To The Moon

The haze of the epidemic has finally faded. For the vast majority of Internet companies, an economic recovery China is slowly coming. $Alibaba(09988)$ $TENCENT(00700)$ $XIAOMI-W(01810)$ 

Don't get me wrong. We have never been blind optimists, rational optimists, pessimistic assumptions in details and optimistic judgments in trends.

We tend to think that this kind of economic recovery is mild and structured: compared with offline entities, the Internet has a stronger recovery agility; compared with real estate, exports and other fields, daily consumption has a strong rebound resilience; tourism and local consumption shows signs of an unexpected rebound.

On the one hand, $Meituan(03690)$ Meituan's business benefits more from the above-mentioned structured recovery.

On the other hand, Meituan's business can also better reflect the cross-cutting aspects of China's economy: how a large number of local catering, entertainment and hotel merchants will pursue lost time; how a large number of young riders will build the life of residents living in an atomic society with local communities; how will a large number of consumer brands cater to new consumption habits. Habit and lifestyle, reconstruct the cost of commodity supply chain and circulation links, and improve the efficiency of social commodity retail; tens of billions of yuan and hundreds of billions of research and development funds continue to invest, how to completely change the lifestyle of the Chinese people.

For the above problems, this annual report can give us some inspiration. Therefore, whether you are a shareholder of Meituan or not, you can actually take a look at this financial report. It implies not only yesterday, today and tomorrow of the local life industry, but also the vision and hope of the Chinese people towards a new life.

This article will revolve around 4 parts and this is part 1 

The progress and prospects of the three major sectors of takeaway and flash shopping, in-store wine tourism, and new business;

Financial data analysis;

Buy side valuation analysis and ecological outlook.

1. Business progress and outlook

According to the structure of Meituan's financial report, there are currently two major sectors: core local business and new business. However, in order to observe the pattern and progress of different business sectors in more detail, we will analyze independently according to three major sectors in this section: takeaway and flash purchase, in-store wine tourism, and new business.

1.1 Takeaway and flash purchase

In a broad sense, takeaway and Meituan grocery shopping also belong to the category of instant retail. In a narrow sense, instant retail usually refers to Meituan's flash shopping business, and the self-operated Meituan grocery shopping business is placed in the new business.

According to the financial report, the number of instant delivery transactions in 2022 was 17.67 billion, with an average of 48.41 million orders per day. Last year, there were 15.5 billion transactions, with an average of 42.47 million orders per day. Starting from Q2 in 2022, Meituan adjusted the financial report disclosure caliber, that is, to unify flash purchase and take Disclosure, the data is published with the volume of instant delivery orders, and the takeaway and flash purchase data will no longer be disclosed separately.

However, the number of takeaway orders will be announced separately in Q1 and before 2022. According to the 2021 financial report, the annual number of takeaway orders is 14.37 billion, and the average daily number of takeaway orders is 39.36 million. It can be accurately calculated that the average daily number of flash purchases in 2021 is 3.11 million. Single.

In addition, the average daily order volume of takeaway in 2019/2020 is also the accurate data disclosed in the financial report, and the flash purchase order volume in 2019/2020/2022 is the estimated data tracked by us based on daily tracking and internal sharing. It is basically accurate for reference. Separate data of takeout in 2022. It is also calculated for tracking, but the overall instant delivery order volume is accurate data published in the financial report.

2019 is the peak of many industries, including some industries of the Internet. The revenue and profits of many companies have not recovered to 2019.

At the core of Meituan's core local business, the annual order volume of instant retail (takeaway + flash purchase) has reached 1.91 times that of 2019, the takeaway order volume is 1.82 times that of that time, and the flash purchase order volume is 3.3 times that of that time.

The three-year compound growth rate of takeaway orders is about 22%, the compound growth rate of flash orders is about 50%, and the compound growth rate of real-time retail (takeout + flash purchase) is about 24%.

Separately, considering the epidemic control factors, the growth rate of takeaway orders is damaged. In 2020-2022, the growth rate of takeaway orders was 16.3%, 41.6% and 10.5% respectively; the growth rate of flash orders was beneficial. In 2020-2022, the growth rate of flash orders was 4 6.7%, 41.4%, 58.5%. Because the flash purchase base is still small, in general, we can see from the figure above that the growth rate of instant retail (takeaway + flash purchase) is slow in 2020 and 2022, when the epidemic is tightly controlled, while the recovery of the epidemic rebounds quickly in 2021. Therefore, takeout is expected to return to normal in 2023. Growth is superimposed and rebounded, especially from the second quarter.

Flash purchase may not be able to continue the explosive growth of 58.5% in 2022, but consumer habits are basically formed. In addition, the performance density of Meituan continues to increase and reduce distribution costs. Under the wave of social atomization, singleness, young children, small family, and Generation Z are at the center of the consumption stage. Under the influence, this new format is expected to better meet the needs of consumers, and offline retail commerce, especially community commerce and convenience stores closer to consumers, vigorously embrace instant retail. The source brands have gradually realized that instant retail, as a new retail channel, is a more efficient way to reach end consumers. This makes it more willing to carry out consumer subsidies and brand marketing for the channel.

Therefore, in the short term of one year, we believe that takeout is expected to achieve rebound growth. In the medium and long term, in the three years, the volume of takeout orders is expected to continue to grow by more than 15%; while the flash purchase business is expected to continue the three-year compound high growth rate of about 35%. Looking forward to 2025, takeout is With an average daily order volume of about 68 million, flash purchase is expected to reach an average daily order volume of about 12.5 million, the average daily order volume of instant delivery reaches about 80 million, and the peak is likely to reach or exceed 100 million orders.

Superimposed instant delivery belongs to the nature of the service industry. Services have inflation attributes, goods have deflation attributes, and more high-end hotels and restaurants choose to embrace takeaway channels. The overall customer unit price is expected to continue to rise slowly, which will make the growth rate of GTV faster than the growth rate of single volume, and the growth rate of revenue will be .

When it comes to the peak orders, the order volume of Meituan takeaway, flash shopping, flowers and medicine in 2022 exceeded 60 million, 11 million, 6 million and 5.8 million respectively. Of course, the peak of these different businesses is likely not to occur on the same day, and the amount of flowers and medicine orders also includes Some orders are delivered through traditional express delivery in different places, but it basically shows that the overall peak of instant delivery should exceed 70 million, and the total increase of 43% in three years is not too high.

Specifically, in the fourth quarter, instant delivery orders totaled 52.5 million per day, takeaway 46 million, and 6.5 million flash purchases. This data is somewhat inconsistent from our previous brief comments and forecasts. Please refer to the current published data.

According to our calculation model, the number of takeaway, flash purchases and instant orders in the past 8 quarters can basically be reversed and calculated.

As for the competitive situation, the competition situation of the takeaway industry has entered a stable period. Eleme superimposed Gaode Map, Alipay, TikTok and other channel traffic to form a balance with Meituan. TikTok has the will to enter the takeaway industry, but it is difficult to make substantial progress, because the takeaway industry has ultra-high time sensitivity, Only by making breakthroughs in the four aspects of users, merchants, rider networks and consumers' minds at the same time can we be expected to challenge the leader. We don't think we can see such a possibility at present.

Takeout is the strategic high point of the large real-time retail industry. The real-time distribution network established around takeout constitutes the ecological network foundation of the whole city consumption. supermarkets, convenience stores, medicine, flowers, third-party grocery shopping and other businesses can be inserted into this ecological network. In this ecology, for reasons to better meet the needs of consumers, up to two-thirds of takeaway orders are in 1P mode, that is, Meituan distribution. At the same time, the business has feng trough characteristics, which makes the performance investment pre-end and difficult to share. New entrants need to reach a certain scale to cover About the cost, this will make the advantage of the leader like a gear, tightly interlocked, and simply intervene in the same city retail such as online supermarket, which is not enough to shake Meituan's position.

A potential change is the emergence of machine distribution at the performance end, such as automatic distribution vehicles, drones, etc., which greatly reduces the performance cost and leads greatly in efficiency, which may subvert the manpower-based platform. Therefore, Meituan has been deeply involved in the investment and research and development of automatic distribution vehicles and drone technology as early as 2018. , ensure that the technology is leading, diving into the no-man's land, and leading the industry.

When it comes to performance value, we may be slightly disturbed by this special category of takeout. In fact, in the field of real-time retail of goods, the value created by the performance side should be lower than that of the supply chain side. For example, a rice cooker is worth 300 yuan. If you improve the scale, turnover rate, handling times, etc., it is not difficult to reduce the cost by 10 yuan, but reduce the performance side 1 The cost of 0 yuan is difficult, and it is more obvious when it comes to high-priced goods such as mobile phones, TVs and watches.

Moreover, in the field of commodity retail, the timeliness sensitivity of performance is lower than that of takeout.

Therefore, after the development from takeaway to everything to home, Meituan still needs to continue to polish the control of the supply chain to ensure that its operating efficiency, procurement costs, inventory management, warehousing costs and other aspects are competitive.

Of course, because takeaway has always been the strategic high ground of large real-time retail, this makes Meituan have a strategic advantage in terms of performance cost and experience. In the first stage of everything, that is, when everything is provided by existing physical terminals, this advantage is overwhelming; and if it enters the next stage, major platforms will deeply intervene. In the procurement, warehousing and even production links, if the third-party instant delivery system is highly mature, the existing performance advantages will be slightly weakened, but the high maturity of the third-party instant delivery system may be a false proposition, which we have mentioned earlier when describing the characteristics of takeout.

We believe that the development of everything has its continuity, and it is difficult for anyone to jump fast-forward to the next stage. At present, Meituan has been accumulating supply chain experience.

Generally speaking, takeaway and flash shopping are the core of Meituan, with high certainty and long-term growth.

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