CMSC: The global food delivery market has vast space, MEITUAN-W (03690) and Didi are ushering in a new era of food delivery going overseas.

CMSC released a research report stating that regions with large market potential (strong industry demand, ample supply of catering merchants, low labor costs, and relaxed policy environment) and insufficient competition (high concentration or room for industry efficiency improvement) are more suitable as destinations for food delivery services to go abroad. There are significant development opportunities in the Middle East, Japan and South Korea, Southeast Asia, and Latin American markets. Chinese internet platforms have competitive advantages in organizational execution, systematic marketing capabilities, ground promotion capabilities, technology, and data, and are optimistic about the broad development space for leading internet platforms to expand abroad in the international food delivery market. Key points of CMSC: Global food delivery market: A $500 billion market, with the Asia-Pacific and Europe leading in size, and the Middle East and Latin America leading in growth rate. The global food delivery market penetration rate continues to steadily increase. According to Euromonitor data, the market size will reach $495.6 billion by 2023, with a CAGR of approximately 14.5% from 2020 to 2023, and the scale is expected to exceed $550 billion in 2024, with a year-on-year growth rate of 11%. Asia-Pacific, North America, and Europe are the top three food delivery markets globally. In terms of regional growth rates, the post-pandemic growth rates in the Middle East, Latin America, Asia-Pacific, and Europe are faster than the global average. In terms of industry penetration rates, the food delivery penetration rates in Asia-Pacific and the Middle East are relatively higher. Leading global food delivery companies such as Deliveryhero, UberEats, and DoorDash have expanded their operations through mergers and acquisitions and by establishing multiple country sites, gradually covering suitable markets in North America, Europe, the Middle East, Southeast Asia, and other regions. The food delivery market situation varies in different countries. The potential for Chinese internet platforms to expand abroad is more significant in the Middle East, Asia-Pacific, and Latin American markets. The report analyzes the size and penetration rate of the food delivery market, core players and industry structure, and market development opportunities in major regions such as North America, Europe, the Middle East, Japan and South Korea, Southeast Asia, and Latin America in detail. It is believed that when judging the potential of a region for food delivery services to expand abroad, the core factors to consider are the overall market potential and competitive landscape. In terms of market potential, regions with higher industry demand, sufficient supply of catering merchants, lower labor costs, and a more relaxed policy environment have greater opportunities for food delivery market development and expansion abroad. In terms of the competitive landscape, regions with unstable and immature duopoly or significant room for industry efficiency improvement have greater opportunities for food delivery services to expand abroad. Overall, the Middle East, Japan and South Korea, Southeast Asia, and Latin America markets have significant development opportunities. Chinese internet companies expanding abroad: Strong organizational execution is the foundation, and the potential for Meituan and Didi's expansion abroad is promising. Compared to international competitors, the core competitive advantage of Chinese internet platforms expanding abroad lies in their strong organizational combat effectiveness, as well as advantages in marketing capabilities, ground promotion capabilities, and technology and data resources. 1) Meituan's expansion abroad: KeeTa is the first to enter Hong Kong and the Middle East, opening up the process of globalization. Its core business strategy focuses on building differentiation advantages rapidly by investing in fulfillment (free delivery+timeliness guarantee) and pricing (new customer subsidies+low-priced single meal package), thereby quickly gaining market share. Currently, KeeTa has captured around half of the market share in Hong Kong and achieves a daily order volume of 100,000+ in Riyadh, Saudi Arabia. It is optimistic about the improvement of profit in the future Hong Kong market, the expansion of market volume and profit elasticity in the Middle East. It is expected that KeeTa's Hong Kong and the Middle East operations could contribute annual profits of up to 5 billion yuan in the long term. 2) Didi's expansion abroad: Following the ride-hailing business, Didi is focusing on the core market of Mexico in Latin America, mainly achieving differentiated competition through low-price strategies and building competitive advantages in synergy with the ride-hailing main business. By the end of 2024, Didi's market share in the food delivery market in Mexico has exceeded 50%, with over 300,000 orders per day. It is expected that the long-term profit space could reach around 1 billion yuan in size. Investment recommendations: The global food delivery market has vast space, and it is optimistic about the prospects for leading Chinese internet platforms to expand abroad. It is recommended to invest in Meituan-W (03690) and Didi. Risk warning: Macroeconomic risks, intensified market competition, overseas policy risks.