Intrinsic Value Meituan (3690.HK)

• Previous Close: HK$97.20
• Intrinsic Value: HK$536.11
• Upside potential: +452%

Stock Valuation Context

Business Model And Market Position

Meituan is a dominant Chinese e-commerce platform operating in the specialty retail sector, primarily serving the consumer cyclical market. Its core revenue model is commission-based, connecting merchants with consumers across three key segments: Food Delivery, In-store/Hotel/Travel services, and New Initiatives. The company generates income by facilitating transactions for prepared meals, local experiences, accommodations, and newer ventures like grocery delivery and bike-sharing. Meituan holds a leading market position in China's on-demand service economy, leveraging its extensive two-sided network of users and merchants. Its platform benefits from significant scale advantages, creating a powerful ecosystem where consumer demand and merchant supply reinforce each other. This entrenched position allows it to continuously expand its service offerings while maintaining a competitive moat against rivals in the highly dynamic Chinese tech landscape.

Revenue Profitability And Efficiency

Meituan reported robust revenue of HKD 337.6 billion for the period, demonstrating its massive scale. The company achieved a net income of HKD 35.8 billion, reflecting improved monetization and operational efficiency across its diverse platform segments. Strong operating cash flow of HKD 57.1 billion indicates healthy conversion of earnings into cash.

Earnings Power And Capital Efficiency

The company generated diluted EPS of HKD 5.66, showcasing solid earnings power from its platform operations. Operating cash flow significantly exceeded capital expenditures of HKD 11.0 billion, indicating efficient capital deployment and strong underlying business cash generation capabilities.

Balance Sheet And Financial Health

Meituan maintains a solid financial position with HKD 70.8 billion in cash and equivalents against total debt of HKD 61.5 billion. The substantial cash reserves provide ample liquidity for operations and strategic investments while maintaining a reasonable debt level relative to its market capitalization.

Growth Trends And Dividend Policy

The company currently maintains a zero dividend policy, reinvesting all earnings back into business growth and expansion initiatives. This approach supports continued investment in new ventures and market expansion while prioritizing long-term value creation over immediate shareholder returns.

Valuation And Market Expectations

With a market capitalization of approximately HKD 589.7 billion, the market values Meituan at roughly 16.5 times revenue. The low beta of 0.193 suggests the stock is perceived as less volatile than the broader market, reflecting investor confidence in its stable platform business model.

Strategic Advantages And Outlook

Meituan's strategic advantage lies in its comprehensive ecosystem that captures multiple consumer spending categories. The platform's network effects and data insights provide sustainable competitive advantages. Future growth will depend on successful execution in newer initiatives while maintaining leadership in core food delivery and local services markets.

Sources

Company filingsHong Kong Stock Exchange disclosures