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<Research>HSBC Global Research Cuts MEITUAN-W TP to $195, Foresees Overseas Investment Loss to Hike
Recommend 8 Positive 16 Negative 7 |
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HSBC Global Research published a report on MEITUAN-W (03690.HK), which delivered 4Q24 results broadly in line with street consensus. While losses from overseas investments are predicted to deepen, the resilience of its domestic earnings is anticipated to hold, with AI integration enhancing efficiency. HSBC Global Research maintained a Buy rating on MEITUAN-W but cut the target price from HKD220 to HKD195. The report highlighted that MEITUAN-W is prioritizing expanded investments in merchant and rider welfare to solidify its leadership in core businesses, with core local commerce earnings expected to remain resilient in 2025. However, the goal of extending its overseas footprint may lead to larger losses in new business segments, particularly as quarterly improvements in Meituan Select plateau, with further supply chain transformation requiring time. The broker assumed these factors will weigh on overall earnings, cutting its 2025-26 adjusted operating profit forecasts by 9-10%, attributable to deeper losses in overseas operations. Revenue forecasts remained largely unchanged. The mainland core business will continue to face macro uncertainties, especially as Meituan ramps up reinvestment in its ecosystem. Competitive concerns are minimal, and the broker considered growing overseas contributions could buffer Meituan’s revenue. The company’s committed share repurchase program is nearly exhausted. Given new investment plans in core operations, Keeta, and AI, alongside debt repayment needs, the broker observed limited room for enhancing shareholder returns in the short term. AAStocks Financial News |
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