Arete has revised its recommendation for Meituan (MPNGF, Financial), moving the rating from Buy to Neutral. The price target has been set at HK$172. This change reflects a reevaluation of the company's market position and potential growth prospects.
MPNGF Key Business Developments
Release Date: May 26, 2025
- Revenue: Increased by 18.1% year-over-year to RMB86.6 billion.
- Cost of Revenue Ratio: Decreased by 2.3 percentage points year-over-year to 62.6%.
- Selling and Marketing Expenses Ratio: Decreased by 1 percentage point year-over-year to 18%.
- R&D Expenses Ratio: Maintained stable at 6.7% year-over-year.
- G&A Expenses Ratio: Maintained stable at 3% year-over-year.
- Total Segment Operating Profit: Increased to RMB11.2 billion from RMB6.9 billion last year.
- Total Segment Operating Margin: Increased from 9.5% to 13%.
- Adjusted Net Profit: Reached RMB10.9 billion, increased year-over-year.
- Cash and Cash Equivalents: Totaled RMB180.4 billion as of March 31, 2025.
- Cash Generated from Operating Activities: Increased to RMB20.1 billion year-over-year.
- Core Local Commerce Revenue: Grew by 17.8% year-over-year to RMB64.3 billion.
- Core Local Commerce Segment Operating Profit: Improved to RMB13.5 billion.
- Core Local Commerce Segment Operating Margin: Improved to 21%.
- New Initiatives Segment Revenue: Increased by 19.2% year-over-year to RMB22.2 billion.
- New Initiatives Segment Operating Loss: Narrowed to RMB2.3 billion.
- New Initiatives Segment Operating Loss Ratio: Narrowed to 10.2%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Meituan (MPNGF, Financial) reported an 18.1% year-over-year increase in revenue, reaching RMB86.6 billion for the first quarter of 2025.
- The company achieved new highs in both annual transacting users and annual active merchants, indicating strong platform engagement.
- Meituan (MPNGF) plans to invest RMB100 billion over the next three years to drive high-quality growth in the food service industry.
- The company has launched innovative supply models, such as branded satellite stores, which have shown impressive revenue performance.
- Meituan (MPNGF) is expanding its on-demand retail brand, Meituan Instashopping, which has seen robust growth, particularly in non-food categories.
Negative Points
- Intense competition in the food delivery market, with new entrants like JD and Elena launching significant subsidy programs, poses challenges.
- The company expects volatility in short-term financial results due to increased competition and investment in maintaining market leadership.
- Meituan (MPNGF) is facing increased costs related to its overseas expansion efforts, particularly in Saudi Arabia and Brazil.
- The company's new initiatives segment, while growing, continues to operate at a loss, impacting overall profitability.
- There is uncertainty regarding the duration of the current competitive environment, making it difficult to provide accurate financial guidance for the year.
