Meituan announced its 1Q24 earnings report. 1Q24 achieved revenue of $73.3 billion, up 25.0% year on year; 1Q24 instant delivery transactions were 5.46 billion orders, up 28.1% year on year; 1Q24 adjusted EBITDA of $8.1 billion. As of March 31, 2024, cash and cash equivalents were $33.3 billion.
Brief review:
The company's 1Q24 revenue and adjusted net profit both exceeded expectations, mainly because after implementing organizational structure adjustments, the company's iterative growth model increased the synergy between various businesses. Looking back, we believe that the company still has strong performance elasticity. (1) The growth of advertising merchants on the platform is quite strong. The company 1Q24 strengthens marketing solutions to help merchants acquire customers more efficiently. The growth of advertising merchants on the platform is quite strong. (2) The membership system will be fully upgraded in the near future. In addition to business collaboration, according to interface news, the Meituan membership system will be fully upgraded in the near future. “God members”, which previously only covered takeout businesses, will begin to gradually expand to in-store business, and operational efficiency is expected to be further improved. (3) Meituan flash sales maintained a rapid growth trend. The number of 1Q24 trading users and transaction frequency grew rapidly, and more and more food and beverage takeout users became Meituan flash shopping users.
Business Overview: (1) Performance: 1Q24 achieved revenue of $73.3 billion, up 25.0% year on year; 1Q24 instant delivery transactions were 5.46 billion orders, up 28.1% year on year; 1Q24 adjusted EBITDA of 8.1 billion yuan. As of March 31, 2024, cash and cash equivalents were $33.3 billion.
(2) Operating data: The number of instant delivery transactions in 1Q24 was 5.46 billion, an increase of 28.1% over the previous year. Among them, ① Meituan Flash Sale: The increase in revenue from delivery services and commissions was partially offset by a drop in average customer unit prices in the food and beverage takeout and flash sales business; there were more than 7,000 “Lightning warehouses”. During the Spring Festival, transaction amounts in categories such as beverages, gifts, and daily necessities increased significantly. ② In-store, hotel and travel: Domestic hotel night volume and transaction value increased strongly year-on-year, and the growth rate of niche travel destinations far exceeded the industry average. ③ New business:
Meituan's preferred business strategy has been optimized, the product price increase rate has been increased, the cost per contract has been reduced, and operating losses have been drastically narrowed month-on-month and year-over-year.
(3) Division: ① Core local business: revenue of 54.6 billion yuan, an increase of 27.4% over the previous year. OP (operating profit) 9.7 billion (+2.7%); OP Margin 17.8% (-4.2pct). ② New business: 1Q24's new business revenue was 18.5% year on year; operating loss was 2.8 billion yuan, narrowing by 45.2% year on year, and the loss rate was 14.8%, narrowing by 11.2 pct month on month.
Expenses: The total cost of 1Q24 was 212 billion yuan, the cost ratio was 28.91%, a year-on-year decrease of 0.9 pct. Among them, sales and marketing expenses were 13.9 billion yuan, an increase of 33.1% year on year, and the sales and marketing expenses ratio was 19.0%, an increase of 1.2 pct year on year. Motivation, promotion and advertising expenses for trading users increased mainly due to repeated business development and changes in the business environment and business strategy. R&D investment was 5 billion yuan, which remained stable year on year. The R&D cost rate was 6.8%, a year-on-year decrease of 1.8 pct; administrative expenses were 2.3 billion yuan, an increase of 15.2% year over year, mainly due to the increase in employee remuneration expenses. The administrative fee rate was 3.1%, which remained stable year over year.
Cash reserves are sufficient. As of March 31, 2024, the company invested $50.8 billion in cash and cash equivalents and $87.8 billion in short-term financial management. 1Q24 net operating cash flow of $6 billion; net investment cash flow of $23.3 billion; net financing cash flow of $11.9 billion.
Updated profit forecast and valuation: The estimated revenue for 2024-2026 is 3233, 3659 billion yuan, and 4142 billion yuan, respectively, and adjusted net profit of 408, 504, and 60.2 billion yuan, respectively. Takeout, flash sales, in-store wine tours, and new businesses use SOTP valuations, which are comprehensively given a reasonable market value range of HK$0.79 trillion to HK$0.93 trillion in 2024, and a reasonable value range of HK$127-150 per share for H shares, with a “superior to the market” rating.
Risk warning: Industry competition intensifies; new business falls short of expectations; market regulation risks; infrastructure economies of scale are not significant.