On Thursday, Goldman Sachs adjusted its outlook on Meituan Dianping (3690:HK) (OTC: OTC:MPNGF) stock, increasing the price target to HK$157.00 from the previous HK$148.00. The firm sustained a Buy rating, following Meituan's robust second-quarter earnings report, which surpassed expectations.
Meituan's revenue saw a year-over-year increase of 21%, slightly above forecasts, while its adjusted EBIT soared by 126%, significantly beating predictions by 30 percentage points. The company also noted an enhanced competitive landscape in-store and a continued reduction in losses from new ventures.
The analyst from Goldman Sachs highlighted Meituan's strong performance and positive future outlook, which may lead to an upbeat response from the market. This comes after concerns regarding food delivery demand and in-store competition had previously led to a dip in the company's share price.
Anticipating sustained growth in food delivery volumes, the analyst revised the forecast for Meituan's fiscal year 2024 adjusted EBIT growth in local commerce to 27% year-over-year, up from the earlier estimate of 14%.
This revision is based on the momentum in food delivery volume, which is now estimated to grow by 12% in the third quarter, and improved unit economics in food delivery, with a record high gross transaction value margin in the second quarter.
The analyst also projects high-teen growth in adjusted EBIT for in-store, hotel, and travel segments for the entire year, which is a significant increase from the previous 10% growth estimate. This positive adjustment reflects Goldman Sachs' confidence in Meituan's continued performance and market position.
In other recent news, Meituan has showcased a robust growth in Q2 2024. The company reported a 21% increase in total revenue year-over-year, reaching RMB 28.3 billion, and a 77.6% surge in adjusted net profit to RMB 13.6 billion. These developments mark new highs in the company's profitability.
Meituan's strategic initiatives, such as the introduction of Meituan Group Buy and investments in lower-tier markets, have significantly contributed to this growth.
The company also revealed that its on-demand delivery and in-store, hotel, and travel businesses have seen substantial growth, and it repurchased over USD 2 billion worth of shares with plans for cancellation.
Despite a decline in average order value for their on-demand delivery business, Meituan maintains optimism for the future. The company aims to continue its retail plus technology strategy, focusing on enhancing collaborations within core local commerce.
As part of recent developments, the board has approved an additional $1 billion buyback plan, indicating the company's commitment to operational efficiency and shareholder returns.
InvestingPro Insights
Meituan Dianping (OTC: MPNGF) has shown a robust financial performance that aligns with Goldman Sachs' positive outlook. According to InvestingPro data, Meituan holds a market capitalization of approximately $89.66 billion, and its revenue growth over the last twelve months as of Q2 2024 stands at 22.6%. This growth is complemented by a significant EBITDA increase of 102.33% during the same period, showcasing the company's strong operational efficiency. The P/E ratio, a metric that investors often look at to gauge a stock's valuation, is currently at 28.92, which suggests that the company is trading at a level that could be attractive when considering its near-term earnings growth.
Furthermore, InvestingPro Tips highlight that Meituan is not only a prominent player in the Hotels, Restaurants & Leisure industry but also holds more cash than debt on its balance sheet, indicating a solid financial position. Additionally, 3 analysts have revised their earnings upwards for the upcoming period, reflecting a consensus view of the company's promising financial trajectory. For investors seeking further insights, there are more InvestingPro Tips available, which can be found on the Meituan Dianping page at InvestingPro.
These financial metrics and expert analyses contribute to understanding Meituan's market performance and potential, complementing the revised forecasts and ratings provided by financial institutions like Goldman Sachs.
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