20220719-招银国际-美团-W-03690.HK-Recovery_on_good_track_4页_853kb

Meituan (3690 HK) Company Update Summary

Core Content Overview

This report provides an update on Meituan's financial performance and market outlook for the second quarter of 2022 (2Q22E) and beyond. It highlights the company's recovery progress, segment performance, and valuation metrics, while maintaining a BUY rating with a target price of HK$263.

Key Financial Highlights

• Revenue Growth: Meituan is expected to see a 12% YoY revenue increase in 2Q22E, with a net loss of RMB2.1bn, better than the previous guidance.
• Segment Performance:
  • Food Delivery: Revenue growth of 12% YoY, with an adjusted operating profit margin (OPM) of 12.5%. Orders are expected to grow by 2% YoY, up from 0% previously, with EBIT per order at RMB0.9.
  • In-Store, Hotel & Travel: Revenue is expected to decline 21% YoY, with an OPM of 40%. It is anticipated to be flat YoY in 3Q22E if the spread of COVID-19 does not worsen.
  • New Initiatives & Others: Revenue is projected to grow 36% YoY, with a net loss of RMB8.0bn, narrowing from previous estimates. Meituan Select contributes RMB5.5bn to this segment.
• Full-Year Forecast:
  • Revenue: RMB212,921 million for FY22E, RMB272,488 million for FY23E, and RMB341,230 million for FY24E.
  • Net Profit: RMB-8,163 million for FY22E, RMB8,509 million for FY23E, and RMB21,833 million for FY24E.
  • EPS (RMB): RMB-1.32 for FY22E, RMB1.30 for FY23E, and RMB3.25 for FY24E.
• Valuation Metrics:
  • P/S (Price-to-Sales): RMB4.7x (FY22E), RMB3.7x (FY23E), and RMB2.9x (FY24E).
  • Target Price: HK$263.0, with a +37.0% upside from the current price of HK$192.
  • SOTP Valuation: Total equity value at HK$210.6bn, with Enterprise Value (EV) at HK$194.0bn.

Key Views and Outlook

• Recovery on Good Track: The company is expected to show double-digit growth in 2H22E as lockdowns ease.
• Margin Improvement: The new initiatives segment is expected to narrow its net loss, and the company anticipates improved gross margin and operating margin due to industrial consolidation and higher ASP (Average Selling Price) and GPM (Gross Profit Margin).
• Maintain BUY Rating: The analyst keeps the BUY rating and the SOTP-based target price at HK$263, reflecting confidence in the company's long-term organic growth and high barriers to entry.

Market and Financial Performance

• Share Price Performance:
  • 1-month: -4.7%
  • 3-months: +22.2%
  • 6-months: -12.1%
• Shareholding Structure:
  • Tencent: 19.26%
  • Baillie Gifford: 5.0%
  • BlackRock: 4.8%
• Market Capitalization: HK$1,186,224 million
• Average 3-month Turnover (HK$ million): 6,064.41
• 52-week High/Low (HK$): 298 / 103.5

Financial Summary (FY20A to FY24E)

Key Ratios and Metrics

Analyst Ratings and Disclaimers

• CMBIGM Ratings:
  • BUY: Potential return of over 15% over next 12 months.
  • HOLD: Potential return of +15% to -10% over next 12 months.
  • SELL: Potential loss of over 10% over next 12 months.
• Industry Outlook:
  • OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
  • MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
  • UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Disclosures

• The research analyst certifies that the views expressed reflect his/her personal opinions and that there are no conflicts of interest.
• CMBIGM has an investment banking relationship with the issuers covered in the report.
• The report is not tailored to individual investors and not an offer or solicitation to buy or sell any security.
• Risk Disclaimer: The report contains general information and does not guarantee future performance. Investors should consult a financial advisor before making investment decisions.

Conclusion

Meituan is expected to show improved performance in the coming quarters, with recovery in food delivery and margin improvement in key segments. The BUY rating and target price remain unchanged, reflecting positive outlook on the company's long-term growth and market position.