Meituan 4Q25 NDR: The Peak of Competition May Be Over, Buy Rating Maintained

Overview

Based on the NDR exchange between UBS and Meituan's IR team, the core conclusion is that Meituan's execution and moat in instant delivery and in-store services remain solid, especially in core users, high-AOV orders, and high-frequency local lifestyle scenarios. The report believes food delivery competitive pressure may already be at a high level or starting to ease marginally. Combined with regulatory constraints on subsidy competition, the industry competition is expected to gradually shift toward efficiency-driven competition. With the current valuation at about 11x normalized P/E, UBS believes competition and unit economics improvement could become re-rating catalysts.

Core views

First, in instant delivery, Meituan's share, order mix, and user stickiness continue to support its unit economics advantage, and management expects the UE gap versus BABA to remain sustainable over the long term and may turn positive earlier than BABA. Second, in-store services are under near-term pressure, mainly from the diversion of in-store dining by food delivery, a higher mix in low-tier cities, macro conditions leading to lower AOV, and Douyin increasing subsidies in standardized dining categories. Third, on new businesses, overseas Keeta, instant retail, Xiaoxiang Supermarket, and others still have long-term contribution potential, but management is prioritizing domestic operations amid intensifying competition at home. Fourth, the rise of AI agents poses a relatively manageable threat to Meituan because Meituan has proprietary real-time local lifestyle data, a merchant network, fulfillment capabilities, and a high-frequency user base.

Analysis framework

The report mainly uses the NDR minutes and feedback from company management, combined with competitive landscape, share metrics, unit economics, regulatory environment, business segment growth, and valuation framework for judgment. On valuation, the report explicitly uses the SOTP method to derive the target price and evaluates the rating based on 12-month forecast stock return versus market return assumptions.

Methodology notes

• Valuation methodSOTP

  sum-of-the-parts valuation

  UBS stated that the target price was derived using the SOTP method, which is suitable for platform companies such as Meituan that have multiple business segments including instant delivery, in-store services, overseas operations, and new retail.

• Rating frameworkForecast Stock Return

  12-month forecast stock return

  UBS defines forecast stock price appreciation plus dividend yield as FSR and compares it with the market return assumption. The forecast stock return in this report is 52.0%, above the 10.9% market return assumption.

• Operating analysisUnit Economics

  unit economics

  The report focuses on comparing Meituan and BABA in food delivery UE, believing Meituan has a structural advantage due to differences in AOV, order frequency, user loyalty, and subsidy strategy.

Asset mapping & comparison

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

• Meituan Dianping 3690.HK

  research subject

  Strengths

  Deep moat in instant delivery and in-store services, improved food delivery CR2 share, advantage in high-AOV orders, strong user frequency and loyalty, and fulfillment capability plus merchant network barriers.

  Weaknesses

  In-store services are under short-term pressure from macro uncertainty, changes in low-tier city mix, AOV decline, and Douyin subsidy competition; new businesses still require investment.

  Comparison

  Versus BABA, the report believes Meituan has a structural advantage in food delivery UE and may reach positive UE earlier; versus Douyin, Meituan has a stronger closed-loop transaction advantage in local lifestyle fulfillment, real-time data, and merchant network.

  Risks

  Intensifying competition, heavy investment weighing on profits, slower consumption, adverse regulatory changes, declining restaurant subsidies, and limited long-term structural industry tailwinds.

• BABA/Ele.me/Koubei

  main competitor

  Strengths

  Has financial and ecosystem resources and can continue to invest in e-commerce user acquisition, merchant acquisition, and O2O market share.

  Weaknesses

  The report believes its smaller scale may lead to lower investment efficiency than Meituan, and food delivery profitability is not expected until FY29.

  Comparison

  Meituan management believes the UE gap versus BABA widened QTD, mainly due to user and order mix advantages.

  Risks

  If BABA extends its investment cycle and increases subsidies, it may pressure Meituan's near-term margins.

• Douyin

  in-store services competitor

  Strengths

  It is increasing subsidies in standardized dining categories such as buffets and hot pot, giving it strong price competitiveness.

  Weaknesses

  The report does not show that it has a fulfillment closed loop and high-frequency local services transaction capability comparable to Meituan.

  Comparison

  Douyin competition is mainly concentrated in in-store dining and creates short-term pressure on Meituan's in-store GTV and revenue growth.

  Risks

  Further escalation of subsidies could prolong Meituan's in-store services growth and profit recovery cycle.

• Keeta

  Meituan's overseas business

  Strengths

  Unit economics in the Saudi market are improving better than expected, driven by subsidy optimization. The target is breakeven in some months by the end of 2026 and profit potential in 2027.

  Weaknesses

  The pace of overseas expansion may be affected by geopolitical uncertainty.

  Comparison

  Compared with the domestic core business, Keeta is still in the expansion and profitability validation stage.

  Risks

  Geopolitics, subsidy efficiency, market entry pace, and local competition may affect profit realization.

Key data

• 12-month ratingBuyThe table discloses Meituan's 12-month rating as Buy.
• Target priceHK$128.0012m price target is HK$128.00.
• Current priceHK$84.20Price date is 2026-03-30.
• Forecast price appreciation52.0%Forecast price appreciation is 52.0%.
• Forecast dividend yield0.0%Forecast dividend yield is 0.0%.
• Forecast stock return52.0%Forecast stock return is 52.0%.
• Market return assumption10.9%Market return assumption is 10.9%.
• Forecast excess return41.1%Forecast excess return is 41.1%.
• Food delivery CR2 order share>55%Management said QTD food delivery CR2 volume share rose to above 55%.
• Food delivery CR2 GTV share>60%Due to high-AOV orders, Meituan's CR2 GTV share is above 60%.
• CR2 share for orders above Rmb30>70%CR2 share for orders above Rmb30 exceeds 70%.
• 1Q in-store revenue growth forecast7%UBS expects 1Q in-store revenue growth of 7%, below 4Q25's 10%.
• 2026E AI investment impactRmb2bnUBS estimates the incremental P&L impact of AI investment on 2026E is about Rmb2bn.
• P/BV(12/25E)3.0xShown in the report's trading data.
• Net debt to EBITDA(12/25E)7.8xShown in the report's trading data.

Impact & implications

If regulation continues to constrain food delivery subsidy competition and pushes the industry from subsidies toward efficiency, Meituan's fulfillment, user frequency, high-AOV orders, and merchant network advantages will be more easily translated into margin improvement and valuation re-rating. In the short term, investors need to watch slower in-store services growth, increased Douyin subsidies, and macro consumption pressure; in the longer term, the focus is on whether Keeta, instant retail, Xiaoxiang Supermarket, and AI capabilities can gradually contribute to profit and transaction-loop efficiency.

Risks

• Intensifying competition, especially BABA's continued investment in Ele.me, Koubei, and the O2O market, or Douyin increasing subsidies in in-store dining.
• Meituan's investment in loss-making new businesses may be higher than expected and place greater pressure on low-margin businesses.
• If customer consumption declines, platform GTV and revenue growth may slow.
• Adverse changes in the macro environment or government regulation.
• A decline in restaurant subsidies may affect platform monetization and profits.
• Returns from long-term structural changes in the industry may be lower than expected.
• Keeta's overseas expansion may be affected by geopolitical uncertainty.
• AI-related investment is expected to have an incremental impact of about Rmb2bn on 2026E P&L; if commercialization falls short, it may weigh on profits.

What to watch

• Whether food delivery subsidy intensity continues to decline and whether competition truly shifts from subsidies to efficiency.
• Whether the UE gap between Meituan and BABA in food delivery remains stable or widens further.
• Whether regulatory investigations and merchant feedback collection lead to clearer industry constraints.
• Whether 1Q in-store revenue growth approaches UBS's expected 7% and how Douyin subsidy intensity changes.
• Whether high-AOV orders, orders above Rmb30, and CR2 GTV share can continue to maintain their advantage.
• Whether Keeta in Saudi Arabia can achieve breakeven in some months by the end of 2026 and show profit potential in 2027.
• Whether supply formats such as Xiaoxiang Supermarket, Raccoon Kitchen, InstaMarts, and Waima Songjiu improve supply-chain efficiency.
• The actual impact of AI investment on the 2026E income statement and whether Meituan can use proprietary real-time data to create a closed-loop transaction advantage.