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Chinese food delivery giant Meituan’s business has been in steady recovery since the turning point of the domestic Covid outbreaks in June, and the firm’s key operational metrics for the second quarter of the year will come stronger than market expectations, said CITIC Securities in a note on Tuesday.
Meituan’s Q2 revenue is expected to grow by 12.8% from a year earlier and its adjusted net loss is expected to narrow to 2.79 billion yuan, it said. The company’s average daily food delivery order volume is expected to grow by 2.5% year over year, with cash ratio at 13.3%, it said.
Despite Covid resurgence in some regions in early July, the strong demand in the summer break season is expected to boost food delivery order volume to extend the growth seen since June and double-digit growth is expected for food delivery order volume in the third quarter, it said.
From a long-term perspective, China’s regional Covid outbreaks will continue to support consumers’ online spending, and amid the country’s efforts to stabilize the economy and employment, the importance of Meituan and other platform economy companies in supporting the recovery of consumption has been widely recognised, the broker said.
CITIC Securities maintains a Buy rating for Meituan, with target price at HK$259. Meituan gained 1.3% to close at HK$190.7 on Tuesday.