20220606-招银国际-美团-W-03690.HK-Recovery_in_sight_with_better_margin_outlook_4页_780kb

Meituan (3690 HK) Company Update Summary

Core Content

Meituan, a leading Chinese online-to-offline platform, reported positive results for the first quarter of 2022 (1Q22), indicating a recovery in its business performance. The company's revenue grew by 25% YoY, surpassing both the consensus and the analysts' estimates. The adjusted net loss was RMB3.6bn, which is above the consensus of -RMB4.6bn, showing improved performance in key segments.

The company's guidance for 2Q22E is also positive, with food delivery revenue expected to grow by 9% YoY, which is higher than the buy-side expectations. This is attributed to an increase in average order value (AOV) and reduced subsidies, despite a potential slowdown in order volume due to the ongoing epidemic.

The report highlights that Meituan's adj. OPM (Operating Profit Margin) for food delivery reached 6.5%, above the estimate of 6.0%, and that the company is targeting adj. EBITDA breakeven in FY22. The new initiatives also showed strong growth, with revenue up 47% YoY and a net loss of RMB9.0bn, which is slightly below the estimate of RMB9.5bn.

Key Business Performance Highlights

• Food Delivery:

  • Revenue: +17% YoY (vs. estimate of +15% YoY)
  • Orders: +16% YoY (above estimate of +15% YoY)
  • OPM: 6.5% (above estimate of 6.0%)
  • Expected to rebound in 3Q22E with mid-to high-teens YoY growth

• In-Store, Hotel & Travel:

  • Revenue: +16% YoY
  • OPM: 45% (above estimate of 41%)
  • Expected to see -23% YoY in 2Q22E due to epidemic resurgence, but with margin and long-term demand intact

• New Initiatives & Other:

  • Revenue: +47% YoY
  • Net loss: RMB9.0bn (vs. estimate of RMB9.5bn)
  • Expected to see +36% YoY in 2Q22E with continued narrowing of loss

Earnings Forecast & Valuation

• Earnings Forecast:

  • CMBIGM raised its earnings forecast for FY23-24E by 7-17%.
  • Adjusted net profit for FY22E is RMB-8.436bn, FY23E is RMB8.442bn, and FY24E is RMB21.741bn.

• Target Price (TP):

  • Raised from HK$250 to HK$263, with a +46.1% upside from the current price of HK$180.

• Valuation Metrics:

  • P/S (Price-to-Sales): 3.5x (FY23E), decreasing from 8.2x (FY20A)
  • P/E (Price-to-Earnings): 115x (FY23E), decreasing from NA (FY20A)
  • SOTP (Sum of the Parts) Valuation: HK$263 per share, based on EV/EBIT and EV/Sales multiples

Financial Summary

• Revenue Growth:

  • FY20A: +17.7%
  • FY21A: +56.0%
  • FY22E: +18.4%
  • FY23E: +28.0%
  • FY24E: +25.2%

• Gross Margin:

  • FY20A: 23.4%
  • FY21A: 24.3%
  • FY22E: 25.3%
  • FY23E: 29.6%
  • FY24E: 31.4%

• Operating Margin:

  • FY20A: -6.0%
  • FY21A: 1.3%
  • FY22E: 5.3%
  • FY23E: 1.6%
  • FY24E: 6.3%

• Adj. Net Margin:

  • FY20A: -4.0%
  • FY21A: 3.1%
  • FY22E: 6.4%
  • FY23E: 3.0%
  • FY24E: 7.3%

Analyst Ratings & Recommendations

• CMBIGM Rating: BUY
• Reasoning: The company is expected to benefit from the reopening and stabilization of COVID cases, with better-than-feared 2Q22E guidance supporting its recovery momentum in the second half of 2022.
• Long-Term Organic Growth: The analysts are confident in Meituan's long-term organic growth and profitability visibility, citing high barriers to entry in its market.

Shareholding & Performance

• Shareholding Structure:

  • Tencent: 19.27%
  • Sequoia Capital: 5.0%
  • Baillie Gifford: 5.0%

• Stock Performance:

  • 1-mth: +6.1%
  • 3-mth: +5.2%
  • 6-mth: -25.4%

Key Ratios

• ROE (Return on Equity): 10.5% (FY24E), up from -10.3% (FY22E)
• ROA (Return on Assets): 8.7% (FY24E), up from -3.8% (FY22E)
• BVPS (Book Value Per Share): 24.07 (FY24E), up from 20.69 (FY22E)

Analyst Certifications & Disclosures

• The research analyst certifies that the views expressed in the report reflect personal views and that no compensation is directly or indirectly related to the report.
• The analyst confirms that they and their associates have not traded in the stocks covered in the report within 30 days prior to the report's release.
• The report is not a recommendation for investment and is not suitable for all investors.
• CMBIGM is not a registered broker-dealer in the United States or Singapore, and may have conflicts of interest due to its investment banking relationships.

Conclusion

Meituan is showing signs of recovery and margin improvement, supported by strong performance in food delivery, in-store, and new initiatives. The analysts are maintaining their BUY rating and have raised the target price due to positive outlook on revenue growth and profitability. The company is expected to benefit significantly from lockdown relaxations and stabilization of the epidemic.