BERNSTEIN6May2025SOCIETECENERALEGROUPChinaInternetChina Internet:Food delivery wars? Wellyes, but actually neOneNightin Being-YfourstulyspentmuchofAprlon theroad,meetingcompariesandRobinZhuinvestors.includinamakinaastop in Belilirobin.zhugbersteinsg.como MeituanandJD.JD's attempttobvhasdrivenmassiveinvestordebate, and big drops in both stocks.In thishe observationsontheCharlesGoudevelopments to date,thoughts on what hapandinvestor views we've heard.While the sll-offisunsurpising, protracted contlictrequires combatants of comparablecharles.gougbernsteingg.comand thinkrisk-rewardnowskews positvelyfor both stocksMin-JooKangminjoo.kang@berThisisultimatelyaboute-commerceshare.Wethink,JD'sdecisiontoenterfooddeliveryCharliePengnment applianceincentives into.RMB3301bnof Merituan Instashoppingrowth to remain strong in future years.ID 's GeneralMerchandiseJRMB2tn thisyear,though transacted GMWV net ofreturmsis probablycloser to RMB1.5tn. Similarly, Aibaba's competitive response also chiefly focused on onind islongtli ature - thisisimportant.ID recently anouncedit'delivery orders though t's worth keepingin mind that this cameinthe back ofheavyusersubsidies, and almostzero merchant monetistion.ID appearstrastwith Meituanwhosedominancesivenetwork ofground apstaf.WithAhovering cdoseto RMB10),itfelsnotable that Chinese mediareportingial media posts from riders alrady poin to ID reducing rider incentives, and askingsmallerthantheone onorders.JD's growthilput pressure on Meituan ordervolume growth, but forMeituan we'dexpectthealler than the one on orders.Short-tail dining isledwhich pay thee lovesttake rates Rider costs are highrin igher tercies. Metuannoettivel to ID's incursion, but wed imagine the incrementalted ratherthannationwide.In the rest of Meituan's businessweexpectIn-storegrowthto continue, and expect Saudilosses to come in belowguidancepituanandJD.It doesn'tsurpriseushat market sentiment wentstr aght to masive, enduring earmings damage.B ut withsignsngthatJDisalreadypivothegrowthatany costtobuildingkfearof competitionhasalreadydelivery is posibeinthe nameof divingrketingspendandthe drop-downfromincrementa(GMVought toprovidesomeoffset.ForMertuan,weexpecthecompanvs dominanecelintod delivery to endure, and think the recent roprepresents an opportunty.SeetheDisclosureAppendixofthisreportforrequireddisclosures, analyst certifications andotheite.FistPublished:05 May202520.:30UTCCompletionDate:O5May20251259UTO
6May2025RFRNSTFINTICKFRTARIF2May2025AdjustedP/E区)ClosingTickerRatingPriceTarget2024A2026E2025E2026E3690.HK(Meituan)OHKD13250190.0017.715.712.8OLD200.0010.19OoUSDedOLD54.009618HKUDoHKD13210200.00(2.9)%8.0OLDBABAUSo125.76165.0044.3%13.411.999B8.HK(Alibaba)HKD12200161.0012.5ASIX1,303.15PRICETARGETCHANGE/ESTIMATECHANGEINBOLDSource:Bloomberg,Berstein estimates and analysisINVESTMENTIMPLICATIONSThemaitudeof,D'sivestmentsinfoodeliveryoverthemonthofApilsurprisedus,thoughitshould probably be keptinmind that the company's recent order volume growth has come on the back of heavy user subsidies, and almost zero merchantmonetisation. There are signs that JD may...
