Matters of Meituan's Social Security, Views of Foreign Investment Banks
Today, $MEITUAN(03690.HK) fell sharply, undoubtedly due to the reason of providing social security for riders yesterday, but the views of foreign investment banks are not very bearish: the main reason is that costs are controllable (will be gradual year by year), of course, it will also affect short-term stock price trends.
Another piece of news:
Nikkei Asia cited unnamed sources reporting that regulators have extended the antitrust rectification period for China's food delivery giant Meituan, without providing a clear timeline for when the regulatory review will end. According to one source, the company's rectification period (originally set to end last October) has been extended as Meituan continues to seek to prevent restaurants from joining other delivery platforms.
The report stated that Meituan did not respond to requests for comment.
The seminar has just concluded, carrot and stick? A bit confusing...
Nomura Securities
Nomura Securities issued a research report stating that the impact of social security coverage on Meituan's (03690) food delivery unit economics is controllable. It is understood that Nomura expects the payment of social security to have a limited impact on Meituan's unit economic benefits and operating profits for its food delivery business this year.
The firm stated that Meituan may implement social security measures city by city rather than a one-time nationwide rollout, and it is expected that a full rollout may take 3 to 4 years. Forecasts indicate that the impact of social security coverage on Meituan's food delivery unit economics in the fiscal year 2025 may be controlled within approximately 5% to 7%.
The firm reiterated its "Buy" rating on Meituan and set a target price of HKD 212. It believes that although social security coverage may bring some cost pressure, its overall impact is controllable and will not significantly change the fundamentals of Meituan's food delivery business.
Goldman Sachs
Goldman Sachs published a research report noting that Meituan has been providing occupational injury insurance for riders in seven pilot provinces since July 2022 and has launched more measures to support a healthy rider ecosystem.
Goldman Sachs stated that considering the latest plan is progressive in nature, it expects the incremental cost of social security in the first year to be RMB 0.1 to 0.2 per order, with costs at a controllable level, and it expects Meituan's food delivery GTV profit margin to stabilize at around 3% year-on-year this year.
Additionally, the report mentioned that although JD.com recently announced a commission-free strategy to enter the food delivery sector, the barriers to entry in the food delivery business are very high, so Goldman Sachs is not overly concerned about market competition. The firm gave Meituan a "Buy" rating with a target price of HKD 200.
Morgan Stanley
Morgan Stanley published a research report stating that Meituan announced plans to pay social security for full-time and stable part-time riders, believing that it will have a limited impact on the unit economics and operating profits of the food delivery business in 2025. It believes that the company will gradually promote rather than pay social security for all riders nationwide at once, with the impact spread over the next few years. At the same time, it expects to absorb the impact on order unit economics through improved operational efficiency, maintaining the forecast for the annual operating profit of the food delivery business in 2025 at RMB 35 billion, with unit economics forecasted at RMB 1.45 Morgan Stanley believes that Meituan, as a leader in the food delivery industry, will enhance the industry's entry barriers by paying social security for riders and improving benefits, further consolidating its industry position. Morgan Stanley has given Meituan an "Overweight" rating with a target price of HKD 200.
Citigroup
Citigroup: The pilot program for Meituan's social security has a controllable impact on overall profit margins for 2025-26, maintaining a Buy rating with a target price of HKD 200.
HSBC Research
HSBC Research: Meituan's payment of social security for delivery riders has a controllable impact on this year's profits, but it limits the short-term upside surprise potential of unit economics.
Personally, I feel that Meituan has recently encountered two issues: one is the disruption from JD.com, and the other is social security. In the short term, the pressure on the stock price is considerable
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