Morgan Stanley: Meituan-W (03690) has a clear roadmap for profitability, rated as "hold"

Morgan Stanley released a research report stating that they maintain a buy rating on MEITUAN-W (03690) with a target price of 120 Hong Kong dollars. The bank maintains its profit forecasts for Meituan, and continues to assume that the economic benefit per order for the food delivery business will reach 1 yuan RMB from 2027 onwards, and in a basic scenario, the operating profit margin for the in-store, hotel, and travel business will gradually recover from the current 25% to an expected 30% by 2030. The bank predicts that Meituan's core local commerce (CLC) operating loss in the first quarter will reach 4.3 billion yuan, and it is expected to achieve a balanced budget in the second quarter. Following Alibaba's commitment to significantly narrow the loss in instant retail, Meituan's roadmap to profitability has greatly improved. In terms of business segments, Morgan Stanley expects that Meituan's total transaction volume (GTV) and revenue for the in-store, hotel, and travel (IHT) business in the first quarter will increase by 10% and 9% year-on-year respectively, with an operating profit of approximately 4.1 billion yuan per quarter and an operating profit margin of 25%. In terms of new business, the overseas business KeeTa will focus on consolidating existing markets this year, with improving unit economics in Saudi Arabia and maintaining profitability in the Hong Kong market.