occurrences
The company released its 2024Q1 financial report. Meituan achieved total revenue of 73.276 billion yuan, YOY +25.0%, slightly higher than the consistent estimate of 6.2%; in terms of profitability, the adjusted EBITDA was 8,070 billion yuan YoY +28.9%, higher than the agreed forecast of 13.2%. Adjusted net profit of $7.488 billion, YoY +36.4%, higher than the consistent forecast of 24.8%. In terms of segment revenue, 24Q1 core local commercial revenue was $54.626 billion. YoY +27.4%, higher than the consistency forecast of 7.7%, operating profit of 9.699 billion yuan, YoY +2.7%, higher than the agreed forecast of 14.9%; new business revenue of 18.650 billion yuan, YoY +18.5%, higher than the consistency forecast 2.3%, and operating loss of 2,757 billion yuan, higher than the consistency forecast of 14.7%.
Catering takeout business and Meituan flash sales business: maintain strong growth, continue to innovate categories and models according to demand, increase the frequency of users and enable merchants to operate online
The company's 2024Q1 instant delivery transaction volume was +28%, reaching 5.465 billion orders. The company combines current consumer trends and continues to innovate categories and models according to demand. 1) Launching branded satellite stores to optimize the cost structure of operations for chain merchants, and users can also enjoy higher cost performance; 2) Expanding the business scope of prepared meals to more cities, with daily order volume peaking at a record high; 3) Shang Shang Shi has launched popular food products from more chain merchants and improved marketing strategies; on the merchant side, activities such as “Desperate” have provided merchants with high-frequency promotion needs in the catering industry and added new promotional customer acquisition scenarios to help merchants accumulate customers and enhance brand image, and launch richer business tools. More merchant values meet the expectations of merchants to increase user stickiness; On the side, Meal preparation can meet the takeout needs of different price ranges, and new operating activities can simultaneously meet their immediate and non-immediate needs, helping to increase the frequency of user transactions. The number of users and frequency of transactions in the flash shopping business has also increased dramatically, and more takeout users have penetrated into flash sales, and there is still room for scale growth in the future.
In-store wine tourism business: Active content layout on a shelf basis, while the penetration rate of low-tier cities increased the company's 2024Q1 core local commercial revenue of 546 yuan, YoY +27.4%; operating profit was 9.7 billion yuan, a growth rate of 2.7%, and OPM for this segment was 17.8%. On the one hand, the company continues to optimize in-device marketing capabilities for merchants, further increase the frequency of live broadcasts, further expand the coverage of cities, and carry out joint online and offline promotional activities; on the other hand, the participation of merchants in activities such as special price group purchases has further strengthened users' mentality about the platform's high cost effectiveness. We believe that the company has accumulated rich operating experience and merchant management knowledge to help merchants improve efficiency and sales revenue levels. Therefore, it is an important channel and basic market for merchant operations, and competition has once again enhanced the company's comprehensive management capabilities, and user stickiness is expected to continue to increase.
New business: focus on high-quality operation and continue to reduce losses
The revenue of the 24Q1 new business segment was RMB 18.7 billion, up 18.5% year on year. Operating losses continued to narrow to 2.8 billion yuan month-on-month, and the operating loss ratio narrowed to 14.8% year on year. Meituan Premium has increased the price increase rate of products this quarter, improved warehousing operations, reduced the average cost of contract fulfillment, and improved marketing efficiency. As a result, operating losses have narrowed drastically, and operating efficiency is expected to continue to improve in the future.
Investment advice
We expect the company's revenue in 2024-2026 to reach 328.2 billion yuan, 377.8 billion yuan and 434 billion yuan respectively (326.6 billion yuan and 375.5 billion yuan before 24-25), with growth rates of 19%, 15% and 15% respectively; adjusted net profit of 36.1 billion yuan, 49.3 billion yuan and 66.7 billion yuan (35.3 billion yuan and 44.3 billion yuan before 24-25), respectively. According to the SOTP valuation method, the reasonable stock price is 152 HKD.
We have long been optimistic about Meituan's operating, organizational and business barriers, and the long-term exploration of its “ultimate execution” organization in the retail field to maintain a “buy” rating.
Risk warning
Policy risk; risk of user penetration falling short of expectations; risk of deteriorating competitive landscape; risk of new business falling short of expectations; risk of operating efficiency falling short of expectations