Core views:
24Q1 results: The company announced 24Q1 results. Q1 achieved revenue of 73.276 billion yuan, an increase of 25.01%; GAAP net profit of 5.369 billion yuan, GAAP net profit of 7.3%; NON-GAAP net profit of 7.488 billion yuan, and NON-GAAP net profit of 10.2%.
By business, 24Q1 core local businesses achieved revenue of 54.63 billion yuan (YOY +27.38%) and OP of 9.699 billion yuan (YOY +2.69%). The new business achieved revenue of 18.650 billion yuan (YOY +18.55%), and the new business OP of 2,757 billion yuan. In terms of period expenses, sales expenses were 13.888 billion yuan, with a sales expense ratio of 18.95%; R&D expenses were 5.0 billion yuan, R&D expenses were 6.82%; and management expenses were 2,298 billion yuan.
The profitability of the instant retail business remains optimistic, and associations are reducing losses at an accelerated pace. The takeout business achieved strong order volume growth in Q1, mainly due to an increase in the frequency of medium- and high-frequency secondary users and an increase in the number of medium- and high-frequency users. However, due to the impact of the macro environment, the single volume growth rate is under pressure. It is expected that the Q2 growth rate will slow down compared to Q1. Meituan Flash Sale continues to maintain strong order volume growth, and profitability has been verified. We remain optimistic about the barriers and advantages of Meituan's instant retail sector. The Q1 in-store business revenue and profit situation was better than expected. In Q2, Meituan promoted a direct management model across the country, further releasing revenue potential in low-tier cities. Among the new businesses, the community group buying business accelerated the reduction of losses.
Profit forecasting and investment advice. We remain optimistic about the profitability and long-term competitiveness of Meituan's core local business. The easing of competitive trends in the in-store business is doubly beneficial to Meituan's door-to-door business OPM and valuation repair; despite pressure on order volume, the overall profitability of takeout is guaranteed. Community group purchases have reduced losses faster than expected and will effectively increase overall profits. The estimated revenue for 24-25 is 331.2 billion yuan and 390.5 billion yuan; adjusted net profit is 37.8 billion yuan, 53 billion yuan. A reasonable value of HK$182.96 per share was calculated using the SOTP method under the assumption of normal operating conditions for 24 years. Stay optimistic about the company's long-term business barriers and profitability, and maintain a “buy” rating.
Risk warning. New businesses are developing at a slower pace than expected, local business competition, regulatory risks, etc.