[ET Net News Agency, 21 October 2019] BofA Merrill Lynch lifted its target price for
Meituan Dianping (03690) to HK$103 from HK$90 and maintained its "buy" rating.
The research house expects food delivery to carry solid growth momentum in 2H. According
to Sina, the number of food delivery orders grew 43% during the October national holidays.
BofAML raised its estimated order growth of food delivery in 2H to mid-30%, similar to
1H. It assumed a modest increase in food delivery ticket size and monetization rate to
just over RMB45 and 14%, respectively, in 3Q and thus see segment revenue growth of 39% in
3Q (versus 32% previously).
The company continuously offers subsidies to target users, especially certain existing
users, who in turn order high ticket items. BofAML modeled moderate revenue deceleration
of the profitable instore/travel segment (37%, versus 43% in 2Q) and a similar adjusted
margin at 36%.
It expects Meituan's 3Q total sales to be RMB26.9bn, up 41% (versus 43% in 2Q) and GAAP
operating profit of RMB0.6bn, which would mark the second profitable quarter following 2Q.
(KL)