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<Research>BofA Securities Downgrades MEITUAN-W to Neutral for Heightened Competition, Profit Uncertainty
Recommend 51 Positive 55 Negative 36 |
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BofA Securities, in its research report, downgraded MEITUAN-W (03690.HK) to Neutral and reduced the target price from HKD136 to HKD105. This reflected more intense and longer than expected competition, necessitating a readjustment of the profit recovery timeline. Although the persistent investments by BABA-W (09988.HK)(BABA.US) and JD-SW (09618.HK)(JD.US) forced Meituan to adopt defensive strategies, putting pressure on short-term margins, the broker remained confident in the company's solid execution and long-term market leadership. The rating change reflects increased profit volatility, warranting a more cautious stance until the competitive landscape stabilizes. BofA Securities expected Meituan to announce its 3Q results in late November, estimating a 5% YoY hike in total revenue to RMB98.7 billion, roughly in line with consensus. It forecast core local commerce revenue to remain flat YoY at RMB69.3 billion, while new initiatives revenue was estimated to grow 22% YoY to RMB29.4 billion. In terms of profit, the broker estimated a non-IFRS net loss of RMB16 billion, and a gross margin of 25.1%. AASTOCKS Financial News Website: www.aastocks.com |
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