Bank of China International: Upgrade MEITUAN-W (03690) rating to "Buy" Target price raised to HK $110

Bank of China International released a research report stating that MEITUAN-W(03690)s first quarter total revenue increased by 6% year-on-year to 91 billion yuan, in line with market expectations. Benefiting from the better-than-expected improvement in unit economics (UE) of the delivery business, it is expected that the improving trend of delivery UE will continue in the coming months, driving the operating profit of the second quarter to reach 3.6 billion yuan. The bank upgraded its rating on Meituan from "hold" to "buy" and raised its target price from 100 Hong Kong dollars to 110 Hong Kong dollars according to the sum-of-the-parts valuation method (SOTP). Although the short-term competitive situation remains uncertain, Meituan has solid core advantages in the supply chain, fulfillment, and operations. Through diversified instant delivery models and cross-selling, it can better balance market share and UE performance. Additionally, with the acceleration of artificial intelligence (AI) empowering core businesses, long-term efficiency will be further enhanced. Bank of China International predicts that Meituan's second-quarter revenue will accelerate, increasing by 11% year-on-year to 102.1 billion yuan, with core local business and new business revenues expected to grow by 6% and 23% respectively.