Goldman Sachs on Meituan (3690.HK): 2Q26 Initial Review — Beat on Disciplined Subsidies and Food Delivery UE Recovery; Buy
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Goldman Sachs maintains its Buy on Meituan (3690.HK) with a 12-month target price of HK$123, implying 58.7% upside from HK$77.50 (August 27 close), after 2Q26 results beat expectations. Net revenue rose 14% YoY to Rmb104.64bn, about 4% above both Goldman's forecast and Visible Alpha consensus, helped by more disciplined subsidies booked as contra-revenue. Core local commerce EBIT climbed 52% YoY to Rmb5.67bn—2% below Goldman's estimate but 66% above consensus (Rmb3.42bn)—on food delivery unit economics recovery, further delivery subsidy normalization and improved marketing efficiency. New initiatives losses narrowed to Rmb1.74bn, 29%/28% better than Goldman/consensus estimates, on domestic grocery gains and improving Keeta efficiency (stable Hong Kong profitability, sequential Middle East improvement); unallocated losses narrowed to Rmb1.2bn. Adjusted EBITDA rose 47% to Rmb4.10bn and adjusted net profit jumped 69% to Rmb2.52bn, 571% above consensus. Management is scaling AI (rising Xiaotuan assistant adoption; the LongCat model trained fully on domestic chips). Key watch items include per-order EBIT guidance into 2027, in-store hotel and travel margin recovery, quick-commerce monetization, and Keeta's overseas investment pace. Main risks: fiercer competition, labor-cost inflation, food-safety regulation and heavier Keeta spending.