Earnings First Take:1Q22 results above market expectations
- Revenue in 1Q22 increased by 25% y-o-y to Rmb46.3bn, above consensus
- Adjusted net loss was Rmb3.6bn in 1Q22, better than market anticipation of c.Rmb4.5bn loss
- The smaller net loss was due to (1) higher operating margin of food delivery and (2) narrower loss from new businesses
- We currently rate BUY with TP of HK$269
What’s New
– Meituan (3690 HK) announced its 1Q22 results on 2Jun after market close.
– Revenue increased by 25% y-o-y to Rmb46.3bn, above consensus.
– Segment-wise, food delivery revenue increased by 17% y-o-y to Rmb24.2bn, driven by 16% increase of gross transaction volume; In-store, hotel and travel segment revenue increased by 16% to Rmb7.6bn; New initiatives revenue increased by 47% to Rmb14.5bn.
– Operating profit of food delivery grew by 41% to Rmb1.6bn, with the margin expanding to 6.5%, from 1Q21’s 5.4%, mainly driven by higher order value and increased advertising income.
– Operating loss of new business segment (including Meituan Select) was c.Rmb9bn, slightly better than market expectations of c.Rmb9.4bn loss.
– Adjusted net loss was Rmb3.6bn, beating market expectations of c.Rmb4.5bn loss. The smaller net loss was mainly due to (1) higher operating margin of food delivery and (2) narrower loss from new businesses
– As of Mar 22, number of transacting users increased by 22% y-o-y to 693m and annual average transaction frequency increased by 22%.
Our View:
– We expect positive share price reaction to the resilient 1Q22 performance.
– We are cautious on 2Q22 outlook and expect slower y-o-y revenue growth due to Covid impact. In longer term, we believe that Meituan’s business will recover in 2H22, after relaxation of Covid measures, supported by robust user growth and expanding product offering.
– We currently rate BUY with TP of HK$269.
