Incident: The company achieved revenue of 73.7 billion yuan in 4Q23, +22.6% year-on-year, and adjusted net profit of 4.4 billion yuan, +427.6% year-on-year. The company achieved revenue of 276.74 billion yuan in 2023, +25.8% year-on-year, and adjusted net profit of 23.3 billion yuan, or +722.5% year-on-year.
Core local businesses have been recovering steadily, and profits have exceeded expectations. 4Q23's core local commercial division achieved revenue of 55.1 billion yuan, +27% year over year, operating profit margin of 14.5%, -2.1 pct year on year, and the number of instant delivery transactions increased 25.2% year over year to 6 billion yuan. Looking at the whole year, 1) Takeout business: the market position has been further consolidated, with annual trading users continuing to grow, and the frequency of their purchases is steadily increasing; 2) Flash sales: Currently, the “Meituan Lightning Warehouse” has covered more than 200 cities, and the annual active merchants have increased nearly 30% year over year. Supply-side improvements have led to an improvement in user experience, and order volume has increased by more than 40% year on year; 3) In-store, hotel and travel business: transaction amount increased by more than 100% year on year, with annual trading users/annual active merchants increasing by more than 30%/60% year over year, respectively. More than 100% increase.
Revenue from the new business grew steadily, and losses were drastically reduced. 4Q23 The company's new business revenue was 18.6 billion yuan, +11.5% year-on-year. The operating loss rate was 26.0%, a year-on-year narrowing of 12.2 pcts. Looking at the whole year, 1) Meituan Premium: The scale of the industry remains flat year on year, and competition is fierce, causing the growth rate of Meituan Premium to slow down and fall below expectations, and the loss rate is still high. In 2024, the company will aim to reduce losses as the main goal, increase the product price increase rate and reduce subsidies, and pay more attention to the long-term growth of users' natural retention rate; 2) Meituan Grocery Shopping: In December 2023, the front warehouse business Meituan Grocery was upgraded to a small elephant supermarket. The transaction amount was +30% year-on-year, and the sales share of its own brands continued to grow. The frequency of purchases has been growing steadily.
Profit forecast and investment advice: Meituan's competitive advantage in the local lifestyle sector is stable. We are optimistic about the long-term improvement of the company's industry penetration rate and operating efficiency. The adjusted net profit for 24/25/26 is 328/467/62.6 billion yuan, +42%/34% year-on-year, maintaining a “buy” rating.
Risk warning: Policy and regulatory risks; new business development falls short of expectations; industry competition intensifies.