In recent days, many people have been discussing the topic of "Pinduoduo surpasses Ali in market value" with great enthusiasm. However, several of them are happy and some of them are worried. After the third quarter report of Meituan, another Internet giant, was released, the stock price of Hong Kong shares fell sharply and continued to hit a new low since April 2020. As of the closing of December 7, the market value of Meituan was HK $537.6 billion, which had evaporated 1.5 trillion from the peak of 2 trillion. What's more, the market value of Meituan has almost halved in this year alone, which is really amazing.
What happened to Meituan? Let's have a look.
one
In view of the sharp drop in share prices after the release of the third quarter report, many people may naturally believe that Meituan's performance was not as expected.
Is that true? Financial reports can reveal the answer.
As can be seen from the financial report data, Meituan achieved a revenue of 76.47 billion yuan in 2023Q3, up 22.1% year on year; Operating profit was 3.359 billion yuan, up 239.9% year on year; The adjusted net profit was 5.73 billion yuan, up 62.4% year on year. From this set of data alone, Meituan's performance in the third quarter of this year was not poor, but far exceeded many people's expectations.
Further from the structure, we can also find the following information:
(1) The company's "core local business" segment (including catering takeout and arrival, hotel and tourism divisions, Meituan flash purchase, home stay, transportation ticketing, etc.) contributed 57.69 billion yuan in revenue in the third quarter, with a year-on-year growth of 24.5%, which was mainly due to the recovery of consumption, the number of instant delivery transactions, and the growth of the transaction amount of arrival, hotel and tourism businesses.
(2) In the "core local business" segment, the number of real-time delivery transactions increased by 23.0% year on year, and the daily order volume of catering delivery reached a peak of 78 million, a record high and double that of three years ago; Meituan's flash purchase order volume, business scale and user scale have significantly increased, and the number of users in low-end cities has continued to grow; The transaction amount of the hotel, hotel and tourism business increased by more than 90% year on year, and the number of active businesses in the quarter increased by more than 50% year on year; In terms of store business, with more merchants participating in and providing high-quality and inexpensive products, the transaction volume of "special price group purchase" continues to grow.
(3) The company's "new business" segment Q3 achieved an operating revenue of 18.78 billion yuan, up 15.3% from 16.29 billion yuan in the same period of the previous year, and the growth rate slowed down compared with Q2 (up 18.4% year-on-year), reflecting the pressure on the growth of new business, which is due to the pressure still existing on the bike sharing business and the decline of its scale, At the same time, the growth of Meituan's vegetable shopping and Meituan's preferred food is facing a high revenue base due to the epidemic last year.
(4) The operation of "new business" is still in deficit, but it has improved on the whole. The main reason for the loss is the poor operation of Meituan Best Choice. However, the amount of Meituan's vegetable purchase transactions has grown strongly in this quarter, and it has become the first choice of many consumers. The user scale, purchase frequency and customer price have all increased steadily.
On the whole, Meituan Q3's performance is not bad. Although some businesses still face the dilemma of loss and weak growth, there are still many highlights, so the performance may not be the root cause of the company's share price decline.
two
Since it is not the performance drag, what is the "culprit"?
One reason widely accepted by the market is that, The pressure from competitors is shaking the dominance of Meituan in the local life market, and the biggest threat is Diaoyin.
Although Ditto has always been famous for short videos and live broadcasts, it has a special preference for local life. Public information shows that as early as 2019, Diaoyin began to try to cut into local life business, but the early progress was relatively slow. In 2021, Diaoyin set up a local life commercialization team to attract and attract many merchants to settle in the way of "zero commission" and low commission. It also continued to launch special group coupons, which attracted a large number of consumers with friendly prices, and its market share grew quietly. Since the third quarter of 2022, the local life business of Diaoyin has entered the fast lane. By the Spring Festival this year, its share in the amount written off by Meituan (GTV) once reached about 40%. At the 2023 Diaoyin Life Service Ecological Partnership Conference held in April this year, the official data disclosed by Diaoyin showed that in 2022, the GMV of Diaoyin Life Service increased sevenfold year on year, and the business of Diaoyin Life Service has covered more than 370 cities, with more than 2 million cooperative stores.
Not only that, but also the group purchase and distribution track. According to the announcement, since the end of last year, Diaoyin Life Service has taken the lead in pilot group purchase and distribution services in Beijing, Shanghai and Chengdu. By July this year, it has further expanded to Guangzhou, Changsha and Linyi on the basis of the three pilot cities. In September, 24 new cities were added at one go, and the regional agent model was introduced in the local area. In terms of distribution, Shunfeng is in the same city, flash delivery, express delivery UU errands and other third parties cooperate with the transportation capacity to provide distribution services, or the merchants deliver by themselves. In addition, Diaoyin has also reached cooperation with Meituan's old rival, Eema. The two sides said that they would work together to explore new scenarios for upgrading local life services, connect businesses and consumers, launch a new service model of "look, click, and reach", and continue to attack the city.
With a huge flow pool of 700 million daily activities, Tiao Yin is getting closer and closer, which makes Meituan more anxious. Finally, this year, Meituan launched a comprehensive counterattack: first, it launched measures including reducing the annual fee, renegotiating the commission rate with merchants, and then launched special group purchase. Most of the group purchase prices are fully aligned with Tiao Yin, and some products are even subsidized to lower prices than Tiao Yin, At the same time, it also made efforts to broadcast the business, selling delivery coupons in the broadcast room, and gradually expanded its coverage to more than 200 cities.
How effective is the Meituan counter attack? In a word, it is: It temporarily stabilized the situation, but paid a big price.
The reason why the situation has been temporarily stabilized is that the overall performance of Meituan's local business sector is good, and the revenue and net profit have achieved a relatively considerable growth trend; However, the big cost is the sharp rise of costs in all aspects.
From the financial report data, we can see that the sales and marketing expenses of Q3 Meituan are 16.9 billion yuan, an increase of 55.3% over the same period in 2022, accounting for 22.1% of the revenue, which has increased significantly, indicating that Meituan's subsidies and costs are high. The high cost also inevitably squeezed the company's profits. Although the adjusted net profit of Q3 increased by 62.4%, compared with the increase of 272% in Q2, it was a precipitous decline, and the cost was heavy, which was self-evident.
These phenomena are difficult not to worry about. After all, local life is not the core business of Tiaoyin at present, but it is the core of Meituan. When the basic market of the industry leader is threatened by the non basic market of competitors, the market's impression of the former is bound to be greatly reduced. What's more, Meituan's new business is still losing money, and it seems difficult to provide more imagination in the short term.
As a result, the ceiling of Meituan's future growth seems to have dropped a lot, and it is naturally difficult to support the upward trend of stock price and market value.
three
In addition to the impact from competitors, Meituan also has something to worry about, That is the uncertainty of the prospect of the sea going business.
As we all know, for the Internet industry, the phenomenal rise of many giants in the early years was largely due to the rich traffic dividend. However, in recent years, with the gradual depletion of traffic dividends, the growth of the entire industry has encountered bottlenecks. In addition, the domestic business has been close to the red sea, so more and more Internet companies are looking to the overseas market.
At present, many of the leading Internet enterprises have carried out their overseas business with great success. For example, the cross-border e-commerce platform Temu launched by Pinduoduo in September last year has entered more than 40 countries and regions in North America, Australia, Europe and Asia, with more than 400000 packages exported every day; Alibaba's AliExpress also has a growing influence overseas; The most commendable is TikTok, the overseas version of TikTok, which has become a powerful driver of byte beating revenue, and has high growth expectations. According to data, Q2's revenue from overseas markets this year accounted for nearly 20% of the total revenue of byte beating, so it is estimated that its overseas market revenue this year is very likely to exceed 20 billion dollars, and the growth rate can even reach more than 50%.
Meituan, also one of the Internet giants, naturally does not want to miss the huge overseas market. As early as 2018, Wang Xing said ambitiously in his internal letter: "2018 is the first year for Meituan Reviews to explore globalization, and also the beginning for us to export our successful business model and scientific and technological innovation to the world." However, from the actual situation, Meituan's journey to the sea is not smooth until May 2023, five years later, Meituan launched a new delivery service platform called KeeTa in Hong Kong, China, in an attempt to occupy a place in this market with high population density and high consumption capacity, and pointed to Southeast Asia. People began to re-examine Meituan's prospects for going to sea.
However, there seems to be more bearish voices.
The reason is that Meituan's local life business model is too heavy:
On the one hand, if you want to expand the local life business overseas, you must establish a good cooperative relationship with local businesses, and also need a large number of local operators and management mechanisms. However, the labor costs in overseas markets are generally high, and a single take away business requires a large number of riders, which will inevitably require a huge investment, Considering that the business environment, laws and regulations of different countries and regions are different, the takeaway boys that can be seen in China can ride the motorcycle all over the street, and the efficient delivery can be achieved at home, but it may not be feasible abroad;
On the other hand, the habits of consumers in different countries and regions are also very different. Let's take Hong Kong, China as an example. Compared with the starting point takeout, Hong Kong people usually prefer to eat in stores or cook in person, and Hong Kong residents have high requirements for food quality and hygiene standards, so they have low trust in takeout, This will inevitably limit the further penetration and expansion of Meituan's business.
On the other hand, short video, games and other pure online businesses, because of their light business model and extremely short industrial chain, can quickly open the situation by copying the successful experience of domestic mobile Internet traffic operations to overseas markets; For e-commerce, although the business model is not as light as short videos and games, it is relatively easy for e-commerce platforms in China to go to sea relying on the long-term overseas independent station e-commerce model and the demand of Chinese supply chain enterprises.
Because of this, the difference in business models makes Meituan's prospects for going to sea more uncertain, and objectively it is difficult to open the market's imagination for Meituan's future growth. In a sense, this is another factor that causes the market to be unwilling to give Meituan a higher valuation.
four
Objectively speaking, although Meituan is facing a series of problems at present, the huge layout of the domestic multi line market, the mature business operation model, a large number of cooperative merchants, the cultivation of users' minds and habits, and strong stickiness are still the core advantages and competitive barriers of Meituan, which also make Meituan's market position still difficult to be truly shaken.
However, from the perspective of the capital market, compared with everything at present, the market may be more concerned about the future growth prospects of the company. If the imagination space cannot be opened, then the company's market value will inevitably continue to shrink. From the perspective of share price, Meituan Hong Kong shares are still hitting new lows, and there is no obvious sign of stopping falling so far.
Because of this, Meituan still needs to solve two major problems if it wants to reverse this decline: first, how to defend the basic plate of takeout and store arrival in the local business, and at the same time resist the covetous eyes of the chatterers; Second, how to upgrade and crack down on the overseas market all the way, and make rapid progress. Either of them is a great challenge. It is conceivable that Meituan is under great pressure. This may also confirm what Wang Xing said at an internal meeting this year: "Meituan is only half a year away from bankruptcy."
However, in retrospect of Meituan's growing process, the most important key word is competition - from participating in the "battle of thousands of Meituan" to competing with Ali for local life services, plus making numerous enemies in hot areas such as wine travel, online ticketing, fresh food, taxi, bike sharing, Meituan has really been able to go to today as "climbing out of the dead". It can be said that the competition faced by Meituan has never disappeared or been simple.
Now it is a new round of competition. What kind of answer will Meituan give? We will wait and see.
[Note: The market is risky, so investment should be cautious. In any case, the information or opinions contained in this subscription number are only for exchange of views, and do not constitute investment suggestions for anyone. Except for special remarks, the research data in this paper is supported by Flush iFinD]
This article was originally written by "Xingtu Financial Research Institute" by Fu Yifu, a senior researcher of Xingtu Financial Research Institute
