Meituan Reports Q3 Earnings, Week in Review
6 Min. Read Time
Week in Review
- Asian equities were mostly higher for the week as Taiwan and Hong Kong's Hang Seng Tech Index outperformed, while Malaysia and Thailand underperformed.
- Alibaba reported third quarter earnings on Tuesday that beat top line revenue expectations, including better-than-expected growth in AI & cloud services, though profitability took a hit versus expectations.
- Presidents Trump and Xi are said to have held a phone call early in the week, indicating continued progress on a comprehensive trade agreement.
- China's currency, the Renminbi, reached its highest level yet versus the US dollar in 2025 this week, ending at 7.05 CNY per USD.
Key News
Asian equities were mixed but mostly higher overnight as Mainland China's STAR Market and Shenzhen Component Index outperformed, while Korea and Malaysia underperformed.
Hong Kong and Mainland China both saw modest gains over the Thanksgiving holiday, though volumes were understandably low in Hong Kong yesterday and today.
Growth outperformed value slightly in both Hong Kong and Mainland China. However, the value-oriented Materials sector was a top performer in both markets, and semiconductor stocks were among the most sold by Mainland investors via Southbound Stock Connect. Meanwhile, they were net buyers of internet stocks, including Alibaba, on the back of strong earnings. Overall, Mainland investors purchased a net $348 million worth of Hong Kong-listed stocks and ETFs overnight. Not bad! We have heard some rumors of lower connect flows recently, but we have not seen that showing up in the data. That being said, the wave of AI valuation concerns has not skipped over China entirely.
Real estate developers were lower in Hong Kong after Vanke delayed the repayment of some local bonds. It will be interesting to see whether the local government in Shenzhen steps in to support the developer, which we believe is likely, but not guaranteed. Real estate prices have stabilized, but need to rise more, in our opinion, for the negative wealth effect on consumption to be reversed.
There have been reports that Alibaba, Baidu, and BYD could be added to the Pentagon's list of China Military-connected companies, though the reports are mostly citing an older list of potential candidates. The bottom line is that Tencent has been on this list for a while, with little to no implications for investors. Arguably, any company with government business is a target for the list. President Trump is currently looking for another "win" with China and, as he is the boss, will likely not allow the Pentagon to jeopardize current negotiations. As far as we can tell, the companies have not commented on the matter. Hong Kong-listed Tencent has sued to be taken off of the list.
Meituan's earnings reflect that internet companies continue to compete heavily for the same wallets (i.e. relatively high income urban consumers) in China, using "instant commerce" subsidies as a tool. The pie overall for E-Commerce, writ large, needs to return to expansion in China, which we believe could happen in 2026. Internet companies have done well from a share price perspective this year nonetheless. Imagine what they could do if the pie increases again?
Meituan Q3 Earnings Overview
% changes are year-over-year
- Revenue +12% to RMB 95.5 billion ($13.5 billion) versus estimate RMB 97.5 billion
- Net Income RMB -17.7 billion (-$2.5 billion) versus estimate RMB -14.0
- Net Margin -19%
- Earnings per Share (EPS) RMB -2.9
Food delivery and local services giant Meituan missed analyst estimates significantly on both top line revenue and bottom line net income. The reason? High spending! The company spent gratuitously in the third quarter, more than expected, on defending its "instant commerce" market share from new competitors Alibaba and JD.com and its expansion into Saudi Arabia and, potentially, Brazil with its "Keeta" overseas delivery brand. The company expects a turnaround in 2026, including a return to profitability. We will see if it can manage this. In any event, its earnings for the third quarter indicate that we may not be completely out of the woods yet for the "instant commerce" price wars.
Last Night's Exchange Rates, Prices, & Yields
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.1% |
| Hang Seng Tech | HSTECH Index | 0.1% |
| Hong Kong Turnover | HKTurn Index | -10.4% |
| Hong Kong Short Sale Turnover | HKSST Index | -25.3% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 16.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 348.27 |
| China (Shanghai) | SHCOMP Index | -0.2% |
| China (Shenzhen) | SZCOMP Index | 0.3% |
| China (STAR Board) | Star50 Index | 1% |
| Mainland Turnover | .chturn Index | 21% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 1.2% |
| Japan | NKY Index | 1.8% |
| India | SENSEX Index | 1.2% |
| Indonesia | JCI Index | 0.9% |
| Malaysia | FBMKLCI Index | 0.8% |
| Pakistan | KSE100 Index | 0.9% |
| Philippines | PCOMP Index | 0.5% |
| South Korea | KOSPI Index | 2.7% |
| Taiwan | TWSE Index | 1.8% |
| Thailand | SET Index | -0.6% |
| Singapore | STI Index | 0.4% |
| Australia | AS51 Index | 0.8% |
| Vietnam | VNINDEX Index | 1.2% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 60 | 95 |
| Advancing Stocks | 24 (Hang Seng) | 181(CSI 300) |
| Declining Stocks | 59 (Hang Seng) | 108 (CSI 300) |
| Outperforming Factors | Growth | Growth |
| Underperforming Factors | Value | Value |
| Top Sectors | Materials, Consumer Discretionary, Information Technology | Consumer Discretionary, Materials, Information Technology |
| Bottom Sectors | Consumer Staples, Real Estate, Financials | Real Estate, Financials, Utilities |
| Top Subsectors | Aerospace, Consumer Durables, Chemical Industry | Forest Industry, Energy Equipment, Education |
| Bottom Subsectors | Consumer Staples, Food, Paper & Packaging | Office Supplies, Banking, Insurance |
| Southbound Connect Buys | Alibaba, Pop Mart, Xiaomi | N/A |
| Southbound Connect Sells | Semiconductor Manufacturing International (SMIC), Hua Home Semiconductor, CAC Group | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | -0.25 |
| Communication Services | 9 | -0.06 |
| Consumer Discretionary | 28 | 0.18 |
| Consumer Staples | 13 | -1.28 |
| Energy | 7 | -0.97 |
| Financials | 23 | -1.02 |
| Health Care | 13 | -0.99 |
| Industrials | 20 | -0.15 |
| Information Technology | 10 | -0.05 |
| Materials | 10 | 0.87 |
| Real Estate | 6 | -1.06 |
| Utilities | 12 | -0.27 |
| Mainland China Listed | 404 | 0.43 |
| Communication Services | 6 | 0.25 |
| Consumer Discretionary | 31 | 1.12 |
| Consumer Staples | 24 | 0.44 |
| Energy | 13 | -0.14 |
| Financials | 64 | -0.35 |
| Health Care | 31 | 0.39 |
| Industrials | 64 | 0.65 |
| Information Technology | 91 | 0.87 |
| Materials | 58 | 0.94 |
| Real Estate | 6 | -0.68 |
| Utilities | 16 | -0.16 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.9 |
| Alibaba HK | 9988 HK Equity | -1.9 |
| JD.com HK | 9618 HK Equity | 2.1 |
| NetEase HK | 9999 HK Equity | -1.1 |
| Yum China HK | 9987 HK Equity | 1 |
| Baozun HK | 9991 HK Equity | -4.9 |
| Baidu HK | 9888 HK Equity | -2.1 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -3 |
| Trip.com HK | 9961 HK Equity | -1.6 |
| EDU HK | 9901 HK Equity | 0.8 |
| Xpeng HK | 9868 HK Equity | 0.6 |
| Weibo HK | 9898 HK Equity | -0.2 |
| Li Auto HK | 2015 HK Equity | -0.4 |
| Nio Auto HK | 9866 HK Equity | -6.2 |
| Zhihu HK | 2390 HK Equity | -8 |
| KE HK | 2423 HK Equity | 0.5 |
| Tencent Music Entertainment HK | 1698 HK Equity | -2.2 |
| Meituan HK | 3690 HK Equity | 5.6 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -1.9 |
| TENCENT HOLDINGS LTD | -0.9 |
| MEITUAN-CLASS B | 5.6 |
| XIAOMI CORP-CLASS B | -0.6 |
| POP MART INTERNATIONAL GROUP | 2.2 |
| SEMICONDUCTOR MANUFACTURI-H | 1.3 |
| HUA HONG SEMICONDUCTOR LTD-H | 2 |
| ZIJIN MINING GROUP CO LTD-H | -2.1 |
| CHINA CONSTRUCTION BANK-H | -0.7 |
| KUAISHOU TECHNOLOGY | -2.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 13.3 |
| EOPTOLINK TECHNOLOGY INC L-A | 8.7 |
| FOXCONN INDUSTRIAL INTERNE-A | 4.1 |
| SUNGROW POWER SUPPLY CO LT-A | 3.9 |
| BLUEFOCUS INTELLIGENT COMM-A | 0.3 |
| SHENZHEN EVERWIN PRECISION-A | 11.2 |
| SHANNON SEMICONDUCTOR TECH-A | 6.3 |
| SAI MICROELECTRONICS INC-A | 0.1 |
| CAMBRICON TECHNOLOGIES-A | 4.3 |
| CONTEMPORARY AMPEREX TECHN-A | 0.5 |
Last Night's Performance
- CNY per USD 7.07 versus 7.08 yesterday
- CNY per EUR 8.19 versus 8.21 yesterday
- Yield on 10-Year Government Bond 1.84% versus 1.85% yesterday
- Yield on 10-Year China Development Bond 1.90% versus 1.92% yesterday
- Copper Price +1.25%
- Steel Price +0.26%
