Yuanta Securities stated that MEITUAN (3690.HK) or DR MEITUAN19 has the potential to respond positively today after reporting stronger-than-expected 2Q26 results, turning to a normal profit of 2.5 billion yuan after three consecutive quarters of losses, and better than the market's expectation of 340 million yuan. The better-than-expected profit was driven by improved margins following reduced price competition, as well as improvements in new businesses such as Keeta in Hong Kong and the Middle East. The company also provided positive guidance, expecting margins to improve year-on-year and order volumes to continue expanding, reflecting its ability to maintain market share despite reduced promotions. In the long term, AI investment is accelerating, with R&D expenses increasing 23% year-on-year to develop AI agents for use in its ecosystem. For 2026, Bloomberg Consensus expects a normal loss of around 2 billion yuan, improving from last year's loss of 18.6 billion yuan, but there is upside after results beat expectations. The current price trades at a 2027 PER of 17 times, with a target price of 1.56 baht per DR, implying 40% upside.
Meituan2Q26 profit beat expectations and turned positive, with improved margins and positive guidance.
