--- title: "It's time to have more confidence in Meituan" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/36808782.md" description: "Possibly due to its adherence to the concept of borderless expansion, Meituan often collides with major giants. But first, there's a small misunderstanding here. Meituan is actually a company with very clear boundaries. It has always been a digital pioneer in local retail. Whether it's group buying, in-store services, hotel and travel, or food delivery, flash sales, Xiaoxiang, or Keeta, all its businesses actually revolve around the goal of digitizing local retail (service retail + product retail). Secondly, history has repeatedly proven that Meituan is an indomitable cockroach, and its combat effectiveness is not the only reason; there are deeper reasons..." datetime: "2025-12-01T00:09:50.000Z" locales: - [en](https://longbridge.com/en/topics/36808782.md) - [zh-CN](https://longbridge.com/zh-CN/topics/36808782.md) - [zh-HK](https://longbridge.com/zh-HK/topics/36808782.md) author: "[走马财经](https://longbridge.com/en/profiles/2493942.md)" --- # It's time to have more confidence in Meituan Possibly due to its adherence to the philosophy of borderless expansion, Meituan has frequently clashed with major industry giants. However, there is a small misunderstanding here. Meituan is actually a company with very clear boundaries. It has always been a pioneer in the digitalization of local retail. Whether it's group buying, in-store services, hotel and travel, food delivery, flash sales, Xiaoxiang, or Keeta, all its businesses are advancing toward the goal of digitalizing local retail (service retail + product retail). Secondly, history has repeatedly proven that Meituan is an unkillable cockroach. Its combat effectiveness is not the sole reason; the deeper reason stems from the aforementioned boundary—digitalization of local retail. Whether it's the battle for lifestyle services or the battle for instant food delivery and retail, these businesses are inherently within Meituan's core boundaries. **In a word, Meituan has no choice.** After nearly a year of competition, I believe people can now give Meituan a little more confidence. **1\. Underperformance in Core Businesses** **1.1 Food Delivery Under Pressure, But It Survived** Yes, Meituan's overall performance in Q3 fell short of expectations, but the worst is over. After fierce competition, market perceptions are increasingly aligning—this is not a life-or-death war. Being the top player in the food delivery market is not a must for Alibaba. It would be great if achieved, but it's not the end of the world if not. The reality is that sustaining this position is prohibitively expensive—Alibaba burned about 50 billion yuan in the past two quarters, and the entire industry burned over 100 billion yuan, resulting only in a surge of invalid orders. The actual revenue and profits, which reflect real performance, were dismal. Rough estimates show that the three major food delivery players collectively lost over 90 billion yuan in Q3, with total revenue growth of only about 9.6 billion yuan. The entire industry lost over 70 billion yuan, compared to a profit of over 10 billion yuan in the same period last year. From the perspective of specific instant retail businesses, such investments are clearly unsustainable. But Alibaba and JD.com have two additional strategic goals for instant retail: First, to evolve from traditional e-commerce platforms for physical goods into super-consumer platforms integrating food, entertainment, and lifestyle services. Second, to establish a stable and sustainable flow of instant retail customers, leveraging its high-frequency and stable traffic to feed back into physical e-commerce. I tend to believe that the first strategic goal takes precedence over the second and is more realistic. Currently, the first goal has largely been achieved, while the second is unlikely to be effectively realized. The reason is simple: instant retail and traditional e-commerce differ in consumer mindset, and most of Alibaba and JD's instant retail traffic is mismatched with their physical e-commerce traffic. Customers drawn by ultra-cheap tea deliveries are highly price-sensitive, some even being bargain hunters. They are unlikely to spend on other products just because they got a good deal on food delivery. They will still consider factors like price, service, timeliness, and overall experience. From the performance of Alibaba and JD's e-commerce businesses in the past two quarters, we can roughly see that the synergy between food delivery and e-commerce is limited. As of the pre-Double 11 period in Q4, Alibaba's subsidies for instant retail remained high (though weaker than the peak in July-August). Alibaba's earnings call mentioned that GTV had reached 40% by November (as of the earnings release, coinciding with Double 11). This is progress, but it's a combined share for Meituan and Alibaba. Including JD.com, Alibaba's overall GTV market share is still only around 30%, and Double 11 is Alibaba's home turf, with the highest traffic. As of Meituan's earnings release (November 28), Meituan stated that its market share had begun to recover, especially with orders over 15 yuan accounting for over two-thirds and orders over 30 yuan stable at over 70%. In other words, Meituan's market share rebounded in the two weeks after Double 11. The decline in Meituan's overall market share in the past two quarters was not due to a drop in normal orders but rather the industry-wide expansion of orders under 15 yuan. In the long run, orders under 15 yuan are entirely unprofitable. You can't say these low-price orders are entirely useless—they contribute to order density, which is a key factor in reducing per-order fulfillment costs and improving unit economics. But such orders shouldn't dominate. If their proportion is too high, it's a sign that subsidies are creating invalid demand, which will mostly disappear once subsidies fade. Therefore, if subsidies eventually recede, the contraction of orders under 15 yuan will naturally boost Meituan's market share—less of an improvement and more of a return to normal. According to Meituan's earnings call, Alibaba's subsidies have already declined noticeably after Double 11. Alibaba also stated that it would significantly reduce subsidies for instant retail in the future, focusing limited resources more on physical flash sales rather than food delivery. Thus, the competitive landscape of the food delivery market is clear: after immense pressure, Meituan has survived. In the past two quarters, Meituan's instant retail business burned an additional 40 billion yuan (core local commerce profits in Q2+Q3 2024 were about 29.8 billion yuan, while losses in the same period this year were about 10.4 billion yuan, meaning an extra 40 billion yuan was spent). Alibaba burned an additional 50 billion yuan, and JD.com burned about 30 billion yuan. Meituan spent relatively less, preserved its real food delivery share (orders over 15 yuan), and widened the UE gap (the UE gap with Ele.me was about 1.5 yuan in Q3 last year and about 3 yuan in Q3 this year, not to mention the gap with JD.com). Given its highest market share, maintaining lower total subsidies amid such fierce competition is even harder. In my post-Q2 earnings analysis, I said: > Meituan will inevitably lose some market share, but Taobao won't invest indefinitely. Meituan's profit margins will eventually normalize. In the end, both sides get what they want most—Meituan retains its top position, Alibaba gains the consumer mindset of a one-stop lifestyle platform, while giving up some goals—Alibaba abandons its ambition to be No. 1 in food delivery, and Meituan gives up its de facto monopoly. > > I still believe this is the most likely outcome. > > Zouma Hanzi, WeChat Official Account: Zouma Finance[Has the Moat of Food Delivery Disappeared?](https://mp.weixin.qq.com/s/Zn395Rzq7UNuRwyuOYOOBw) Now, the likelihood of this outcome seems higher than ever. **1.2 In-Store and Hotel/Travel Under Pressure, but Competitive Advantages Remain** Meituan's in-store and hotel/travel business remained under pressure in Q3, with quarterly GTV of about 327 billion yuan, growing at less than 20%. In-store services grew at nearly 30%, but hotel/travel growth slowed to around 10%, affected by macro factors and competition. Currently, Meituan is focusing on lower-tier markets for in-store and hotel/travel. In tier-1 and tier-2 cities with many chain brands, Douyin's traffic leverage is more pronounced—a single short video ad can cover stores nationwide, an advantage Meituan can hardly match. Meituan's strengths lie in merchant coverage, brand recognition, high certainty, professionalism, and marketing ROI. Douyin excels in driving orders for chain brands and acquiring new customers. The two platforms have distinct competitive edges, but the instant retail war has spilled over into in-store and hotel/travel, as most merchants operate both in-store and delivery services on Meituan. Intense delivery competition has shifted some in-store demand to delivery, while merchants have passively increased subsidies, affecting in-store revenue and their willingness to advertise. Meanwhile, Meituan has had to divert more resources and energy to instant retail, leaving it stretched thin in in-store and hotel/travel. Douyin Lifestyle seized the opportunity to ramp up subsidies, reaping the benefits. However, the two platforms' advantages remain clear-cut, especially Meituan's redemption rate advantage for high-certainty demand. Post-redemption, Meituan still holds a significant market share. Combining in-store and delivery, Meituan has unparalleled scale and bargaining power with merchants—especially in dining—making it stronger, not weaker, in negotiated supply prices. Douyin's lower SKU prices are often the result of platform subsidies. Overall, Meituan has maintained its low-price appeal, thanks in large part to its discount group deals. In the past two quarters, Douyin Lifestyle has shown more aggression in dining services, with noticeably more ads in mall dining areas. Meituan and Dianping remain under heavy pressure. Douyin made many fundamental mistakes before 2024 but has performed steadily and outstandingly since 2025, making it a rival all internet companies should respect. **2\. Many Bright Spots** While its core food delivery and in-store/hotel-travel businesses face their own pressures, Meituan achieved impressive results in many other areas this quarter. **2.1 Flash Sales Continue to Shine** In Q3, Meituan's flash sales averaged about 13.5 million daily, up ~30% YoY, maintaining strong growth. Quarterly GTV was ~100B yuan, with YTD GTV at ~260B yuan. Full-year GTV is expected to reach ~360B yuan. Over the past six quarters, flash sales growth has consistently hovered around 30%. In the last two quarters, flash sales were unaffected by the food delivery war, with average order value rising slightly due to expansion into high-value categories like 3C, electronics, and appliances. Previously, instant retail supply mainly came from brick-and-mortar stores going online, which didn’t fully meet consumer demand for immediacy due to limited selection and mediocre value. But as offline-native supply improves and lightning warehouses mature, the line between flash sales and traditional e-commerce will blur further. In October, Meituan Flash Sales partnered with several brands to launch branded lightning warehouses and flagship store models—a brilliant move. For branded goods, establishing standardized local inventory is a clear trend as consumers increasingly shop online locally. Compared to instant retail platforms, traditional e-commerce’s main advantages are variety and affordability, and to some extent, quality (since some instant retail merchants offer generic goods). But for branded goods, pricing is usually consistent across channels, ensuring quality. This means instant retail and e-commerce align on “affordability” and “quality.” As for variety, instant retail can never match e-commerce, but speed is its killer feature. Honestly, I’ve long felt Meituan’s current valuation doesn’t reflect flash sales’ potential even three to five years out. It’s almost certain that flash sales will reach food delivery’s 2024 scale (~1T yuan GTV) within five years. Given physical goods’ higher profit elasticity and brands’ greater ad budgets, 1T yuan in flash sales GTV should yield higher monetization than food delivery at the same scale. In 2024, Meituan’s food delivery net profit was ~35B yuan. Assuming flash sales hit that level (or at least the same potential) in five years, a 25x PE would imply ~940B HKD market cap—about 1.5x Meituan’s current valuation. The market is efficient, sometimes excessively so. In early 2024, due to the in-store/hotel-travel war, Meituan’s valuation was below the intrinsic value of its food delivery business alone. In 2025, the food delivery war seems to have zeroed out many businesses’ valuations. **2.2 Xiaoxiang Stronger Than Expected** Xiaoxiang and Kuailu stood out in retail. Xiaoxiang’s growth has led the industry for several quarters, earning more consumer recommendations. Two years ago, I warned that Xiaoxiang was far stronger than imagined, as its penetration would exceed expectations. Over time, more people are realizing this. If Meituan Flash Sales is the instant retail version of Taobao, Xiaoxiang is the instant retail version of JD’s self-operated model. More precisely, Xiaoxiang is the local version of JD Supermarket，对标 JD Retail’s daily necessities segment, which hit ~400B yuan in the past 12 months. Xiaoxiang is only ~40B yuan in 2025. JD Supermarket reaches rural markets, while Xiaoxiang covers just 20 tier-1 and new tier-1 cities, mostly not citywide. If China’s consumer market enters an upcycle, Xiaoxiang could expand to all tier-1, new tier-1, and tier-2 cities, even some tier-3 cities—a ~500M-person market. Kuailehou could cover tier-3-5 cities. Together, Xiaoxiang and Kuailehou would replicate JD Supermarket with faster delivery and better value, theoretically achieving even greater scale. Once realized, their substitutability for JD Supermarket would be obvious. Kuailehou has opened ~6 stores, all very successful based on my field research. Compared to peers, Kuailehou’s results are the best (though new-store effects may play a role). But it lags far behind Hema NB, which has validated its model and started franchising. Xiaoxiang is a high-certainty business; Kuailehou isn’t yet, far from proving itself. **2.3 Keeta Exceeds Expectations** Keeta has made remarkable progress recently, turning profitable in Hong Kong ahead of schedule in October. Its market share long surpassed 50% and continues to grow in orders and share, proving Meituan has built an efficient, replicable operational standard in instant retail. Saudi Arabia is different. Local leaders are stronger, and localization needs are higher. Many Hong Kong F&B brands overlap with mainland ones, already familiar with Meituan’s model, making supply-side expansion easier than in Saudi Arabia. But Saudi Arabia has advantages: higher average order values and better unit economics, making breakeven easier in theory. Currently, Keeta can likely achieve some market share and profitability in Saudi Arabia and the Gulf states. Matching Hong Kong’s leading share and profitability is more challenging. If all goes well, Keeta Saudi could hit breakeven by Q4 2026, but becoming No. 1 in market share is a long road. Still, this is commendable. Keeta’s highly localized expansion minimizes geopolitical risks, much like Lazada, creating jobs and tax revenue for host governments. Long-term, Keeta has a good shot at winning both market share and profits in the Gulf. Brazil is more uncertain. Success there on both fronts would let Keeta’s valuation approach DoorDash’s (on comparable GTV), driving a Meituan re-rating. **2.4 Non-Core Businesses Steady** Beyond new businesses, Meituan Bike and power banks are profitable and posted solid Q3, both No. 1 in their sectors. After Q2 cuts, Meituan Youxuan’s losses narrowed further. Profits and reduced losses in non-core businesses helped control overall new business losses. **3\. Compounding Investments** The 2025 food delivery war showed some platforms’ investments will become permanent losses—even with scale cuts, unit economics won’t improve, leaving them stuck between shrinking meaninglessly or burning cash. They may end up abandoned. Meituan’s investments mostly went into areas that compound: supply-side innovation, fulfillment upgrades, and targeted consumer subsidies, laying a sustainable foundation for food delivery. **3.1 Accelerating Innovation** Supply-side innovation is Meituan’s biggest focus now and for years ahead. Consumer growth is plateauing, but supply optimization is endless. Just in food delivery, Meituan created Pinhaofan, a flagship product with tens of millions of daily orders. This model will outlast the subsidy war, offering sustainably low prices. Shenqiangshou, brand satellite stores, and Huanxiong Canteen deepened supplier ties. Beyond food delivery, lightning warehouses are a major innovation, now nearing 40,000. This year, branded lightning warehouses were added. Waima Songjiu, a quasi-self-operated model, also progressed rapidly. Xiaoxiang’s supply chain innovations are subtle yet profound: direct sourcing, origin partnerships, and private labels advancing in parallel—representing the latest and most promising trends in Chinese retail. **3.2 Doubling Down on Fulfillment** For years, rider social insurance loomed over Meituan investors, resurfacing periodically. Post-November 2024, this cloud will rain, but rainbows follow. Management reiterated the long-term 1-yuan UE target is achievable, including 社保 costs. This will strengthen Meituan’s fulfillment capabilities and stabilize labor relations. Lower gross margins will also raise operational barriers in food delivery. Low entry barriers don’t mean low operating barriers. **3.3 Precision Subsidies** While rivals subsidized seasonal, unsustainable demand like milk tea, Meituan focused on full-meal delivery. It also refined subsidy targeting. Meituan Membership is key here, using tiered subsidies to reach the right users and boost loyalty. Members at all levels are ordering more, showing deeper trust—consumers vote with their wallets. At the subsidy war’s peak, Meituan’s basic membership (12 no-minimum 5-yuan coupons) cost 2.99 yuan, ensuring profit on the first order. With most coupons expandable, returns were even better. There’s room to raise the 2.99-yuan fee. Since coupons are at least 5 yuan with no minimum, the fee could theoretically go up to 4.99 yuan, adjusted gradually. A 1-yuan hike across ~800M members would add ~10B yuan in annual profit. 2025 may be Meituan’s toughest year yet, with home and in-store services under siege like never before. But it’s also the year Meituan transformed. If someone told you a company did all this in a year: _Reallocated capital, cutting non-core spending to focus on high-ROI businesses;_ _Fought two world-class rivals head-on, holding its ground in core businesses;_ _Innovated across supply, fulfillment, and demand, defending valuable share with less spending, widening UE gaps;_ _Pushed ahead overseas and in AI;_ _Made strides in retail extensions, whether 1P, 3P, or offline._ What would you do but trust it more? Internal sources say Meituan will further review and cut some innovation projects with unclear short-term revenue, tightening its belt. Crisis breeds opportunity. With sharper focus on retail, AI, and globalization, plus cost controls, it’s time to give Meituan more confidence.$MEITUAN(03690.HK) ### Related Stocks - [03690.HK](https://longbridge.com/en/quote/03690.HK.md) - [09988.HK](https://longbridge.com/en/quote/09988.HK.md) - [09618.HK](https://longbridge.com/en/quote/09618.HK.md) - [83690.HK](https://longbridge.com/en/quote/83690.HK.md) - [MPNGY.US](https://longbridge.com/en/quote/MPNGY.US.md) - [BABA.US](https://longbridge.com/en/quote/BABA.US.md) - [89988.HK](https://longbridge.com/en/quote/89988.HK.md) - [89618.HK](https://longbridge.com/en/quote/89618.HK.md) - [JD.US](https://longbridge.com/en/quote/JD.US.md) - [KBAB.US](https://longbridge.com/en/quote/KBAB.US.md) - [BABO.US](https://longbridge.com/en/quote/BABO.US.md) - [BABX.US](https://longbridge.com/en/quote/BABX.US.md) - [HMTD.SG](https://longbridge.com/en/quote/HMTD.SG.md) - [HBBD.SG](https://longbridge.com/en/quote/HBBD.SG.md) - [HJDD.SG](https://longbridge.com/en/quote/HJDD.SG.md) ## Comments (3) - **EdwardLu · 2025-12-01T04:54:32.000Z**: No use, sell first and wait for the Q4 report to come out before considering buying in - **KAISHENGHK · 2025-12-01T01:40:02.000Z**: The profit model is too simple, easily replicated, and profits drop significantly when facing strong competition. - **天弢 · 2025-12-01T01:10:54.000Z · 👍 1**: Well written, give it a thumbs up