Market Insight | Meituan-W surges over 3% in the afternoon, with a cumulative increase of over 23% after performance, while S&P and Fitch have recently raised the company's credit ratings

According to the financial news app Zhitong Finance, Meituan-W (03690) surged more than 3% in the afternoon, with a cumulative increase of over 23% after the earnings release. As of the time of publication, it rose by 3.09% to HKD 126.8, with a turnover of HKD 1.788 billion.

On the news front, rating agency Standard & Poor's (S&P) announced an upgrade of Meituan's long-term issuer credit rating to "BBB+", and correspondingly raised the company's senior unsecured notes rating, with a "stable" outlook. S&P stated that despite the weak macroeconomic conditions, the strong momentum of Meituan's core local commerce business is expected to be sustainable. Although the average order value has decreased, transaction volume continues to grow at a healthy pace. S&P pointed out that Meituan has executed its loss reduction plan faster than expected and has accelerated the reduction of user incentives for on-demand delivery.

Fitch Ratings recently also raised Meituan's long-term issuer rating to "BBB" with a "positive" outlook. Fitch stated that this rating upgrade reflects the significant improvement in Meituan's profitability and strong free cash flow (FCF), benefiting from successful strategic execution and easing competition in its in-store business. Fitch expects that the scalability of Meituan's platform, the continuous improvement in the penetration rate of its core local commerce business, and the strategic shift from subsidy-driven investments to return-driven investments will support robust EBITDA growth and FCF generation in the medium to short term