Meituan fell out of the opportunity

Meituan's recent shareholding experience has been bad, and if you own Meituan, of course, it is self-explanatory. If you don't own Meituan, look at the picture below to make it clear.

Since July 31, the highest price has been 150 Hong Kong dollars, and the lowest price on October 4 is 105.7 Hong Kong dollars, the largest decline has reached 29.5%, only the past 44 trading days, two months and four days.

The biggest decline in the Hang Seng TECH Index over the same period was 20.4%.

You know, the Hengke index is already a very "bear" index.

Basically, the trend of the Hengke Index has reflected a number of negative macro impacts over the same period:

U.S.-China relations are up and down;

The RMB exchange rate fell slightly and continued to come under pressure;

The domestic economy is still facing a lot of pressure in the second half of the year, and the momentum of recovery is insufficient.

Therefore, the over-fall of Meituan (relative to the Hengke Index) needs to find the reason from the micro level.

But at the micro level during the same period, Meituan also has many positive factors:

Technology stocks reported relatively good earnings in the first half of the year, far better than the macroeconomic recovery momentum;

Meituan's performance fundamentals are still excellent, which can be effectively verified by Meituan's overall performance growth rate;

Although the negative impact of local life such as Douyin still exists, Meituan's live broadcast, short video and special price model is still an effective counterattack, as can be seen from the repair trend of Meituan's advertising business growth rate and the sharp reduction in advertising growth and transaction commission business growth - from 21.8% in Q1 to 7.1%.

So on the whole, Meituan should at least maintain the same frequency as the Hengke index.

In fact, in the past 2 months and 4 days, the first 21 days - that is, before August 21 (including the 21st), the trend of Meituan is basically completely consistent with the Hengke Index.

In these 15 trading days, the Hengke index fell by 16.6% and Meituan by 16.3%, and both sides basically fell unilaterally.

From August 22 to 30, after 7 trading days in the middle, Meituan and Hengke indexes were in the overall unilateral rise market, superimposed on Meituan's second quarterly report, as of August 30, Meituan's maximum increase was 11.5%, and Hengke's maximum increase was 10.3%.

It can be seen that in the above two bands, a wave of unilateral decline and a wave of unilateral rise, Meituan's stock price performance is slightly outperforming the Hengke index.

The real weakening divergence occurred in the 22 trading days after August 31, during which although Hengke and Meituan basically experienced unilateral declines, but Meituan's decline was much larger than that of Hengke Index.

In the last 22 trading days, Hengke fell by 13.5% and Meituan by 24.5%, underperforming the already weak Hengke Index by 11 points.

We summarize the reasons for the downward oversell, including the following factors (sorted by impact factor size):

1. In the private roadshow and future outlook disclosed to large institutional investors, the management slightly lowered its optimistic trend for the growth of the food delivery business in the coming year, but reiterated that the long-term trend remained unchanged;

2. Sequoia China, once an important shareholder, sold some of its shares, and according to the announcement, on August 31, it reduced its holdings by 26.35 million shares, with an estimated trading price of HK$129 and a turnover of about HK$3.4 billion;

3. Tencent's major shareholders in South Africa are expected to reduce their holdings of Meituan shares, and although they have not yet implemented the reduction plan, they will increase negative market sentiment in the context of important shareholders' reduction actions;

4. On September 26, Wang Xing's charitable foundation sold 24,000 shares of Meituan shares for charitable purposes, amounting to about 2.8 million Hong Kong dollars;

5. In the past week, the market suddenly turned out the evaluation of Huawei, Intel and other companies by Wang Xing a few years ago, believing that "real high-tech products will not be afraid that a country will not open the market to you, but a country is afraid that you will not sell to him, a typical example of Intel's chips." And based on this, it is believed that Wang Xing denied Huawei, and then launched a public opinion attack on Meituan.

The above factors, under a variety of complex emotions, some are investors' personal rational judgment to make investment decisions, and some are maliciously used by intentional people to amplify negative emotions.

Regarding point 1, the growth trend of takeaway orders actually does not mainly depend on Meituan's unilateral actions, but on the economic recovery, but because Meituan can see more data details, it can make some forward-looking predictions in advance, it just releases a worst-case possibility in advance and better controls market expectations. In a market with very low risk appetite, even the smallest negative news can be amplified, and unfortunately, it can merge and resonate with several other messages.

Regarding the second point, Sequoia China has invested in Meituan for 17 years, and Meituan has been listed for 5 years, and the reason they gave to reduce their holdings is the fund's established exit plan, because Sequoia Global Fund and Sequoia China will be cut in the future, and the early investment needs to be withdrawn, which returns to global fund investors, which has nothing to do with the current stock price and future expectations.

Regarding point 3, it is more about the psychological pressure affected by point 2.

Regarding point 4, this reduction amount is basically negligible, but because it is related to Wang Xing, it will be used by some people, and it will also make some people who do not know the truth amplify their fear, thinking that Wang Xing is going to sell. In fact, Wang Xing has never sold Meituan shares since the listing, and this foundation is a family charity fund, a routine charitable act. Taking 10,000 steps back, the founder is also a corporate equity holder, in the case of legal compliance, it is understandable to reduce his holdings appropriately, Ma Huateng also sells some Tencent shares from time to time to improve his life, even if Wang Xing sells millions of shares himself, it should not be regarded as an act of being bullish on his company. If the market is making a fuss about this amount, it is the mood problem of the market itself.

Regarding point 5, this is even more outrageous, but we believe that this is not the main reason for the recent stock price decline, or even an important reason, but this negative information will put investors under emotional pressure, under pressure, people's psychology and actions may be deformed.

In essence, this is a "trumped-up speech crime" against private enterprises, and some media with no lower limit take this to say something, which is quite bottomless. Not only Intel, NVIDIA provides a more vivid case, global technology companies are worried that it does not sell high-end AI chips to themselves, this is an objective fact, not a value judgment.

But it was precisely because of the above complicated news and emotional pressure that Meituan fell out of the opportunity.

The reason is simple.

The core local business segment made an operating profit of about 20.6 billion yuan in the first half of the year, 10 billion yuan in the third quarter, and a conservative forecast of 40 billion yuan for the whole year, of which about 15 billion for in-store wine and about 25 billion for takeaway - in fact, more, because flash sales are still in a state of small losses.

Based on the extremely pessimistic valuation logic, the hotel refers to Vipshop's current 10 times PE valuation, because this is an open market, and the profit is temporarily compressed due to phased competition, otherwise the current minimum profit in a year is 20 billion, corresponding to a valuation of 150 billion.

The unit volume growth rate of takeaway business gives a pessimistic forecast of 10%, the revenue growth rate is forecast of 15%, the profit is given a 20% growth forecast, and the 20-fold limit undervaluation PE is given - considering the high moat of the takeaway business and the profitability that is still deliberately suppressed to a certain extent - the normal market can give more than 40 times PE, corresponding to a valuation of 500 billion.

The two add up to 650 billion, and the current stock price is 106.9 Hong Kong dollars, and the market value of 667.36 billion Hong Kong dollars, according to the current exchange rate, is about 622.2 billion yuan.

According to the extreme undervaluation model, the current share price is already below the value of the takeaway and in-store hotel business.

Even if you have concerns about the community group buying business, Meituan grocery shopping is obviously a good business with huge growth space and value, not to mention the new business with a very deep moat, vast space and breakeven, as well as bicycles, power banks, performance tickets, car rentals, smart cash registers and other businesses that create cash flow, or have made profits, not counting the 120.2 billion cash, cash equivalents and short-term financial assets lying on the company's account.

Flash sale 2023 GTV is about 200 billion, as of the June quarter in the past 12 months is 175 billion, has reached about 20% of takeaway GTV, its unit volume growth rate is 4 times that of takeaway business, considering the higher advertising flexibility of the retail business, the average profit model of this business will be better than takeaway, we give the takeaway business a valuation of 40% - the normal market can give the takeaway at least 80% of the valuation, corresponding to 200 billion, even if the new business is not all valued, It should also be 6500 + 2000 + 1202 = 970.2 billion yuan, which is converted into 1,040.5 billion Hong Kong dollars, corresponding to a stock price of 166.7 Hong Kong dollars.

The current stock price is equal to not valuing any business other than food delivery, 6222-1202 (cash) = 502 billion, almost exactly equal to the pessimistic valuation of food delivery business.

This is completely unreasonable.

There is no problem with Meituan's business fundamentals, and there is no deterioration in the competitive landscape, and we firmly reiterate that Meituan under 150 Hong Kong dollars is almost equivalent to sending money.

Of course, the market often behaves irrationally in the short term, it is a voting machine in the short term, and it is a weighing machine in the long term.

Investment is your own business, so please judge and decide for yourself.