We Lowered Meituan’s Fair Value Estimate by 15% to Reflect Intensifying Competition

We expect slow growth in Meituan’s customer acquisition, as the platform already boasts over 770 million users—68% of the Chinese internet users as of June 2024. While Meituan continues to deepen user penetration in less developed areas in China, it is also focusing on increasing customer purchase frequency and expanding overseas. In recent quarters, Meituan has replaced its former agency model with direct operations nationwide, aiming to enhance services for merchants in lower-tier markets. In addition, Meituan rolled out the Shen Hui Yuan membership program, offering coupons across food delivery, in-store services, hotels, and travel services, to encourage cross-selling and stimulate new demand. To address the downtrading trend amid China’s weaker economy, Meituan has also launched Special Deals, Group Buy, and Pin Hao Fan (low-cost meals).