Investment banks expect Meituan’s food delivery business to return to normal in the second quarter.
Meituan (03690.HK) ‘s latest performance report exceeded market expectations. In Q4 of 2019, Meituan’s total revenue was 28.2 billion yuan, an increase of 42.2% year-on-year, and adjusted net profit was 2.27 billion yuan, which was a year-on-year loss. Extending to the whole of 2019, the overall financial status of Meituan has been continuously improved, and it has achieved profit for three consecutive quarters.
Enhancing the ability to make money from the food delivery business, to the restaurant and the wine and travel business, and the loss of new business such as travel has narrowed sharply, which is the main reason why Meituan ’s performance exceeded expectations. For the performance outlook for the first quarter of this year, Meituan is expected to be under pressure due to the epidemic, and its operating results in the next few quarters will also be adversely affected.
After the financial report was released, a number of investment banks and securities firms, including JP Morgan Chase, Yamato, and CICC, issued the latest tracking ratings. The following are the latest investment ratings and target prices of the various brokers on Meituan:
Data from Bloomberg, mapping
Among them, UBS believes in the report that the recovery of the US group’s review business is faster than expected. Consistent with the monitoring data of QuestMobile, the demand for takeaway food has now recovered to 75% of the level before the outbreak, and the demand for restaurants and hotels has risen to 50%, which is faster than the advertising and tourism industries. UBS expects Meituan’s takeaway business to return to normal levels in the second quarter, while physical stores will return to normal in the third quarter. In the long term , UBS believes that Meituan ’s competition with Ali is under control, maintains its “Buy” rating, and raises its target price by 5% to HK $ 115.
Daiwa Securities also raised the target price of Meituan Review by 4% to HK $ 130 on March 30, maintaining the “Buy” rating. The bank said that although management is conservative on the company’s first quarter results this year, the profit of Meituan’s takeaway business is expected to increase further in the second half of this year. Meituan’s food delivery business made its first profit in the second quarter of 2019.
The latest report of CITIC Securities on March 31 is optimistic about the growth of Meituan’s main business. The report mentions that despite the US Mission expected to be infected in the first quarter of this year
Compared with other investment banks or securities firms, Chen Yin International’s latest target price for Meituan is relatively low, which is HK $ 95. Analyst Steve Chow said in his report that although Meituan is a leader in the consumer service market, the macro adverse factors caused by the outbreak will lead to fluctuations in its stock price.
Specifically, the most profitable Meituan wine travel business will suffer the most in the short term. It is expected that the total transaction volume (GTV) of the market segment in the first half of 2020 will decrease by 38% year-on-year, and the second half A year-on-year decrease of 1%. The food delivery business is gradually recovering, but the total transaction value of this segment in the first half of the year is expected to decline by 19% year-on-year, and growth is expected to resume in the second half of the year.
As of press time, Meituan commented at HK $ 95.4, up nearly 2% from the previous day, with a market capitalization of approximately HK $ 555.1 billion.
(title picture from visual China)