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2025-04-24 15:01:35 A reignited price war in the mainland Chinese food delivery sector is likely to eclipse the profit outlook for MEITUAN-W (03690.HK) and JD-SW (09618.HK), Macquarie said in a report. While major shifts in the industry landscape are unlikely, fierce competition could lead to more aggressive supply-side subsidies. The broker downgraded both MEITUAN-W and JD-SW from Outperform to Neutral. It slashed the former’s target price by 48%, from HKD246 to HKD128. Similarly, JD-SW target price was axed by 43%, from HKD230 to HKD132. Macquarie assumed there are no winners in the current competitive phase, with JD’s recent ambitious expansion into food delivery reigniting market concerns about fierce competition, similar to when Douyin tapped into the local services market in 2023. The broker’s long-term fundamental view on the sector’s fundamentals remained unchanged, noting Meituan’s superior service moat makes it difficult for new entrants to challenge its leadership. However, Macquarie was more concerned that increased supply-side subsidies (e.g., merchant subsidies or lower monetization rates) could reduce profit visibility for both Meituan and JD in the near term, making their valuation multiples less attractive. The broker advised investors to stay on the sidelines for now. ~ AAStocks Financial News Web Site: www.aastocks.com | |