Nomura maintains a "Neutral" rating on Meituan, expects the stock price to be difficult to rebound in the short term

Nomura published a research report indicating that Meituan (03690.HK) recently issued a profit warning, expecting to turn from profit to loss in the fiscal year 2025, with a net loss estimated between RMB 23.3 billion and RMB 24.3 billion. This implies that the net loss for the fourth quarter of last year reached approximately RMB 15 billion to RMB 16 billion, slightly worse than the market expectation of a loss of about RMB 14.7 billion, mainly due to intensified competition in the local lifestyle services sector and the company's investments in overseas markets.

Meituan predicts that the operating loss for its core local business last year will reach RMB 6.8 billion to RMB 7 billion, with the fourth quarter loss amounting to about RMB 10 billion, roughly in line with market expectations. Nomura believes that the expansion of overseas food delivery services is the main reason, anticipating that Meituan's Keeta began pilot operations in Brazil last October and will compete with Didi locally.

Nomura noted that Meituan's stock price has significantly underperformed the market over the past year, with a cumulative decline of 51.7%, compared to a rise of about 17.5% in the Hang Seng Index during the same period. Considering the strong competition faced by all core businesses, it believes that Meituan's stock price is unlikely to rebound in the short term, maintaining its "Neutral" rating with a target price of RMB 107