing losses on Duoduo, and raised its revenue forecast for 2022-24 by 6-12 per cent, taking into account the increased rate of application. At the same time, as Meituan's losses narrowed, Meituan is expected to increase its profit margin in the second half of 2022 and increase its earnings per share by 36% in 2023, which is expected to benefit from reopening.