UBS: Meituan 4Q25 Preliminary Results Largely Inline
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Meituan released its FY25 profit warning on February 13, 2026. Core local commerce (CLC) operating loss reached RMB 6.8-7.0 billion, a sharp swing from RMB 52.4 billion operating profit in FY24. GAAP net loss was RMB 23.3-24.3 billion, compared to FY24 net profit of RMB 35.8 billion.
For 4Q25, implied CLC operating loss was roughly RMB 10 billion, about 5-7% narrower than market expectations, driven by improved instant retail unit economics. UBS estimates food delivery and Shangou operating losses at RMB 14 billion, or RMB 1.8 loss per order, better than the market consensus of RMB 2. The unit economics gap with Alibaba narrowed to RMB 1.8 per order from RMB 2.2 in 3Q, and competitive intensity has eased since November 2025.
However, GAAP net loss of RMB 15.1-16.1 billion was merely inline, indicating increased investments in Keeta, Xiaoxiang Supermarket, and AI. UBS notes Alibaba's RMB 3 billion Spring Festival subsidy via Qwen (February 6-28) warrants monitoring, though regulators are encouraging anti-involution. Douyin's aggressive in-store subsidies and standalone app could pressure Meituan's FY26E in-store margin, where consensus expects roughly 29%.
Keeta's investment pace remains critical, with Saudi Arabia potentially reaching breakeven in 2026, though other GCC markets and Brazil remain challenging.
UBS maintains a Buy rating with a 12-month target price of HKD 128.00 (current price: HKD 82.15). UBS expects normalized profit of approximately RMB 40 billion in 1-2 years, comprising RMB 25 billion from instant retail, RMB 25 billion from in-store, minus RMB 10 billion in new business losses.