CITIC Securities expects Meituan to incur a core local business operating loss of 11.8 billion RMB in the fourth quarter, with a rating of "Buy."

China Merchants Securities published a research report, indicating that Meituan-W (03690.HK) has a stable high customer order share and anticipates a profit recovery next year. Its third-quarter revenue grew by 2% year-on-year, reaching RMB 95.5 billion, which is 2% lower than expected. Gross profit decreased by 31% year-on-year. The adjusted operating loss was RMB 15.3 billion, in line with expectations. The core local business operating profit fell short of expectations due to increased investment, while the operating profit from new businesses exceeded expectations.

The firm predicts that Meituan's core local business revenue will decline by 1% year-on-year in the last quarter of this year, with the decline in instant delivery revenue narrowing quarter-on-quarter, flash purchase maintaining good growth momentum, and in-store hotel and travel maintaining double-digit growth; it forecasts a core local business operating loss of RMB 11.8 billion, with an absolute investment scale of approximately RMB 22 billion.

For 2026, the firm expects Meituan's core local business revenue to grow by 12% year-on-year, with operating profit reaching RMB 18 billion; it anticipates new business revenue to grow by 18% year-on-year, with operating losses narrowing to RMB 8.4 billion.

The firm also adjusted its forecasts for Meituan from 2025 to 2027, maintaining a target price of HKD 139, corresponding to 86 times and 23 times price-to-earnings ratios for the base case in 2026 to 2027, and 24 times and 15 times price-to-earnings ratios in the optimistic scenario; the rating is "Buy."