Citi: Expects Meituan's last quarter performance to meet expectations, intensified competition drags down profit outlook, maintains "Neutral" rating

Citi published a research report indicating that Meituan (03690.HK) is expected to announce its fourth-quarter results for 2025 by the end of March and believes the results may meet market expectations. However, entering the first quarter of 2026 and the full fiscal year, the bank maintains a cautious outlook on its growth prospects, maintaining a "Neutral" rating with a target price of HKD 115.

The report mentions that although the market consensus forecast for Meituan in 2026 and 2027 has recently shown a downward trend, its total revenue forecast is still 3% to 5% higher than Citi's predictions. The market consensus expects Meituan to achieve a net profit of approximately RMB 5.2 billion for the fiscal year 2026, but Citi predicts it will record a net loss of RMB 13 billion. Citi believes that under the influence of regulatory scrutiny and the seasonal off-peak period (Spring Festival), while the platform's subsidy strategy is becoming subtle and not fully withdrawn, it helps to drive a moderate recovery in unit economic efficiency, but the overall competitive environment remains severe.

Alibaba is actively competing for market share in the food delivery and instant retail sectors, and Douyin may further intensify competition in the in-store business. Therefore, Citi assesses that the market consensus forecast for Meituan's core local business revenue and operating profit still faces downside risks. The report mentions that although Bloomberg's market consensus forecast for Meituan in 2026 and 2027 has recently shown a downward trend, its total revenue forecast is still 3% to 5% higher than Citi's predictions. The market consensus expects Meituan to achieve a net profit of approximately RMB 5.2 billion for the fiscal year 2026, but Citi predicts it will record a net loss of RMB 13 billion.

Citi believes that under the influence of regulatory scrutiny and the seasonal off-peak period (Spring Festival), while the platform's subsidy strategy is becoming subtle and not fully withdrawn, it helps to drive a moderate recovery in unit economic efficiency, but the overall competitive environment remains severe. Alibaba is actively competing for market share in the food delivery and instant retail sectors, and Douyin may further intensify competition in the in-store business. Therefore, Citi assesses that the market consensus forecast for Meituan's core local business revenue and operating profit still faces downside risks