Meituan Expected to Report Fourth-Quarter Net Profit on Higher Revenue -- Earnings Preview

Dow Jones03-22

By Kimberley Kao

Meituan is scheduled to report results for the fourth quarter on Friday. Here is what you need to know:

NET PROFIT: The Chinese food-delivery company will likely report net profit of CNY958.0 million, according to the consensus estimate of nine analysts polled by FactSet. That would compare with net loss of CNY1.08 billion in the year-ago period.

REVENUE: Revenue is estimated at CNY72.50 billion, according to FactSet, up from CNY60.13 billion a year earlier.

The company's Hong Kong-listed shares fell 29% in the fourth quarter but have risen 13% this year through Thursday.

WHAT TO WATCH:

--OPERATING MARGIN: Market competition likely pressured Meituan's margins and prices, and the rivalry with Chinese companies such as Douyin, Pinduoduo and Kuaishou is expected to continue weighing on its profitability, UOB Kay Hian analysts write in a note. DBS Group Research analysts expect the company to be a key beneficiary of the growing trend of consumers looking for a one-stop services platform. Meituan's revenue will likely be supported by solid demand for on-demand delivery and its rapid expansion into new product categories, they said in a note.

--FOOD DELIVERY: Revenue growth for the food-delivery segment may have slowed in the fourth quarter from the third quarter due to lower driver supply and increased driver subsidies in winter, UOB Kay Hian analysts said. But revenue still likely rose from a year earlier, with its in-store, hotel and travel business likely surging on solid tourism demand, they said.

--E-GROCERY: Meituan's initiatives in the e-grocery business will create new synergies for the company, with revenue from the space expected to grow 17% annually between 2023 and 2025, DBS analysts said.

--OUTLOOK: The company's 2024 guidance will be a key factor in investor sentiment, Citi Research analyst Alicia Yap wrote in a note. Meituan's share price is expected to remain range-bound until there is greater visibility on growth and competition positioning, she said.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

March 21, 2024 22:47 ET (02:47 GMT)

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Meituan Expected to Report Fourth-Quarter Net Profit on Higher Revenue -- Earnings Preview

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