Citibank pointed out that although Meituan (03690.HK) is expected to meet its first-quarter results in line with the bank's and market predictions, the focus for the quarterly results will be on the growth of food delivery volume in the second quarter and throughout the year, average order value, gross Trade volume, revenue, rider costs, and the impact of unit economics.
Although JD.com (09618.HK) believes that the initial sales of food delivery mainly reflect broader user adoption due to its attractive discounts and subsidies, driving users to increase the ordering frequency of beverages, snacks, and meals may have limited short-term impact on Meituan's delivery sales. Given the level of discounts, attractive rider compensation, and waived merchant commissions may force Meituan to strengthen subsidies for users, riders, and merchants, and accelerate the launch of rider incentives, this will dampen Meituan's revenue growth and unit economics. Meituan could slow its overseas expansion to offset the profit pressure from the domestic core local business.
The bank lowered its revenue and non-GAAP net profit forecasts for Meituan for this year to 2027 by 1.3% to 3.2% and 7.3% to 9.8%, reflecting intensified competition in the Dining delivery segment. The Target Price for Meituan has been reduced from 217 yuan to 204 yuan, maintaining a 'Buy' rating.
