Meituan’s 63% Stock Surge Faces Risks in China Consumer Malaise

Blockhead09-20

Food delivery firm’s cheap offering has boosted growth, sharesWeak macro, retailers’ struggles among reasons for cautionMeituan’s strategy to focus on lower prices has helped the Chinese food delivery...

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Danielng
09-20
Danielng
Meh. Name me a competitor.

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Investors are now wondering whether its steep share-price gains can last as the macro weakness deepens. The firm last month posted 21% sales growth and a record high gross margin for the latest quarter despite anemic consumer spending. Backed by strong results, its Hong Kong-listed stock has surged 63% this year, outperforming all global food-delivery peers and topping the Hang Seng China Enterprises Index in 2024.Meituan’s secret weapon is its cheaper, group-based Pin Hao Fan platform for ordering meals. The service’s success has helped cushion the company’s results so far, but concerns are growing about whether that offering alone will be able to defy the broader consumer slump.“It’s a tricky one, because on one hand you’re seeing this robust revenue growth relative to other platforms, but on the other hand, you still have macro that’s weighing it down,” said Morningstar Inc. analyst Kai Wang. “And there’s still a long-term risk with regard to competition.”For now at least, Meituan has benefited from a reduced threat by rivals. Alibaba Group Holding Ltd. is focusing on bolstering its core e-commerce business rather than its Ele.me food-delivery operation, while ByteDance Ltd.’s Douyin is emphasizing profitability over market share. In addition to winning over customers, Pin Hao Fan is also attracting restaurants that are keen to advertise their cheaper products. As a result, the number of transacting users and active merchants both hit record highs on Meituan’s platforms in the second quarter.The company has scored some early success with its push outside of mainland China as well, with its KeeTa delivery app in Hong Kong.Among other things that have gone right, driver recruiting costs have dropped amid elevated youth unemployment, while Meituan has also saved money by shuttering underperforming warehouses and lowering user subsidies. On top of all this, a new $1 billion stock buyback helped boost investor confidence.“The company is obviously adopting a low-price strategy to grab more market share and cater to the trend of consumption downgrade in China,” said Daniel So, a trading strategist at Goldhorse Capital Management (HK) Ltd. “But if the overall consumption is really weak, the new initiatives wouldn’t translate into a meaningful growth driver.”Clouds are gathering, with China’s shaky economy starting to even pressure sales at value champion and former market darling PDD Holdings Inc. Catering chain stocks have been tumbling amid sluggish results, and restaurant sales growth has slowed to the weakest pace since pandemic lockdowns, according to data from China’s National Bureau of Statistics.With many restaurants struggling for survival and consumer confidence deteriorating, “we continue to argue that Meituan’s revenue growth rate will likely decelerate,” said Barclays PLC analyst Jiong Shao, the only analyst among the 62 tracked by Bloomberg who recommends selling the stock. Analysts on average forecast its sales growth will slow to 16% in 2025 from 21% this year.Valuations may not provide much reason for further upside. The shares are trading at a forward price-to-earnings ratio to 16 times, down from recent highs but still pricier than Hong Kong-traded tech peers. PDD and Alibaba are both trading below 10 times expected profits.Risks are also on the rise as positioning in Meituan’s stock gets more crowded, according to Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management. Investors are cautious about its “macro-sensitive nature” and whether the current growth rate is sustainable in a deflationary environment, he added.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"Business Data","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":351425186885736,"gmtCreate":1726805161316,"gmtModify":1726805165567,"author":{"id":"3567242381966976","authorId":"3567242381966976","name":"Danielng","avatar":"https://community-static.tradeup.com/news/5cd5b4aefd2b0994474d489d4d1c2904","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":7,"crmLevelSwitch":1,"idStr":"3567242381966976","authorIdStr":"3567242381966976"},"htmlText":"Meh. Name me a competitor.&nbsp;","listText":"Meh. Name me a competitor.&nbsp;","text":"Meh. Name me a competitor.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/351425186885736","repostId":2468265164,"repostType":4,"repost":{"id":"2468265164","kind":"highlight","pubTimestamp":1726802965,"share":"https://ttm.financial/m/news/2468265164?lang=&edition=fundamental","pubTime":"2024-09-20 11:29","market":"hk","language":"en","title":"Meituan’s 63% Stock Surge Faces Risks in China Consumer Malaise","url":"https://stock-news.laohu8.com/highlight/detail?id=2468265164","media":"Blockhead","summary":"Meituan’s strategy to focus on lower prices has helped the Chinese food delivery company beat sales targets even as the slowing economy drags peers. Investors are now wondering whether its steep share-price gains can last as the macro weakness deepens.","content":"<html><head></head><body><ul style=\"\"><li><p>Food delivery firm’s cheap offering has boosted growth, shares</p></li><li><p>Weak macro, retailers’ struggles among reasons for caution</p></li></ul><p>Meituan’s strategy to focus on lower prices has helped the Chinese food delivery company beat sales targets even as the slowing economy drags peers. Investors are now wondering whether its steep share-price gains can last as the macro weakness deepens. </p><p>The firm last month posted 21% sales growth and a record high gross margin for the latest quarter despite anemic consumer spending. Backed by strong results, its Hong Kong-listed stock has surged 63% this year, outperforming all global food-delivery peers and topping the Hang Seng China Enterprises Index in 2024.</p><p>Meituan’s secret weapon is its cheaper, group-based Pin Hao Fan platform for ordering meals. The service’s success has helped cushion the company’s results so far, but concerns are growing about whether that offering alone will be able to defy the broader consumer slump.</p><p>“It’s a tricky one, because on one hand you’re seeing this robust revenue growth relative to other platforms, but on the other hand, you still have macro that’s weighing it down,” said Morningstar Inc. analyst Kai Wang. “And there’s still a long-term risk with regard to competition.”</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/53d3dfcf15d0cb0545c40995ebaabe19\" tg-width=\"1200\" tg-height=\"675\"/></p><p>For now at least, Meituan has benefited from a reduced threat by rivals. Alibaba Group Holding Ltd. is focusing on bolstering its core e-commerce business rather than its Ele.me food-delivery operation, while ByteDance Ltd.’s Douyin is emphasizing profitability over market share. </p><p>In addition to winning over customers, Pin Hao Fan is also attracting restaurants that are keen to advertise their cheaper products. As a result, the number of transacting users and active merchants both hit record highs on Meituan’s platforms in the second quarter.</p><p>The company has scored some early success with its push outside of mainland China as well, with its KeeTa delivery app in Hong Kong.</p><p>Among other things that have gone right, driver recruiting costs have dropped amid elevated youth unemployment, while Meituan has also saved money by shuttering underperforming warehouses and lowering user subsidies. On top of all this, a new $1 billion stock buyback helped boost investor confidence.</p><p>“The company is obviously adopting a low-price strategy to grab more market share and cater to the trend of consumption downgrade in China,” said Daniel So, a trading strategist at Goldhorse Capital Management (HK) Ltd. “But if the overall consumption is really weak, the new initiatives wouldn’t translate into a meaningful growth driver.”</p><p>Clouds are gathering, with China’s shaky economy starting to even pressure sales at value champion and former market darling PDD Holdings Inc. Catering chain stocks have been tumbling amid sluggish results, and restaurant sales growth has slowed to the weakest pace since pandemic lockdowns, according to data from China’s National Bureau of Statistics.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7cbc813febdb99e8e8ca203bf7ae3c5e\" tg-width=\"1200\" tg-height=\"675\"/></p><p>With many restaurants struggling for survival and consumer confidence deteriorating, “we continue to argue that Meituan’s revenue growth rate will likely decelerate,” said <a href=\"https://laohu8.com/S/FIYY\">Barclays PLC</a> analyst Jiong Shao, the only analyst among the 62 tracked by Bloomberg who recommends selling the stock. Analysts on average forecast its sales growth will slow to 16% in 2025 from 21% this year.</p><p>Valuations may not provide much reason for further upside. The shares are trading at a forward price-to-earnings ratio to 16 times, down from recent highs but still pricier than Hong Kong-traded tech peers. PDD and Alibaba are both trading below 10 times expected profits.</p><p>Risks are also on the rise as positioning in Meituan’s stock gets more crowded, according to Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management. Investors are cautious about its “macro-sensitive nature” and whether the current growth rate is sustainable in a deflationary environment, he added.</p></body></html>","source":"bnn_bloomberg_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Meituan’s 63% Stock Surge Faces Risks in China Consumer Malaise</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMeituan’s 63% Stock Surge Faces Risks in China Consumer Malaise\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-20 11:29 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.bnnbloomberg.ca/business/technology/2024/09/20/meituans-63-stock-surge-faces-risks-in-china-consumer-malaise/><strong>Blockhead</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Food delivery firm’s cheap offering has boosted growth, sharesWeak macro, retailers’ struggles among reasons for cautionMeituan’s strategy to focus on lower prices has helped the Chinese food delivery...</p>\n\n<a href=\"https://www.bnnbloomberg.ca/business/technology/2024/09/20/meituans-63-stock-surge-faces-risks-in-china-consumer-malaise/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0880133367.SGD":"UBS (LUX) EQUITY FUND CHINA OPPORTUNITY USD \"P\" (SGD) ACC","BK4575":"芯片概念","LU0067412154.USD":"UBS (LUX) EQUITY FUND -  CHINA OPPORTUNITY \"P\" (USD) ACC","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","BK4558":"双十一","BK4587":"ChatGPT概念","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","BK4535":"淡马锡持仓","LU1048596156.SGD":"Blackrock Asian Growth Leaders A2 SGD-H","LU0918141705.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AM\" (HKD) INC","BK4524":"宅经济概念","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","BK4220":"综合零售","BK4538":"云计算","BK4527":"明星科技股","LU0821914370.USD":"贝莱德亚洲成长领袖A2","BK4579":"人工智能","LU1282648689.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AMG\" (USD) INC","BK4526":"热门中概股","BK4588":"碎股","LU1046421795.USD":"富达环球科技A-ACC","BK4503":"景林资产持仓","BK4122":"互联网与直销零售","BK4502":"阿里概念","BK4505":"高瓴资本持仓","LU0918141887.USD":"安联亚洲实际收益股票基金","LU0651946864.USD":"贝莱德新兴市场股票收益A2","BK4581":"高盛持仓","BK4504":"桥水持仓","LU1880383366.USD":"东方汇理中国股票基金 A2 (C)","LU1051768304.USD":"贝莱德新兴市场股票收益A6","IE00BFMHRM44.USD":"NEUBERGER BERMAN GLOBAL EQUITY MEGATRENDS \"A\" (USD) ACC","MPNGY":"美团ADR","LU0251143458.SGD":"Fidelity Emerging Markets A-SGD","LU1046422090.SGD":"Fidelity Pacific A-SGD","BK4548":"巴美列捷福持仓","BK4565":"NFT概念","03690":"美团-W","LU1515016050.SGD":"Blackrock Emerging Markets Equity Income A6 SGD-H","LU0501845795.SGD":"瑞银大中华区股票基金P Acc SGD","IE00B0JY6N72.USD":"PINEBRIDGE GLOBAL EMERGING MARKETS FOCUS EQUITY \"A\" (USD) ACC","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","BK4554":"元宇宙及AR概念","LU2226246903.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT4\" (HKD) ACC","BK4534":"瑞士信贷持仓","BK4531":"中概回港概念","LU1823568750.SGD":"Fidelity Global Technology A-ACC SGD","LU0072913022.USD":"UBS (LUX) EQUITY FUND -  GREATER CHINA \"P\" (USD) ACC"},"source_url":"https://www.bnnbloomberg.ca/business/technology/2024/09/20/meituans-63-stock-surge-faces-risks-in-china-consumer-malaise/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2468265164","content_text":"Food delivery firm’s cheap offering has boosted growth, sharesWeak macro, retailers’ struggles among reasons for cautionMeituan’s strategy to focus on lower prices has helped the Chinese food delivery company beat sales targets even as the slowing economy drags peers. Investors are now wondering whether its steep share-price gains can last as the macro weakness deepens. The firm last month posted 21% sales growth and a record high gross margin for the latest quarter despite anemic consumer spending. Backed by strong results, its Hong Kong-listed stock has surged 63% this year, outperforming all global food-delivery peers and topping the Hang Seng China Enterprises Index in 2024.Meituan’s secret weapon is its cheaper, group-based Pin Hao Fan platform for ordering meals. The service’s success has helped cushion the company’s results so far, but concerns are growing about whether that offering alone will be able to defy the broader consumer slump.“It’s a tricky one, because on one hand you’re seeing this robust revenue growth relative to other platforms, but on the other hand, you still have macro that’s weighing it down,” said Morningstar Inc. analyst Kai Wang. “And there’s still a long-term risk with regard to competition.”For now at least, Meituan has benefited from a reduced threat by rivals. Alibaba Group Holding Ltd. is focusing on bolstering its core e-commerce business rather than its Ele.me food-delivery operation, while ByteDance Ltd.’s Douyin is emphasizing profitability over market share. In addition to winning over customers, Pin Hao Fan is also attracting restaurants that are keen to advertise their cheaper products. As a result, the number of transacting users and active merchants both hit record highs on Meituan’s platforms in the second quarter.The company has scored some early success with its push outside of mainland China as well, with its KeeTa delivery app in Hong Kong.Among other things that have gone right, driver recruiting costs have dropped amid elevated youth unemployment, while Meituan has also saved money by shuttering underperforming warehouses and lowering user subsidies. On top of all this, a new $1 billion stock buyback helped boost investor confidence.“The company is obviously adopting a low-price strategy to grab more market share and cater to the trend of consumption downgrade in China,” said Daniel So, a trading strategist at Goldhorse Capital Management (HK) Ltd. “But if the overall consumption is really weak, the new initiatives wouldn’t translate into a meaningful growth driver.”Clouds are gathering, with China’s shaky economy starting to even pressure sales at value champion and former market darling PDD Holdings Inc. Catering chain stocks have been tumbling amid sluggish results, and restaurant sales growth has slowed to the weakest pace since pandemic lockdowns, according to data from China’s National Bureau of Statistics.With many restaurants struggling for survival and consumer confidence deteriorating, “we continue to argue that Meituan’s revenue growth rate will likely decelerate,” said Barclays PLC analyst Jiong Shao, the only analyst among the 62 tracked by Bloomberg who recommends selling the stock. Analysts on average forecast its sales growth will slow to 16% in 2025 from 21% this year.Valuations may not provide much reason for further upside. The shares are trading at a forward price-to-earnings ratio to 16 times, down from recent highs but still pricier than Hong Kong-traded tech peers. PDD and Alibaba are both trading below 10 times expected profits.Risks are also on the rise as positioning in Meituan’s stock gets more crowded, according to Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management. Investors are cautious about its “macro-sensitive nature” and whether the current growth rate is sustainable in a deflationary environment, he added.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":2,"commentSize":1,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2468265164"}