Meituan Q1 food delivery nears breakeven, with losses better than expected

Overview

This report is Bernstein's review of Meituan's Q1 results. The core conclusion is that revenue was broadly in line with expectations, while both group and core local commerce losses were better than expected, and the food delivery business moved closer to breakeven faster under subsidy normalization and seasonal improvement. However, Alibaba in food delivery, ByteDance in in-store/hotel/travel, and new investment areas such as AI, physical retail, and Brazil will still affect the pace of Meituan's future profit release.

Core views

Bernstein believes Meituan's Q1 results prove that food delivery losses are narrowing faster than the market expected, and Q2 may return to profitability or breakeven; however, near-term financial performance still depends heavily on the intensity of competition from Alibaba and ByteDance. On valuation, the report continues to use 1x 2027E PS to derive an HK$85 target price and maintains Market-Perform, because the market has already priced Meituan to some extent on normalized profits, and unless competition eases significantly, the 2027E PE framework is unlikely to imply meaningful upside.

Analysis framework

The report mainly compares Meituan's Q1 actual revenue, adjusted EBITDA, and segment operating profit with Bernstein's model and Bloomberg consensus expectations, and combines this with management commentary on food delivery order share, per-order unit economics, in-store/hotel/travel, overseas operations, and AI investment to update its view on the breakeven path for core local commerce and the direction of investment in new businesses.

Methodology notes

• Valuation methods2027E PS multiple

  Price-to-sales valuation based on expected 2027 revenue

  Bernstein continues to use 1x 2027E PS to value Meituan, deriving a target price of HK$85 per share.

• Earnings comparisonComparison of actual results with consensus expectations

  Comparing company-reported results with sell-side models and Bloomberg consensus expectations

  The report uses metrics such as revenue, adjusted EBITDA, core local commerce losses, and new business losses to judge whether results beat expectations.

• Segment analysisBreakdown of core local commerce and new businesses

  Observing revenue growth, losses, and competitive pressure by business line

  The report focuses on breaking down food delivery, in-store/hotel/travel, new businesses, and unallocated expenses to assess the balance between profit recovery and investment expansion.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Meituan (03690.HK)

  Covered company

  Strengths

  Food delivery losses are narrowing rapidly, core local commerce is nearing breakeven, and management is more confident about share in higher-ticket orders and per-order unit economics.

  Weaknesses

  Revenue growth is weak, food delivery monetization is under pressure, in-store/hotel/travel is still affected by competition, and new business and AI investment will continue to consume profits.

  Comparison

  The report says Meituan's food delivery per-order unit economics are about RMB3 better than Alibaba's, but in-store/hotel/travel still faces pressure from ByteDance, while the premium hotel segment is gaining some share from Trip.com.

  Risks

  Renewed intensification of competition, expanded subsidies, regulatory pressure, a slowdown in macro consumption, and widening losses in new businesses.

• Alibaba

  Food delivery competitor

  Strengths

  If it continues investing in subsidies, it could slow Meituan's profit recovery.

  Weaknesses

  According to Meituan management, its food delivery per-order unit economics are about RMB3 worse than Meituan's.

  Comparison

  The report views whether Alibaba continues investing as the key variable for Meituan's food delivery profitability in Q2 and beyond.

  Risks

  If Alibaba does not retreat, it will limit Meituan's valuation upside and the pace of profit normalization.

• ByteDance

  In-store/hotel/travel competitor

  Strengths

  Continues to exert competitive pressure on Meituan in the in-store, hotel and travel business.

  Weaknesses

  The report does not provide its specific financial data.

  Comparison

  Meituan's in-store/hotel/travel revenue rose high single digits and GTV rose low double digits, indicating competitive pressure remains.

  Risks

  If ByteDance maintains its investment, Meituan's IHT margins and revenue growth may continue to face pressure.

Key data

• Group revenueRMB91.0bn, up 5.6% year on yearBetween Bernstein's estimate of RMB91.3bn and Bloomberg consensus expectation of RMB90.8bn.
• Adjusted EBITDA lossAbout RMB3.0-3.1bnBetter than Bernstein's expected loss of RMB5.1bn and consensus expected loss of RMB5.5bn.
• Core local commerce revenueRMB64.1bn, up 0.1% year on yearThe report notes that revenue growth in this segment was weak, reflecting competitive and subsidy pressure.
• Core local commerce operating lossRMB2.0bnMarkedly narrower than the RMB10.0bn loss in Q4 2025, and also better than the consensus expected loss of RMB4.3bn.
• New business lossRMB2.1bnBelow Bernstein's and the market's previous expectation of about RMB2.5-2.6bn.
• Selling and marketing expensesRMB23.0bnUp 51.1% year on year, but down 27.6% from Q4 2025, a decrease of RMB8.8bn.
• Unallocated lossRMB2.3bnWorse than the market's expected RMB1.9bn loss, mainly due to a RMB746mn SAMR fine, portfolio declines, and higher AI development costs.
• Food delivery per-order unit economicsEstimated loss of about RMB1 per orderMeituan management said its per-order unit economics are about RMB3 better than Alibaba's.
• Food delivery revenue and GTVRevenue estimated to decline by nearly 10%, GTV up high single digitsIndicating that subsidy and monetization pressure remains.
• In-store, hotel and travelRevenue up high single digits, GTV up low double digitsThe report believes ByteDance continues to create competitive pressure, but the premium hotel segment gained some share from Trip.com.
• Target priceHK$85Based on a 1x 2027E PS multiple.

Impact & implications

For investors, the positive implication of the Q1 results is that food delivery loss recovery is faster and visibility on Q2 breakeven has improved, which may lead to upward revisions to short-term earnings expectations; however, the medium-term implication is not unilaterally positive, because the competitive landscape has not fully eased and the focus of new business investment will gradually shift from Middle East expansion to AI, physical retail, and Brazil, so future expense ratios and losses may still suppress valuation re-rating.

Risks

• Food delivery competition intensifies significantly, leading to renewed expansion of subsidies.
• Alibaba does not clearly retreat, delaying realization of Meituan's normalized profits.
• ByteDance continues to suppress growth and margins in the in-store, hotel and travel business.
• The macro, credit, and retail consumption environment weakens.
• Fluctuations in user engagement, average order value, monetization rate, rider costs, and operating expenses.
• Regulatory risks in China, including antitrust.
• Losses in new businesses such as community e-commerce, AI, physical retail, and Brazil come in above expectations.
• Changes in overseas strategy cause international business losses to exceed expectations.

What to watch

• Whether food delivery returns to breakeven or profitability in Q2 as guided by management.
• Whether Alibaba's subsidy and investment intensity in food delivery declines.
• Whether Meituan can continue lifting its share of orders above RMB30 from above 70%.
• Whether order volume declines in H2 2026 as guided, and whether GTV remains resilient due to a low AOV base.
• Revenue growth and operating margin in the in-store, hotel and travel business amid competition from ByteDance.
• Whether investment in AI, physical retail, and the Brazil business continues to rise.
• Whether the Middle East business can achieve breakeven in Saudi Arabia next year and across the region by 2028.
• The impact of regulatory fines, portfolio volatility, and unallocated expenses on group losses.