MEITUAN-W Reportedly Set to Issue First Dim Sum Bonds Next Week to Raise Up to RMB10 Billion

The analyst rating for MEITUAN-W (03690.HK) is "Outperform" based on several key factors highlighted in the CICC research report. The management's insights during a recent non-deal roadshow indicated confidence in the company's ability to drive profits back to reasonable levels in the long term, particularly as the focus of food delivery competition shifts to high-value users. CICC maintained its forecasts, projecting a 2025 adjusted net loss of RMB16.8 billion and a 2026 adjusted net profit of RMB19.6 billion. The target price of $125 reflects a 15x adjusted PE ratio for 2027, suggesting a 23% upside potential from the current share price, which corresponds to a lower 12x adjusted PE ratio for the same year.

The analyst rating from S&P Global for Meituan (03690.HK) is influenced by several factors indicating that the risks to the company's EBITDA recovery are increasing. The primary reasons include: 1. Rising Costs: Meituan is facing increasing costs to maintain its market leadership in local commerce, which may hinder the recovery of its profit margins. 2. Lower EBITDA Margin Forecast: The company’s food delivery segment is expected to have an EBITDA margin in 2026 that is lower than initially forecasted, suggesting a slower recovery than anticipated. 3. Increased Marketing Investment: As subsidies decrease, Meituan may need to invest more in marketing to attract and retain customer loyalty and ensure the quality of rider services, further impacting its costs. 4. Competitive Pressure: The narrowing cost gap in delivery services between Meituan and its main competitor, Alibaba (BABA-W), is likely to increase Meituan's expenses related to maintaining brand recognition and consumer awareness. Overall, these factors contribute to a more cautious outlook on Meituan's financial recovery, leading S&P Global to assign an A- credit rating with a Stable outlook.

JPMorgan's cautious stance on MEITUAN-W (03690.HK) is based on uncertainties surrounding three key areas: competition in the food delivery business, the sustainability of profits in the in-store business, and the execution of overseas expansion. These factors contribute to weakened financial visibility and increased risk of earnings volatility, prompting the firm to maintain a Neutral rating and lower its target price from HKD100 to HKD95.