①Will the "subsidy war" in the food delivery industry come to a complete end? ②Why do institutions generally predict the second quarter of 2026 as Meituan's turning point for profitability?
According to a report by Cailian Press on March 26 (edited by Hu Jiarong), the State Administration for Market Regulation reposted an article from the Economic Daily titled 'The Takeout War Should End,' which the market interpreted as a clear signal from regulators to halt malicious competition among platforms and guide the industry toward healthy development.
Following this news, $MEITUAN-W (03690.HK)$the stock surged nearly 16% at one point during trading yesterday and closed more than 10% higher, with its market value increasing by approximately HKD 67.7 billion in a single day. Today, it experienced a slight pullback, falling 3% as of the time of writing.
Meanwhile, the market will focus on Meituan's latest earnings report released after today’s market close.
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First, let's look at yesterday’s news: the official website of the State Administration for Market Regulation reposted a commentary article from the Economic Daily titled "The Food Delivery Wars Should End." The article explicitly pointed out that the competition among food delivery platforms through "subsidies, price wars, and controlling traffic" has devolved into disordered internal strife, squeezing profit margins for catering businesses and disrupting market order. Regulatory authorities will take action to standardize competitive behavior and steer the industry back to rationality.
This follows another clear signal released by regulators after January 9, 2026, when the Office of the State Council Anti-Monopoly and Anti-Unfair Competition Committee announced an investigation and evaluation of the competitive state of the food delivery platform service industry.
Wang Qiuping, spokesperson for the State Administration for Market Regulation, stated at the regular Q1 press conference on March 20 that the administration is advancing the investigation and evaluation work according to the established plan regarding the competitive state of the food delivery platform service industry.
After the policy signal was released, the capital markets responded swiftly, with all constituent stocks of relevant technology indices posting gains. As of the market close yesterday, $MEITUAN-W (03690.HK)$ one stock rose nearly 14%, and $JD-SW (09618.HK)$、 $BABA-W (09988.HK)$ others increased by over 4.5%.
Moreover, earlier on January 9, 2026, the three major platforms—Meituan, Taobao Flash Purchase, and JD.com Food Delivery—collectively expressed their support. Meituan emphasized its repeated calls for the industry to return to rationality and pledged full cooperation with the investigation; Taobao Flash Purchase stated it would strictly implement compliance responsibilities and work together with all parties to maintain a fair market environment; JD.com Food Delivery said it would promote quality food delivery through supply chain innovation.
Institutions are optimistic about Meituan's performance in the second quarter of this year.
Aside from the aforementioned positive news for Meituan, yesterday’s rally was largely driven by recent bullish stances from institutions.
Based on recent perspectives from multiple international investment banks, market sentiment towards Meituan shows significant divergence but leans overall optimistic. UBS Group, Goldman Sachs, HSBC, Morgan Stanley, and Daiwa Capital have all assigned 'Buy' or 'Strong Buy' ratings, with target prices ranging between HKD 104 and HKD 200. Notably, Morgan Stanley has set a target of HKD 193, while Daiwa Capital issued the highest target price at HKD 200.
The core bullish thesis hinges on the belief that 2026 will mark the beginning of a profitability recovery: UBS Group and Daiwa Capital project that earnings per delivery order will turn positive by the second quarter of 2026, with full-year core local commerce reaching breakeven. This is primarily attributed to cost reductions and efficiency gains driven by AI, rational subsidy adjustments, and a stabilized competitive landscape. Goldman Sachs and HSBC emphasize the company’s robust fulfillment moat, maintaining an absolute lead with a 67% share of rider hours, and highlight that proprietary large-scale models have already enhanced operations. With negative factors fully priced in, the valuation offers a high margin of safety.
In addition, institutions are highly optimistic about the long-term growth trajectory. Morgan Stanley pointed out that instant retail represents a trillion-yuan incremental market, with significant potential in flash purchase services, while overseas operations have already validated their business model in some markets, which could become the second growth curve. Daiwa Capital specifically highlighted the acquisition of $Dingdong (DDL.US)$China operations will address the shortcomings in the fresh food supply chain.
However, Citi and JPMorgan hold relatively cautious 'Neutral' ratings, with target prices of HKD 115 and HKD 106, respectively. Their concerns lie in the fact that the industry subsidy war has not fully concluded, potentially delaying the 2026 profitability recovery timeline and even resulting in losses exceeding billions. Additionally, uncertainties regarding overseas expansion and continued pressure from Douyin in store-based services add further risks to performance.
Overall, the bulls believe that the stock price has already fully reflected pessimistic expectations, and once the turning point in profitability is confirmed, it will present a significant opportunity for valuation recovery.
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Editor/Rocky