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<Research>Daiwa Narrowly Raises MEITUAN-W (03690.HK) TP to HKD112; Food Delivery Inflection Earlier Than Expected
Recommend 16 Positive 28 Negative 5 |
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MEITUAN-W (03690.HK)'s revenue in 1Q26 met expectations, while its bottom-line performance was solid, about 30% above consensus, on the ride of faster-than-expected narrowing of losses in food delivery, Daiwa said in its report. As industry subsidies among competitors become more rational, the broker expected the profitability inflection of the food delivery to arrive earlier than expected, indicating a potential turnaround to profit in 2Q26 and a credible path toward breakeven in 2026, assuming competition remains stable. The broker noted that Meituan's in-store, hotel and travel (IHT) businesses continued to serve as a stable profit pool for the group, with segment margins likely having bottomed out. Meanwhile, losses from new businesses in 1Q26 were smaller than expected, and full-year losses are also likely to narrow. Despite uncertainties in the Middle East situation, faster normalization of subsidies in core markets such as Saudi Arabia, coupled with more disciplined overseas expansion, support controlled losses in new businesses. On the back of stronger-than-expected recovery in unit economics (UE) of the food delivery, Daiwa raised its 2028 EPS forecast for MEITUAN-W by 7%, while cutting its 2027 EPS forecast by 18% to reflect deferred investment in new businesses. The broker reiterated its Buy rating on the stock and slightly raised its 12-month TP from HKD110 to HKD112. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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