Meituan third-quarter earnings preview: Profit per food delivery order falls, with the fourth-quarter profitability threshold in focus
Citi expects Meituan’s third-quarter results to be broadly in line with consensus, but margins in both food delivery and in-store services are under sequential pressure. Improved food delivery efficiency in the fourth quarter may be partly offset by spending on expansion in Brazil, and the bank’s net profit forecast is below consensus.
Original source：Citi ResearchFirst published on Unhidea：Original source date：
Key takeaway
Citi is focused on whether profit per food delivery order can improve in the fourth quarter amid winter cost pressures, and how much profit expansion in Brazil will consume.
Why would a third quarter in line with consensus still not be enough to raise expectations?
Citi forecasts Meituan’s third-quarter 2026 revenue at 114.2 billion yuan, up 20% year on year, and adjusted net profit at 2.56 billion yuan. Bloomberg consensus forecasts are 113.3 billion yuan and 2.2 billion yuan, respectively. The bank maintains its forecasts, believing results may meet or slightly exceed consensus, but investors may have higher expectations for profit per food delivery order.
Core local commerce revenue is forecast at 77.3 billion yuan, up 15.3% year on year, with operating profit of 4.15 billion yuan, in line with Visible Alpha consensus but below the actual 5.7 billion yuan in the second quarter. The sequential decline is mainly attributable to food delivery seasonality and increased rider and consumer promotional subsidies.
Why is profit per order falling as food delivery revenue grows?
Citi forecasts average daily food delivery orders of 71.2 million in the third quarter, down 7% year on year, mainly due to last year’s high base. Average order value rose 11% year on year to 51.4 yuan, driving 3.2% growth in gross transaction value. Growth relied more on order value than on order expansion.
Food delivery revenue is forecast to rise 16.8% year on year to 47.8 billion yuan, faster than transaction value, benefiting from lower subsidies deducted from revenue and a rise in the monetization rate to 14.2%. But spending on riders and promotions is weighing on profit: operating profit per order is forecast at just 0.08 yuan, below Citi’s estimate of 0.20 yuan for the second quarter.
Actual app traffic has also weakened: QuestMobile data show that the Meituan Waimai app had 54.3 million monthly active users in September, down 8% year on year and 3% sequentially. This is an active-user metric for a single app and differs from the platform-wide order count.
How much profit can the in-store business still provide?
Citi forecasts third-quarter revenue from in-store, hotel and travel services at 18.5 billion yuan, up 7.1% year on year, and adjusted operating profit at 4.63 billion yuan, down 3.2% year on year. Seasonal factors and increased spending reduced the margin to 25%, below the bank’s estimates of 30.3% in the second quarter and 27.7% a year earlier.
The business’s margin is expected to stabilize at 25.1% in the fourth quarter. It remains an important source of profit, but third-quarter revenue growth alongside declining profit means revenue expansion has yet to offset spending pressure.
How will instant retail and expansion in Brazil affect spending?
Meituan Instashopping plans to provide 30 billion yuan in resources over the next three years for infrastructure, product development and marketing. Together with supply-chain product selection, brand-operated forward warehouses and AI pricing tools, these investments are intended to build a “30-minute product circle.” The spending focuses on expanding product supply and the fulfillment network.
After a Brazilian court prohibited exclusivity clauses restricting merchant partnerships, Keeta announced expansion into 21 new cities on top of its existing 11 cities and reiterated its plan to invest 5.6 billion Brazilian reais over five years. Citi expects subsidies and geographic expansion to intensify competition.
Citi forecasts third-quarter new-business revenue of 36.9 billion yuan, up 31.5% year on year, and an operating loss of 1.72 billion yuan. More aggressive expansion in Brazil will widen the fourth-quarter loss to 1.85 billion yuan.
What profitability threshold must the fourth quarter clear?
Citi expects improving competition, a steadier pace of subsidies and greater operating efficiency to lift profit per food delivery order slightly from 0.08 yuan to 0.09 yuan in the fourth quarter. Winter weather-related pressure on rider costs constrains this path to improvement.
Even so, Citi forecasts fourth-quarter group revenue of 109.2 billion yuan, above consensus of 107.7 billion yuan, but adjusted net profit of only about 2.3 billion yuan, below consensus of 3.08 billion yuan. Greater optimism about revenue has not translated into greater optimism about profit.
Citi maintains its “Buy/High Risk” rating and 120 Hong Kong dollar target price. Its valuation is based on 2027 segment forecasts: food delivery and Instashopping are valued at 1.3 times sales, and in-store, hotel and travel services at 8 times adjusted net profit. The multiples reflect competition in instant delivery and pressure from Douyin, respectively.
