After the Hong Kong stock market closed on Friday, March 22, MEITUAN will release its financial report for the fourth quarter and full year of 2023.
SCS expects that MEITUAN's total revenue in the fourth quarter will reach 72.4 billion RMB, a year-on-year increase of 20%; the combined operating profit of core local businesses and new businesses will reach 2.5 billion RMB.
By segment, it is expected that in the fourth quarter, the company's core local business will achieve revenue of 54.4 billion RMB, a year-on-year increase of 25%; contributing an operating profit of 7.6 billion RMB, a year-on-year increase of 6%; new businesses will achieve revenue of 18.1 billion RMB, a year-on-year increase of 9%; operating losses of 5.2 billion RMB, a year-on-year decrease of 19%.
<h3>Itemized Expectations</h3>
<ul>
<li>Increased subsidies affecting short-term profitability of food delivery, while flash sales continue to show growth trends.</li>
</ul>
(1) Food delivery: With a low base in the fourth quarter of last year, the company is expected to have 5.3 billion food delivery orders in the fourth quarter of this year, a 24% year-on-year increase; revenue of 38.1 billion RMB, an 18% year-on-year increase; the increase in advertising monetization rate is offset by the year-on-year decline in customer unit price, and the decrease in rider costs is offset by increased subsidies, resulting in a slight year-on-year decrease in UE to 0.9 RMB.
Looking ahead to 2024, we believe that the profitability of food delivery may be under pressure, but core user stickiness is high, and order volume growth will remain resilient.
(2) Flash sales: With a high base in the fourth quarter of last year, the company is expected to have a total of 720 million flash sales orders in the fourth quarter, a 20% year-on-year increase; revenue of 5 billion RMB, a 23% year-on-year increase; operating losses of 300 million RMB.
Supply increase is driving growth, with initiatives like lightning warehouses serving as important supplements to platform supply, meeting long-tail user demand. During the Double Eleven and Double Twelve promotions, order volume once again reached a historical peak, with a year-on-year growth in transaction volume of 219%. It is expected that flash sales will remain the business with the greatest growth potential for the company.
<ul>
<li>Expectations for fluctuations in market share for in-store travel in the fourth quarter, with 2024 potentially entering the final battle.</li>
</ul>
It is expected that the company's in-store travel revenue in the fourth quarter will increase by 56% to 11.3 billion RMB year-on-year, due to increased investment in lower-tier market business development, as well as contributions from live streaming and special price group buying, resulting in a decrease in operating profit margin to 29%.
Local life service consumption is expected to continue to grow higher than the overall consumption market in 2024. As of December 27, pre-orders for New Year's Day travel on MEITUAN &amp; Dianping have increased by over 500% year-on-year; online transaction volume for in-store dining nationwide in the first two days of New Year's Day increased by over 230% year-on-year; during the 2024 Spring Festival holiday, MEITUAN's daily consumption scale increased by 36% year-on-year, exceeding 155% growth compared to 2019.
The post-epidemic recovery of in-store travel consumption is not yet complete, and it is expected that the company's in-store travel business will continue to maintain high growth in 2024. There may be short-term competitive pressures, but it is expected that the situation may be determined in 2024.
Since November 2023, Douyin and MEITUAN have successively adjusted the organizational structure and core personnel of their local life businesses, which is conducive to better synergy between the two major businesses in merchant operations, live streaming products, and membership systems. Short-term profits are still under pressure, but it is expected that the competition between the two platforms has entered a deep water zone. 2024 may be the final battle, and after the situation stabilizes, we look forward to MEITUAN's ability to monetize its in-store business recovering.
<ul>
<li>New Business
It is expected that the new business will break even in the fourth quarter. The expected revenue from the new business in the fourth quarter is 18.1 billion RMB, a year-on-year increase of 9%; the operating loss rate is 29%, compared to 38% in the same period last year, with expectations of further turning losses around by 2024.</li>
</ul>
In the fourth quarter, the company's overseas business made a breakthrough. In October, the food delivery platform KeeTa in Hong Kong, China achieved full coverage in Hong Kong, with a market share of about 31% in November, surpassing Deliveroo to become the second largest in Hong Kong. KeeTa's overseas expansion is promising, expected to accumulate experience for the company and create a new growth curve

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East China Securities expects that MEITUAN's total revenue in the fourth quarter will reach 72.4 billion yuan, a year-on-year increase of 20%; the operating profit of core local businesses and new businesses combined will reach 2.5 billion yuan; it is expected that increased subsidies will impact the short-term profitability of food delivery, while flash sales will continue to show a growth trend. Looking forward to a bright future in 2024!

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