20201201-招银国际-美团-W-03690.HK-Upbeat_3Q20__Eyes_on_new_initiatives_5页_851kb

Meituan (3690 HK) Company Update Summary

Core Content

CMB International Securities has released an equity research update on Meituan, highlighting its strong performance in the third quarter of 2020 and its strategic focus on new initiatives, particularly the community group-purchase model. The report indicates that Meituan delivered robust revenue and adjusted net profit growth, exceeding analyst expectations and demonstrating resilience in the market.

Main Points

Financial Performance in 3Q20

• Revenue: Increased by +29% YoY, +4% above consensus, reaching RMB35.4 billion.
• Adj. Net Profit: Reached RMB2.1 billion, +95% above consensus.
• Segment Performance:
  • Food Delivery: Revenue up +33% YoY, with GTV, orders, and AOV also showing growth.
  • In-Store, Hotel & Travel: Revenue up +5% YoY, a significant improvement from the -13% YoY in 2Q20.
  • New Initiatives: Revenue surged +43% YoY, outperforming previous estimates.

Revenue Growth Expectations

• The report forecasts 4Q20E revenue growth to continue accelerating.
• Food Delivery: Expected to grow +34% YoY, with an OPM of +3.1%.
• In-Store, Hotel & Travel: Projected to grow at double-digit rates, driven by recovery in lower-tier cities and expansion of high-end hotels.
• New Initiatives: Continued strong growth, with a focus on the community group-purchase (CGP) model.

Community Group-Purchase Model (CGP)

• The CGP model is seen as a key growth driver with a large TAM.
• Meituan's strategy involves:
  • Meituan Select (美团优选): Focused on lower-tier cities.
  • Meituan Maicai (美团买菜): Targeting high-tier cities, with higher AOV and margins.
  • Shangou (闪购): Offering all-geographic coverage.
• The report emphasizes Meituan's mechanism enhancement and investment in the CGP portfolio.

Target Price and Rating

• Target Price: HK$348.0, representing an upward revision from the previous target of HK$290.0.
• Rating: BUY (Maintain), indicating strong potential for over 15% return in the next 12 months.

Key Financial Metrics

Key Insights

• Strong Revenue Growth: Meituan's revenue growth was above market expectations in 3Q20.
• Margin Improvements: Higher margins in food delivery, hotel & travel segments contributed to improved net profit.
• Investment in CGP: The company is increasing investment in the CGP model, which is expected to drive further upside.
• Positive Outlook: The report maintains a BUY rating with a target price of HK$348, suggesting confidence in its long-term growth potential.

Shareholding and Stock Data

• Market Cap: HK$1,835,540 million.
• Avg 3 Mths t/o: HK$5,978.2 million.
• 52w High/Low: HK$338 / HK$70.
• Total Issued Shares: 5,148 million.
• Shareholding Structure:
  • Tencent: 20.5%
  • Sequoia Capital: 7.4%
  • Baillie Gifford: 5.0%

Share Performance

• 1-Month Return: 17.4% (Absolute) / 9.1% (Relative)
• 3-Month Return: 19.0% (Absolute) / 13.1% (Relative)
• 6-Month Return: 121.7% (Absolute) / 93.3% (Relative)

Valuation and SOTP Analysis

• SOTP Valuation: The total equity value is estimated at HK$266.6 billion.
• Business Segments:
  • Food Delivery: Valued at HK$138.3 billion using EV/Sales at 9.0x.
  • In-Store and Travel: Valued at HK$39.4 billion using EV/EBIT at 30.0x.
  • Hotel: Valued at HK$11.9 billion using EV/EBIT at 30.0x.
  • New Initiatives: Valued at HK$60.9 billion using EV/Sales at 9.0x.

Analyst Certification and Disclaimers

• The report is certified by the primary research analyst, who confirms no conflict of interest.
• CMBIS has an investment banking relationship with the issuers covered in the report.
• The report is not tailored to individual investors and is for informational purposes only.
• Disclaimer: CMBIS does not guarantee the accuracy or completeness of the information and is not liable for any losses incurred.

Conclusion

Meituan's strong 3Q20 performance, coupled with strategic initiatives in the CGP model, positions it for continued revenue growth and improved profitability. The BUY rating and target price of HK$348 reflect positive outlook and growth potential. The report underscores the structural opportunities in the groceries and digital operations sectors, which are expected to benefit Meituan in the long term.