Stock Idea Food delivery giant Meituan slapped with CNY 3. | FSMOne SG - Research Highlights

Stock Idea

Food delivery giant Meituan slapped with CNY 3.4 billion fine as China ends anti-monopoly probe

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• On 8 October 2021, Meituan received a fine of CNY 3.4 billion for violating China’s anti-monopoly law, putting an end to the government’s anti-monopoly investigation that began in April.

• The fine, which is equivalent to about 3% of the company’s domestic revenue, was much lower than expected, and well below the maximum of 10% allowed under Chinese law.

• New guidelines should not have a significant impact on operations. Merchant and user acquisition are expected to be robust as Meituan continues to expand its service offerings.

• The sell-off in Meituan’s shares has left valuations more attractive than before, and could serve as an attractive entry opportunity for those who are able to stomach the volatility.

• Our target price for Meituan is HKD 414, which translates to an upside potential of about 45%.

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: Meituan (HKEX:3690)