Market Insight | Meituan-W rises nearly 4% again, with a cumulative increase of over 20% post-performance. Fitch upgrades Meituan's credit rating and maintains a positive outlook

According to the Smart Finance app, Meituan-W (03690) has risen by nearly 4% again, with a cumulative increase of over 20% after the performance announcement. As of the time of publication, it has risen by 3.85% to HKD 124, with a turnover of HKD 1.799 billion.

On the news front, Fitch Ratings has upgraded Meituan's long-term issuer rating to "BBB" with a "positive" outlook. Fitch stated that this rating upgrade reflects Meituan's significant improvement in profitability and strong free cash flow (FCF), thanks to its successful strategic execution and easing competition in its on-site business. Fitch expects that Meituan's platform scalability, continuous improvement in the penetration rate of its core local business, and the strategic shift from subsidy-driven investments to return-driven investments will support steady EBITDA growth and FCF generation in the medium term.

J.P. Morgan previously stated that it predicts Meituan's adjusted earnings per share to grow by 119% in the third quarter and 95% in the fourth quarter, accelerating from 78% in the second quarter. J.P. Morgan also noted that Meituan is significantly accelerating shareholder returns, with the share buyback scale exceeding 3% of outstanding shares and increasing the buyback plan size to USD 1 billion. Citigroup, on the other hand, mentioned that looking ahead to the third and fourth quarters, due to product innovation, subsidies, and cost improvements, profit growth may outpace revenue and Gross Transaction Value (GTV) growth. The bank stated that with the accelerated pace of buybacks, earnings per share improvement is better than adjusted earnings