Meituan [3690.HK; ADD; TP: HK$299.00] - Strong results but continued heavy investment

■   Meituan reported 2Q21 revenue of Rmb44bn, up 77% yoy, and an adjusted net loss of Rmb2.2bn, compared to net profit in 2Q20, both above our expectations.  

■   We expect 3Q21F top-line growth of 39% yoy and an operating loss of Rmb6.5bn.

■   Meituan will start to pay injury insurance for its delivery riders next year, which may increase delivery costs by Rmb0.05/order. Social benefits payments for riders will take more time resolve.

■   Reiterate Add with a DCF-based TP of HK$299.