[ET Net News Agency, 19 September 2019] Credit Suisse hosted a China internet tour
visiting companies and industry contacts in Beijing from 17-18 September.
From Meituan Dianping (03690), the research house said food delivery business growth
momentum remains strong. Market competition stepped up a bit in August but should be
offset by the gradual improvement in monetisation rate through more advertising, leaving a
relatively steady GP margin.
Medium-term, the company is focused on increasing customer order frequency (some early
success seen from membership program) and adding delivery capacity on the supply side to
drive growth.
On the cost side, rider costs should see some improvement in 2H through efficiency
gains. For in-store business, ad revenue still has upside driven by more product
categories, higher ASP and increased penetration into the existing merchants base.
On hotels, more marketing budget will be spent on customer subsidy to enhance customer
conversion from food delivery business. The company will continue to invest in new
business initiatives where it sees long-term potential but remain return-focused.
Credit Suisse maintained its "outperform" rating, with a target price of HK$85. (KL)