J.P. Morgan: Meituan (3690.HK) — A Better Setup, But Not Yet a Cleaner Story
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J.P. Morgan maintains a Neutral rating on Meituan (3690.HK), lowering its target price from HK$95 to HK$85. The firm notes that recent regulatory signals targeting intense food delivery competition increase the probability of restrictions on aggressive pricing and subsidies, potentially improving Meituan's near-term earnings outlook. However, an improved short-term earnings trajectory does not eliminate long-term investment risks. At current valuations, the range of mid-term outcomes remains too wide, and the expected value asymmetry is insufficient to justify an upgrade to Overweight.
The report cautions that the market may be oversimplifying the link between regulatory easing and normalized profitability. Alibaba remains strategically committed to capturing food delivery market share. If pricing tools become restricted, competition will likely shift toward non-price channels such as membership perks, consumer experience, and logistics quality. Furthermore, in-store business margins face structural pressure from Douyin and Alibaba's entry, making the long-term margin floor difficult to determine.
J.P. Morgan cuts its 2026 and 2027 revenue forecasts by 3% and 5%, respectively, while lowering adjusted EPS estimates by 51% and 4%, reflecting a more conservative view on the food delivery break-even path. The revised HK$85 target is based on 15 times 2027E P/E, aligning with the average for Chinese internet subsector leaders.