Meituan released its 23Q4 financial report. In 23Q4, the company's revenue was 73.70 billion/+22.6%, operating OP 1.76 billion; adjusted net profit was 4.37 billion/+427.6%. Among them, the core local commercial division's revenue was 55.13 billion/+26.8%, operating OP was 8.02 billion/+11.1%; new business revenue was 18.57 billion/+11.5%, and OP was -48.3 billion.
The company's core revenue distribution and OP growth rate were both slightly better than expected in the current quarter, and the 24-year loss reduction brought flexibility in performance; in the long run, the company's in-store and takeout business growth and barriers still exist, maintaining a “highly recommended” rating.
The performance slightly exceeded expectations, and the core segment continued to grow resilient. 23Q4 The company's revenue was 73.70 billion/+22.6%, operating OP 1.76 billion; adjusted net profit was 4.37 billion/+427.6%. Among them, the core local business segment revenue was 55.13 billion/+26.8%, operating OP was 8.02 billion/+11.1%; new business revenue was 18.57 billion/+11.5%, OP was -48.3 billion, and new business OPM was -26.0% /+12.8 pct.
Takeout customer unit prices are under pressure, and flash sales losses have narrowed and the high growth rate continues. The company's 23Q4 delivery volume reached 6.05 billion orders/ +25.2%; of these, 1) Takeout: The 23Q4 order volume is expected to increase by about 25% year-on-year. Under the influence of the decline in takeaway customer unit prices and the cancellation of the VAT exemption policy during the same period last year, the Q4 takeout OPM is expected to drop to about 12.8% /-0.9pct. Looking ahead to 24Q1, takeout orders are expected to grow by about 21%, customer unit prices are expected to decline slightly year-on-year, and OPM is about 15.2% /-1.5pct. 2) Flash sales: Q4 is expected to achieve a high increase of about 27% in the same period last year, with an average daily order volume of about 8.3 million orders, and OPM of about -2%.
Flash sales are expected to grow at a rate of about 42% in 24Q1. OPM is expected to be around -1% under continuous marketing campaigns.
In Q4, in-store GTV increased 160% +, and OPM declined slightly from month to month. GTV arrivals are expected to increase by about 160% + year over year in 23Q4, with revenue of about 11.8 billion/+64%. As Q4 continued to push agents to direct management, the number of BDs increased, and Q4 OPM dropped slightly month-on-month. It is expected that GTV will still achieve a high growth rate of about 50% + and OPM of about 28.5% when it arrives in stores in Q1. In terms of pattern, in a situation where there is a large online space and misplaced competition, Douyin's high growth has not changed the undertone of Meituan's in-store business growth.
New businesses continue to grow at a high rate, and operating efficiency continues to improve. 23Q4 new business revenue was 18.57 billion/+11.5%, OP was -4.83 billion, and OPM was -26.0% /+12.2pct. Losses continued to narrow year over month. The slowdown in revenue growth from new businesses was mainly affected by the closure of the 1P taxi business. The loss margin of new businesses narrowed further this quarter. It is expected that all new businesses other than Preferred will basically achieve break-even in 2024. The loss for Preferred 24 is expected to be about $11.5 billion, OPM narrows to -13.7%, and loss reduction accelerates.
Investment advice: The company's Q4 performance was better than expected. The 24-year preferred loss reduction brought performance flexibility; in the long run, the company's takeout and in-store business growth and barriers still exist. The company's takeout+in-store business OP is estimated at $42.8 billion in 2024. According to the 15% tax rate, the estimated net profit for store+takeout is 36.4 billion, giving 20 times PE, corresponding to the target price of HK$127, maintaining the “Highly Recommended” rating.
Risk warning: Competition in the industry intensifies, demand recovery falls short of expectations, and new business development falls short of expectations.