Bank of China International: Raised Meituan's target price to HK$110, upgrade to "buy" rating.

The Bank of China International released a report stating that Meituan's total revenue in the first quarter increased by 6% year-on-year to 91 billion yuan, in line with market expectations. The bank expects the improving trend in the unit economics of the takeaway business to continue in the coming months, driving the core local business to achieve an operating profit of 3.6 billion yuan in the second quarter. Although the short-term competitive situation is still unclear, Meituan has solid core advantages in the supply chain, fulfillment, and operations, and can better balance market share and user experience performance through diversified real-time delivery models and cross-selling. Additionally, as artificial intelligence accelerates the empowerment of core business, long-term efficiency will be further released. The bank predicts that Meituan's revenue in the second quarter will accelerate by 11% year-on-year to 102.1 billion yuan, with core local business and new business revenue expected to increase by 6% and 23% respectively. The bank has raised Meituan's rating from "hold" to "buy" and increased the target price from 100 Hong Kong dollars to 110 Hong Kong dollars based on the sum-of-parts valuation method.