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S&P: MEITUAN-W On Bumpy Ride in Return to Profitability Amid Subsidy Risks
MEITUAN-W (03690.HK) may be on a bumpy ride in its path back to profitability, S&P Global Ratings said in a report. Although the most intense subsidy war may have ended, compet...
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S&P: MEITUAN-W On Bumpy Ride in Return to Profitability Amid Subsidy Risks
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MEITUAN-W (03690.HK)  +0.950 (+1.246%)    Short selling $682.25M; Ratio 25.779%   may be on a bumpy ride in its path back to profitability, S&P Global Ratings said in a report. Although the most intense subsidy war may have ended, competition could flare up again if peers such as BABA-W (09988.HK)  -1.700 (-1.431%)    Short selling $1.21B; Ratio 15.389%   increase promotional spending, potentially forcing MEITUAN-W to follow suit. The agency assigned a "BBB+" credit rating to MEITUAN-W with a Negative outlook.

S&P said MEITUAN-W's 1Q26 results were in line. Operating margin improved to negative 7% from negative 21% at the peak of the subsidy war in 3Q25. The key driver was lessened subsidies in its CLC segment. Losses from new initiatives also narrowed, supported by improved efficiency of its international brand Keeta in Hong Kong and Saudi Arabia.

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Assuming subsidies continue to decline and EBITDA turns positive in 2H26, MEITUAN-W's EBITDA margin will recover to around 3% in 2026, the rating agency said. The company may adopt a more targeted subsidy strategy, focusing on cross-selling and enhancing user stickiness.

Even if a new round of price competition is less intense than in 2025, it could still disrupt plans to improve service quality. MEITUAN-W aims to maintain its leadership in high-value orders by focusing on product quality and user experience. The company continued to emphasize higher net gross transaction value (GTV) rather than absolute volume. It also improved operating efficiency in food delivery and accelerated agentic AI deployment by partnering Yuanbao, the AI assistant of TENCENT (00700.HK)  +6.800 (+1.523%)    Short selling $2.93B; Ratio 17.025%   . Whether these efforts can attract more high-value customers remains to be seen.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-06-09 16:25.)

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