According to the report released by Bank of America Securities, target price of Meituan-W03690 has been raised by 5.2%, from HKD 135 to HKD 142. Profit forecast for 2024-2026 has been raised by 3%-6%, mainly due to the improvement of profit trend. Recommendation of "buy" rating has been reiterated, primarily due to optimistic trend of core business and stable competition.

The bank pointed out that Meituan's Q1 2024 performance was better than expected, and the trend of core business was more optimistic. The main reasons are: 1) More flexibility in adjusting subsidies and food-related business strategies, on-demand video delivery trading volume and core local revenue exceeded expectations within the period; 2) Strong advertising demand and subsidy control can help offset the decrease of average order value (AOV) in the food delivery industry and increase operating margin; 3) Reasonable competition in store-related business. Therefore, it is believed that the profit space of Meituan will be higher.

In addition, on June 11, Meituan announced a new repurchase plan, which will occasionally repurchase a total amount of no more than 2 billion US dollars of shares in the open market. The repurchase will depend on market conditions and will be supported by Meituan's existing financial resources. This may increase shareholder returns. The bank believes that Meituan has sufficient cash flow and will not issue convertible corporate bonds (CB) this year.