Morgan Stanley raised its target price for Meituan Dianping (03690) to HK$105 from HK$78 and maintained its "overweight" rating.
The research house raised its 3Q revenue forecast 2% to Rmb25.9bn, mainly reflecting upside from food delivery orders. Morgan also expects a better net profit margin on better food delivery margins. It expects 3Q adjusted net profit of Rmb0.1bn versus Rmb1.3bn net loss in its prior forecast thanks to strength in food delivery and ongoing cost synergies in new initiatives.
It expects 2019 full-year food delivery adjusted operating profit to reach break-even
despite a likely loss in 4Q amid seasonally unfavorable cost structure. It believes the better-than-expected margin performance this year is manifested by Meituan's leadership in food delivery.
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