Incident Overview
In the first half of 2024, the company's revenue was 155.527 billion yuan, up 22.9% year on year; adjusted net profit was 21.005 billion yuan, up 60.4% year on year. In the second quarter of 2024, the company's revenue was 82.251 billion yuan, up 21% year on year; gross margin was 41.2%, up 3.8 pct year on year; operating profit was 11.257 billion yuan, 138.8% year on year; operating profit margin was 13.7%, up 6.9 pct year on year.
The core local business grew steadily. In the second quarter of 2024, the number of in-store orders increased by more than 60%. In the second quarter of 2024, the company's revenue from core local businesses was 60.682 billion yuan, up 18.5% year on year, operating profit was 15.2 billion yuan, up 36.8% year on year, and operating profit margin increased 3.3 pct to 25.1% year on year. We judge that the impact of external competition has stabilized.
The number of instant delivery transactions by the company during the reporting period was 6.2 billion, an increase of 14.2% over the previous year. Among them, 1) Meal Prep performed particularly well in the second quarter, and the peak number of orders in a single day reached a new high, breaking through 8 million orders. 2) Flash sales achieved strong growth. The annual transaction users of Meituan Flash Sale have maintained steady growth, and the frequency of orders placed is growing faster.
The on-site wine tourism business once again achieved steady growth. Order volume increased by more than 60% year over year, and the number of annual transaction users increased nearly 35% year over year. In terms of in-store business, the transaction amount and order volume of the leisure and entertainment category increased by more than 60% year on year, while the transaction amount of beauty and medical and aesthetic categories increased by more than 50% year on year. In terms of wine tourism, domestic hotel nights and transaction amounts increased steadily in the second quarter.
Significant progress in reducing losses in new businesses, and high-quality growth continues
In the second quarter of 2024, revenue from the new business segment increased 28.7% year over year to RMB 21.6 billion, segment operating losses narrowed 74.7% year over year to RMB 1.3 billion, and operating loss ratio improved 8.7 pct to 6.1% month on month. The company has improved the operating efficiency of Meituan Preferred, thereby increasing the average price of each item and the price increase rate of products, which has drastically narrowed losses month-on-month and year-over-year. Little Elephant Supermarket has also made significant progress in terms of products, operations, and contract fulfillment, leading the industry in growth and continuous improvement in efficiency. Other new business aspects, including B2B food supply chain services, catering management systems, bike sharing, and power banks, have all achieved healthy growth and efficiency improvements. We are optimistic that the company will further improve operational efficiency and enhance its capabilities in product selection and contract fulfillment, and high-quality growth is expected to continue.
Investment advice
We are optimistic about the stabilizing competitive pattern under the platform's differentiated endowments. We expect to achieve revenue of 331.4/366/407.1 billion yuan in 2024-2026, and achieve net profit of 30.7/42.4/53.1 billion yuan, corresponding to EPS of 4.94/6.81/8.54. Refer to the closing price of HK$102.8 per share on August 28, 2024. The RMB HKD exchange rate is 1.10, PE is 21/15/12 times, respectively, to maintain “buying” ratings.
Risk warning
Risk of the pandemic disrupting retail and in-store operations; risk of performance growth falling short of expectations; policy risk.