Meituan reported (28 Nov) its 3Q25 results: revenue was RMB95.5bn, up 2.0% YoY, 2% shy of both our forecast and Bloomberg consensus, while adj. net loss reached RMB16.0bn (3Q24: +RMB12.8bn), shy of consensus at RMB14.0bn due to more intensified-than-market expected competition in food delivery (FD) but was better than our forecast of loss of RMB16.6bn. With a moderation in industry competition QoQ in 4Q25 QTD, we believe FD investment has peaked out in 3Q25. Although competition in FD industry remains dynamic, and Meituan is facing increasing competition in in-store business, the strategy to enhance mindshare of the core user base should help Meituan better support long-term growth. The greater-than-peers order contribution from high-value FD orders and better operating efficiency should help Meituan sustain its UE advantage over peers for FD business, in our view. Our DCF-based TP is lowered by 9% to HK$141.0 to factor in Meituan’s incremental investment to drive value creation for the core user base and likely wider-than-our previously expected loss in new businesses in the near term resulting from Keeta expansion in new countries. Our new TP translates into 19x 2027E PE (non-GAAP). BUY.
CLC: maintained solid market share in high-quality FD orders. Core local commerce (CLC) segment revenue reached RMB67.4bn, down 3% YoY, and OP loss was RMB14.1bn (3Q24: profit of RMB14.6bn), as Meituan is revamping business strategies to enhance user stickiness and fortify market position amid intensified competition. Management highlighted that it has maintained solid market share in high-quality FD orders, which should support long-term profitability: Meituan’s market share for orders with average order value above RMB15 is more than 2/3, and that for orders above RMB30 reached more than 70% recently. As we observed that industry competition has marginally eased in Oct-Nov compared to that in Jul-Aug, and further moderated post Double 11 shopping festival, we expect investment drag from FD business on profitability to narrow QoQ in 4Q25. Meanwhile, we expect Meituan to sustain its investment in core membership user base to enhance consumer mindshare and better support long-term growth. For 4Q25, we forecast CLC to ink revenue of RMB65.1bn, down 1% YoY, driven by +10/+31% YoY revenue growth in in-store/Instashopping business, but offset by a 9% YoY decline in the FD business, and we anticipate CLC to achieve operating loss of RMB10.7bn in 4Q25E (4Q24: OP of RMB12.9bn).
New initiatives: operating efficiency improvement of Keeta trending better than our expectation. Revenue generated from new initiatives was RMB28.0bn in 3Q25, up 15.9% YoY (2Q25: 22.8%). Segmental operating loss was RMB1.3bn, narrowing from RMB1.9bn in 2Q25, and was narrower than both our forecast/consensus at loss of RMB2.3bn/2.4bn, thanks to better-than-expected operating efficiency improvement of Keeta. Management highlighted that Keeta in Hong Kong has turned profitable in Oct 2025 after commencing operation for 29 months, ahead of its original schedule of 36 months, in our view proving that Meituan’s FD business operation know-how can be successfully replicated to other regions and Meituan has managed to drive operating efficiency improvement. We expect Keeta in the GCC area could also achieve breakeven within 36 months. For 4Q25, we are estimating revenue growth for new initiatives to accelerate to 18.5% YoY driven by business expansion to more GCC countries and Brazil for Keeta, and we are looking for operating loss to widen accordingly to RMB4.0bn, mainly driven by the upfront investment of Keeta, as well as a slight increase in loss from Xiaoxiang Supermarket on domestic business expansion.