Citibank: Meituan-W (03690) is expected to maintain a “buy” rating in response to ongoing macroeconomic and competitive challenges

The Zhitong Finance App learned that Citi released a research report stating that it will maintain the Meituan-W (03690) “buy” rating and target price of HK$120. The bank remains confident in the management's steady execution, focus on high quality and AI-driven growth, and believes that the company can meet ongoing macroeconomic and competitive challenges.

Management said that after regulations provided guidance on subsidy practices, takeout competition further eased in the third quarter, and the industry switched to improving operational efficiency, which helped lay the foundation for the industry's profit recovery. Meituan's subsidy level remained roughly flat month-on-month. Despite rising rider costs and the implementation of work-related injury insurance, the unit's economic benefits are expected to remain positive in the third quarter.

In terms of instant retail, sales of products in core local businesses increased 79% year over year, mainly driven by the instant retail 1P business; sales of new business products increased 45% year over year, driven by the expansion of Little Elephant Supermarkets and Happy Monkey stores.

Overseas, Keeta has already recorded profits in Hong Kong. The Saudi Arabian business achieved profit in July, while the Brazilian business prioritized budget control and improving operational efficiency in São Paulo. Management believes that the Chinese domestic market is still the company's primary focus compared to overseas markets.