Meituan Reports Better Profitability, but Offset by Slowing Revenue and Orders; FVE Remains HKD 165

There are still questions about the viability of Meituan's new initiatives business, given the challenges of the community group buying industry as profitability has remained a question for not only Meituan, but also its competitors. Other community group buying companies such as Nice Tuan and Shixianghui, which are backed by Alibaba and Tencent, have already failed. Even if the new initiatives division was to break even, we estimate long-term operating margins for the segment to be only in midsingle digits.