3690.HK: Margins Likely To Improve Meaningfully On Fewer Subsidies In 2Q19 And Changes In Competition
Meituan will report 2Q19 results on August 23rd before the markets open with a 7am EST conference call. We are positive into 2Q19 results, as Meituan is likely to be better on margins due to fewer subsidies. Based on our data and assumptions, Meituan Dianping revenue is likely to be better than consensus at RMB 21.7B in 2Q19 and our model. Gross margin at per unit of food delivery improved significantly in 2Q19 as the subsidies for drivers was less in 2Q19, which we believe is likely to lead to better margin and even to profitability for Meituan in 2Q19.