Meituan: A Hidden Gem in the Internet Plus Sector

Meituan's stock price has been on a downward trajectory for several days, but foreign banks have been raising their target prices for next year, indicating their confidence in the company's long-term growth and market position. Morgan Stanley, for instance, has raised its target price for Meituan to 300 Hong Kong dollars, representing a potential increase of 40% from the current stock price. This adjustment suggests that Morgan Stanley believes Meituan has growth advantages despite the economic slowdown and has a good chance of reaching the most bullish target price next year.

Meituan's strong financial performance and growth prospects contribute to its potential upside. The company's revenue has been growing consistently, with a 22.4% year-on-year increase in the third quarter of 2024, driven by increased demand for its services, particularly in the food delivery and in-store segments. Meituan's profit has also been increasing significantly, with a more than threefold increase compared to the same period last year, driven by strong revenue growth and cost control.



Meituan's expansion into new markets, such as the Middle East, and strategic partnerships, such as its collaboration with Walmart for 30-minute deliveries in China, further boost its growth prospects. The company's strong user base and merchant network, combined with its adaptability to changing consumption trends, set it apart from its competitors in the internet plus sector.

Regulatory changes and market trends also play a significant role in Meituan's stock price outlook. The company's recent announcements, such as ending late delivery penalties and implementing 'fatigue management' systems for its couriers, align with regulatory crackdowns on algorithm misuse and address work-life balance concerns. These initiatives indicate a more user-friendly approach that could boost customer satisfaction and potentially drive stock price growth.



In conclusion, Meituan's strong financial performance, growth prospects, and adaptability to regulatory changes and market trends make it an attractive investment opportunity. Despite the recent stock price decline, foreign banks' target price adjustments reflect their confidence in the company's long-term growth and market position. Investors should consider Meituan as a potential addition to their portfolios, given its strong fundamentals and growth prospects.