China Regulators Clamp Down on Food Delivery Price Wars

Meituan, JD.com, and Alibaba Group have risen in Hong Kong trading after the State Administration for Market Regulation summoned the three largest food-delivery firms to a meeting, requiring them to further regulate promotions. The cooling of price wars in China's food-delivery sector is expected to benefit all companies, with Meituan set to benefit the most due to its dominant market share in the core businesses of food delivery and quick commerce.

Hong Kong trading saw a significant boost for Meituan, JD.com, and Alibaba Group following a meeting with the State Administration for Market Regulation (SAMR). The meeting aimed to address the escalating price wars within China's food-delivery sector [1].

Meituan, the largest player in food delivery and quick commerce, saw its shares climb as much as 5% in Hong Kong, with analysts attributing the gains to the potential resolution of the sector's intense competition. The cooling of price wars is expected to benefit all companies involved, but Meituan stands to gain the most due to its dominant market share in its core businesses [1].

JD.com, which initiated the price wars earlier this year, rose by as much as 3.6%, while Alibaba Group, which owns Ele.me, increased by 2.6%. The market believes that the irrational competition between these players may be resolved soon, with the regulators stepping in to enforce stricter promotional regulations [1].

The cooling of price wars will also have a positive impact on the earnings visibility of these companies. China Merchants Securities (CMS) reported that intensified competition had reduced earnings visibility, but the recent regulatory intervention is expected to stabilize the market and improve profitability [2].

The subsidy plans and promotional activities implemented by these companies have led to significant increases in order volumes. For instance, Alibaba's Ele.me saw a single-day order volume of 80 million on July 5, while Meituan reached 120 million on the same day. JD.com reported approximately 20 million instant delivery orders [2].

Despite the positive outlook, CMS has lowered its financial forecasts for these companies. The brokerage firm reduced its FY2026/2027 non-GAAP net profit forecasts for Alibaba Group by 23% and 6% respectively, and slashed its target price from US$176 to US$146. Similarly, it lowered its forecasts for Meituan by 14% and 3% respectively, and chopped its target price from $177 to $156. For JD.com, the forecasts were reduced by 39% and 17% respectively, and the target price was slashed from US$54 to US$42 [2].

While the regulatory intervention is expected to benefit the companies in the long run, the immediate impact may be a temporary slowdown in growth due to reduced promotional activities. However, the market remains optimistic about the companies' stable cloud businesses and leading market shares.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-21/meituan-jumps-with-food-delivers-as-beijing-targets-price-wars
[2] https://www.aastocks.com/en/usq/news/comment.aspx?catg=1&id=NOW.1453519&source=AAFN