"Big Banks" Citigroup: Meituan's acquisition of DingDong enhances its position in the fresh food retail market, but competition remains fierce

Citigroup's research report indicates that Meituan-W (03690.HK) announced an initial consideration of USD 717 million (adjustable) to acquire the online grocery retailer DingDong's business in China. It believes that this acquisition is of significant strategic importance, aimed at expanding its coverage of first-line warehouses, especially in key regions such as East China, complementing its "Ella Supermarket" business; strengthening its supply chain capabilities for fresh agricultural products and private label products; and diversifying its consumer wallet share from takeout and dine-in to home cooking.

Citigroup stated that while this acquisition may enhance Meituan's position in the fresh retail market, the overall landscape of the fresh and grocery market remains fragmented, with intense competition. Meituan still faces challenges in its core local business, and overseas expansion will also consume a significant amount of investment resources; it has set a target price of 115 yuan and maintains a "Neutral/High Risk" rating