by winston » Tue Mar 29, 2022 3:15 pm
not vested
Meituan (3690 HK) - Look past near-term challenges
Meituan posted a good set of 4Q21 results.
Total revenue grew 31% YoY to RMB49.5b, broadly in-line with consensus.
OPM of food delivery as well as in-store, hotel and travel were robust at 6.6% and 44.7%, respectively.
Group adjusted net loss at RMB3.9b was smaller than consensus at -RMB5.8b.
Management noted that there is a ~RMB1.5 gap between food delivery services revenue and delivery related costs for 1P in 4Q21.
In our view, this could imply that profit for 1P orders could improve with gradual reduction in subsidies, and potentially also help alleviate regulatory pressure.
Despite Covid-19 disruption and stepped-up merchant support measures that could weigh on short-term transaction revenues, management believes that these headwinds can be partially offset by an increase in online advertising revenue and resilient demand from mid to high-end users.
Encouragingly, we note that the competition for community e-commerce has become more rational due to the regulatory landscape.
While this is likely to result in an overall lower growth rate, Meituan believe that Meituan Select can grow at a healthy pace and build long-term capabilities while narrowing losses.
Heading into 2Q22, it is likely that Covid-19 measures will have a more pronounced impact on Meituan’s core business, but this is likely to be a short-term risk to its resilient fundamental business, in our view.
Management aims to be EBITDA and operating cash flow positive this year.
Following more conservative adjustments (while maintaining our ESG premium of 10%), our FV dips from HKD300 to HKD216. BUY.
Source: OCBC
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
