Revenue from marketing services grew significantly, and adjusted profit increased 36% year over year. With 2024Q1, Meituan achieved revenue of 73.3 billion yuan, an increase of 25% over the previous year. By revenue type, instant delivery service/transaction commission/marketing service revenue increased +25%/+27%/+34% year-on-year, respectively, this quarter. The growth rate of marketing service revenue is obvious, and Meituan has improved its marketing capabilities on the basis of the traditional shelf model. The gross profit margin and R&D rate were continuously optimized, and the sales rate was optimized month-on-month. 2024Q1, Meituan achieved adjusted net profit of 7.5 billion yuan, up 36% year on year; adjusted net profit margin was 10.2%, up 0.9 pct year on year. The gross margin increased by about 1 pct year-on-year, thanks to improvements in gross margin in businesses such as community group buying. On the cost side, the sales rate was 19%, up 1.2 pct year on year, but decreased by 3.7 pct from month to month. The year-on-year increase was mainly due to the increase in the company's subsidies and marketing and promotion activities on the user side. The month-on-month decline was mainly due to more refined corporate subsidies.
Core local area: The average profit of takeout orders increased month-on-month, and the profit margin of in-store wine tourism operations picked up month-on-month.
1) Food and beverage takeout: Order volume increased by 24% year on year. The estimated takeout revenue growth rate was 23%, and the gap between revenue growth rate and order volume growth rate continued to narrow. On the profit side, the average price per order was 1.18 yuan, down 0.1 yuan from the previous year, mainly due to the decline in the average price of the order and the impact of rider subsidies. The month-on-month increase is mainly due to increased advertising monetization capacity and economies of scale. It is expected that the average profit per order for the second quarter will continue to be optimized. 2) The number of flash purchase orders increased 60% year over year, and operating profit changed for the first time, mainly due to reduced subsidies and increased monetization rates. 3) In-store wine tourism GTV increased by more than 60%, narrowing the gap between revenue growth and GTV growth. It is estimated that the company's in-store wine tourism revenue increased 32% year-on-year in the first quarter, and the continuing gap between revenue growth and GTV growth narrowed, mainly due to a trend towards normalization of the monetization rate. We expect this trend to continue in the second quarter. The 24Q1 operating margin was 31%. The company will continue to launch new products and accelerate online penetration, especially in low-tier cities. Considering the cost front company, the company expects profit fluctuations in the next few quarters. We expect OPM to remain flat month-on-month in the second quarter.
New business: Preferred loss reduction performance was outstanding. In 24Q1, new business revenue increased 19% year over year to 18.7 billion yuan.
The high growth rate is mainly due to the rapid growth of baby elephant supermarkets and fast donkeys. New business operating losses narrowed to 2.8 billion yuan.
The operating loss rate was 15%, narrowing by 11 pcts month-on-month and 17 pcts year-on-year.
Risk warning: Competition risk for new entrants; risk of business adjustments due to policy regulation.
Investment proposal: In the first quarter of 2024, the company adjusted the organizational structure of the core local business sector, which is expected to bring significant improvements in operational efficiency in the future. In mid-May, the company upgraded God membership benefits, expanding from takeout to in-store, hotel, and travel services. Considering the company's excellent profit performance for the quarter, we raised our 24-year profit forecast and expect to achieve adjusted net profit of 366/491/58.3 billion yuan in 24-26 (adjustment margin +1%/0%/-9%). Maintaining the target price of HK$125-144, we are still optimistic about the competitive advantage of the company's core business and the growth of new businesses, and maintain the “superior to the market” evaluation