20211129-招银国际-美团-W-03690.HK-Moving_into_2Q22E_recovery_4页_839kb

Meituan (3690 HK) Company Update Summary

Core Content

This report provides an equity research update on Meituan, focusing on its financial performance in 3Q21, outlook for 4Q21 and 1Q22E, and the overall valuation and investment outlook. The analysis highlights the company's performance against expectations, sector challenges, and the updated target price.

Main Points

Financial Performance in 3Q21

• Revenue Growth: Meituan's revenue in 3Q21 increased by 38% YoY, slightly 1% above both the consensus and CMBIS's estimate.
• Adjusted Net Loss: Adjusted net loss reached RMB5.5 billion, which is better than the estimate of RMB5.6 billion but missed the consensus due to higher losses from new initiatives.
• Segment Performance:
  • Food Delivery: Revenue growth of 28% YoY, slightly above CMBIS's estimate of 26%.
  • In-Store & Travel: Revenue growth of 33% YoY, in line with CMBIS's estimate of 31%.
  • Hotel and Travel: Revenue growth of 67% YoY, exceeding the estimate of 70%.
  • New Initiatives: Revenue growth of 67% YoY, slightly below the estimate of 70%.

Outlook for 4Q21 & 1Q22E

• Epidemic and Macro Challenges: Management is prioritizing quality growth and efficiency improvements to address these headwinds.
• Revenue Forecasts:
  • Food Delivery: Expected to grow 19% YoY in 4Q21E, with a projected OPM of 5.5%.
  • In-Store, Hotel, Travel: Expected to grow 22% YoY in 4Q21E, with an OPM of 40%.
  • New Initiatives: Expected to grow 57% YoY in 4Q21E, with a net loss of RMB11.5 billion.
• Stock Price Volatility: The stock may experience near-term volatility due to the challenging outlook and sector sentiment.

Updated Target Price

• New Target Price: HK$332.2 (a reduction from the previous target of HK$383.0).
• Price Target Change: The target price is 25.7% above the current price of HK$264.6.

Key Information

Financial Summary

• Revenue Projections (FY21E–FY23E):
  • FY21E: RMB178,388 million
  • FY22E: RMB232,676 million
  • FY23E: RMB297,613 million
• Adjusted Net Profit:
  • FY21E: RMB-18,180 million
  • FY22E: RMB-4,811 million
  • FY23E: RMB13,698 million
• EPS (RMB):
  • FY21E: -2.94
  • FY22E: -0.76
  • FY23E: 2.10
• P/S Ratio:
  • FY21E: 7.4x
  • FY22E: 5.7x
  • FY23E: 4.5x

Valuation Analysis

• SOTP Valuation:
  • Enterprise Value: RMB259.9 billion
  • Equity Value: RMB277.8 billion
  • Valuation per Share (HK$): RMB332.2
• Business Segments:
  • Food Delivery: RMB23.7 billion in FY23E, with an EV/EBIT multiple of 38x.
  • In-Store and Travel: RMB6.0 billion in FY23E, with an EV/EBIT multiple of 28x.
  • Hotel: RMB2.2 billion in FY23E, with an EV/EBIT multiple of 28x.
  • New Initiatives: RMB14.8 billion in FY23E, with an EV/Sales multiple of 6.5x.

Shareholding Structure

• Top Holders:
  • Tencent: 19.5%
  • Sequoia Capital: 6.5%
  • Baillie Gifford: 5.0%

Share Performance

• 1-month: -5.3%
• 3-months: +41.7%
• 6-months: -0.4%

Key Ratios

• Operating Margin: -14.7% (FY21E), -5.9% (FY22E), 2.3% (FY23E)
• Net Margin: -10.2% (FY21E), -2.1% (FY22E), 4.6% (FY23E)
• ROE: 3.7% (FY19A), 5.0% (FY20A), -39.9% (FY21E), -22.5% (FY22E), 9.9% (FY23E)
• P/E Ratio: 275 (FY19A), 416 (FY20A), 103 (FY23E)
• P/S Ratio: 13.6 (FY19A), 11.6 (FY20A), 7.4 (FY21E), 5.7 (FY22E), 4.5 (FY23E)

Investment Recommendation

• Ratings: BUY (Maintained)
• Reasoning: Despite near-term challenges, the long-term growth potential is confidently maintained, with a gradual rebound expected from 2Q22E.
• Valuation Adjustments: The target price has been trimmed to reflect the tough outlook and improved efficiency.

Key Risks and Disclosures

• Market Volatility: The stock may experience short-term volatility due to epidemic and macroeconomic factors.
• Investment Risks: The report is not tailored for individual investors and is not an offer to buy or sell any securities.
• Conflicts of Interest: CMBIS may have investment banking relationships with the companies discussed, which could affect objectivity.
• Legal Responsibility: The report is intended for specific investors, and reproduction is prohibited without prior written consent.

Summary

Meituan's performance in 3Q21 was largely in line with expectations, with strong growth in food delivery and in-store & travel. The company faces challenges in the coming quarters due to epidemic resurgence and economic headwinds, but is expected to rebound gradually from 2Q22E. The target price has been reduced to reflect the conservative outlook, and BUY recommendation is maintained. The financial metrics show improvement in efficiency and net loss reduction in new initiatives, with a focus on quality growth. The valuation analysis indicates a discounted value based on SOTP and EV/EBIT and EV/Sales multiples, with a target price of HK$332.2.