Meituan's Outlook Improves Significantly as Profitability Is Scaling Despite Plateau in User Base

We see some near-term headwinds for Meituan in its food delivery business, which accounted for 52% of 2023 revenue but is expected to see operating margin pressure in 2024. The company cited impact from covid-19 lockdown policies but also indicated there is some limited visibility due to the macroeconomic slowdown. We also expect customer acquisition to slow, given that there are about 700 million users on the platform, approaching saturation in China.