By Tracy Qu
Meituan shares rose sharply in Hong Kong after better-than-expected results lifted investors' confidence about its earnings outlook.
Shares of China's top on-demand delivery player climbed 7.7% to 84.30 Hong Kong dollars, equivalent to US$10.76, by the midday break Tuesday, outperforming the Hang Seng Tech Index's 3.5% gain.
The Beijing-based company on Monday reported a smaller-than-expected loss and faster revenue growth. On the earnings call, management said the company could witness a meaningful sequential improvement in unit economics--a gauge of profit or loss per food-delivery order--in the second quarter if competition stays rational.
Meituan has been battling with Alibaba Group and JD.com to defend its market leadership in food delivery. The stock remains down 18% year to date.
Now that "the worst of the competitive intensity is over," Meituan will be able focus on driving artificial-intelligence adoption and product enhancement, wrote Citi analysts, who reiterated a buy rating and raised their target price to HK$113.00 from HK$110.00.
Analysts at Daiwa said in a note that Meituan's food-delivery profitability inflection point is "arriving faster than expected," adding that the company's market share remains stable, especially for high-quality orders. Daiwa maintained its buy rating and increased its 12-month target price to HK$112.00 from HK$110.00.
Write to Tracy Qu at tracy.qu@wsj.com
(END) Dow Jones Newswires
06-02-26 0029ET
