Performance exceeded expectations: Meituan achieved operating revenue of 73.7 billion yuan in 23Q4, an increase of 23% over the previous year. Bloomberg's agreed forecast was 72.7 billion yuan; adjusted net profit to mother was 4.4 billion yuan, and Bloomberg's agreed forecast was 2.9 billion yuan.
The company's revenue profit was better than expected.
Core local commercial profits were better than expected, and the new business clearly accelerated to reverse losses. (1) Core local businesses:
23Q4 revenue increased 27% year over year to 55.1 billion yuan, in line with consistent expectations; operating profit reached 8 billion yuan, better than agreed expectations. Both commission revenue and marketing revenue were better than agreed upon expectations. (2) New business:
23Q4 revenue increased 11.5% year over year to 18.6 billion yuan, and operating loss narrowed to 4.8 billion yuan year over year, better than agreed expectations. The operating loss rate narrowed by 12 pct to 26.0% year over year. The slowdown in the growth rate of the community group buying industry in '23 affected preferential profitability. In '24, the company will make strategic adjustments, make loss reduction targets more clear, plan to increase product price increases and reduce subsidies, and pay more attention to long-term growth in the natural retention rate of users. We expect the overall loss of the new business to narrow to less than 13 billion yuan in '24.
The volume of instant delivery orders is growing steadily, and I am optimistic that the flash sales business will continue to grow rapidly for 24 years. The number of instant delivery transactions at 23Q4 increased 25.2% year over year to 6.046 billion, better than the consensus forecast. The overall performance of food and beverage takeout was in line with expectations. We estimated that the 23Q4 order volume increased 25% year over year, the number of trading users continued to grow in '23, and the frequency of medium- and high-frequency users and their purchasing frequency increased steadily. Short-term consumption pressure has had a slight impact on AOV. We expect the 24Q1 UE level to decline slightly year-on-year. The flash sales business continued to grow significantly. The number of flash sales orders increased by more than 40% year on year in '23. We estimate that 23Q4 orders increased 27% year over year.
The frequency and amount of purchases made by flash sales users continued to increase, and the number of annual active merchants increased by nearly 30% year-on-year.
We are optimistic that the flash sales business will continue to perform better than the retail market in 2024.
GTV, the wine tourism business, doubled year-on-year in '23, and we expect a stable pattern in '24. The company's in-store wine travel transaction amount increased by more than 100% year on year in '23, with domestic hotel transaction amount increasing by more than 100% year on year. Annual trading users and annual active merchants increased by more than 30% and 60%, respectively. Entering 2024, the on-site wine tourism business continued to grow rapidly. The average daily transaction volume of the on-site wine tour business increased 36% year-on-year during the Spring Festival, an increase of more than 155% over 2019. Looking ahead to 2024, we are optimistic that the home to store business will have a stronger synergy effect after the company's organizational structure is adjusted, and the share of the on-site wine tourism business will remain stable. At the same time, as Douyin puts forward higher requirements in terms of advertising monetization and profitability, the operating costs of merchants on the Douyin platform may further increase, and we are optimistic that the company's share will stabilize and profitability will recover.
Profit forecast and investment rating: We are optimistic that the company's fundamentals will recover upward in 2024. Considering that the company's loss reduction progress is better than our expectations, we raised the company's adjusted profit for 2024-2025 from 300/43.7 billion yuan to 337/47.2 billion yuan, adding a 2026 forecast of 59.7 billion yuan, corresponding to the adjusted PE of 2024-2026 to 16/11/9x, maintaining the “buy” rating.
Risk warning: Consumption recovery falls short of expectations, and new business losses fall short of expectations