Citi lowers the target price for MEITUAN to 94 yuan, last year's core local business operations loss exceeded expectations

Citigroup's research report indicates that Meituan (03690.HK) issued a profit warning, expecting a core local commerce (CLC) operating loss of RMB 6.8 billion to 7 billion for 2025, better than the bank's and market expectations of RMB 7.3 billion and 7.9 billion, reflecting that last year's fourth-quarter loss was slightly better than expected. The net loss under International Financial Reporting Standards is approximately RMB 23.3 billion to 24.3 billion, higher than the bank's expectation of RMB 22.7 billion, but generally in line with market expectations.

As for 2026, the bank expects total revenue to grow by 9.1% year-on-year to RMB 399 billion, lower than the market expectation of RMB 411 billion; the adjusted net loss is expected to be RMB 13.9 billion, compared to the market expectation of a net profit of RMB 4.6 billion, with losses from CLC business and new businesses at RMB 5.1 billion and RMB 8.8 billion, respectively.

Given Alibaba (09988.HK) aims to further compete for market share in the takeaway and instant retail markets, along with the potential intensification of competition from Douyin in the in-store business, the bank believes Meituan may face more challenges before a turnaround occurs; maintaining a "Neutral" rating, with the target price lowered from HKD 115 to HKD 94