MEITUAN Meituan Just Booked Its Best Profit Ever. Why Did the Stock Fall 46% First?

The Best Year on Record, After the Worst Drawdown in This Dataset

Meituan's 2024 annual report tells a business story that's almost entirely positive: full-year revenue grew 22.0% to RMB337.6 billion, profit for the year jumped 158.4% to RMB35.8 billion, and Adjusted EBITDA rose to RMB49.1 billion from RMB23.9 billion — Meituan's strongest full-year result in the six years of reports this project has now covered (see meituan/2021-12 and meituan/2023-06). Core Local Commerce, the profit engine, expanded its operating margin to 20.9% from 18.7%, while New Initiatives — the segment that burned RMB38.4 billion in FY2021 funding Meituan Select — narrowed its operating loss to RMB7.3 billion from RMB20.2 billion, a 63.8% improvement.

None of that was obvious from the stock chart along the way. Meituan closed 2023 at HKD81.90, then fell further still to an intra-window low of HKD62.55 in January 2024 — a 65.7% drawdown from the trailing-24-month peak of HKD182.50 hit in June 2023 — before staging a real recovery through the back half of 2024 to close the year at HKD152.50, up 86.1% off that January low but still 16.4% below the two-year high (see Target Valuation Range). The business Meituan reported for 2024 is not the business the market was pricing in January 2024; the two years' data in this post cover both a genuine trough in market confidence and one of the company's best operating years since this coverage began.

The Prescription

Meituan should keep pushing the same mechanism that drove 2024's margin expansion: Core Local Commerce revenue grew 20.9% while its operating profit grew 35.4% — profit growing meaningfully faster than revenue is the clearest sign of real, non-transitory operating leverage, not just a cyclical bounce. The buyback program disclosed this year (RMB28.2 billion across six months, all shares cancelled) is a reasonable use of a swelling cash position (RMB70.8 billion cash plus RMB97.4 billion in short-term treasury investments) given the gearing ratio actually fell to 32% from the mid-2023 level, rather than a debt-funded gamble.

What Meituan should watch, not necessarily stop: New Initiatives' loss narrowed by RMB12.9 billion year-over-year, but it's still a RMB7.3 billion drag on a company whose entire annual profit is RMB35.8 billion — roughly a fifth of Core Local Commerce's profit is still being spent offsetting New Initiatives losses. That's a much better trade than FY2021 (when New Initiatives alone cost more than ten times the whole year's eventual loss), but it's not resolved, and the buyback spending RMB28.2 billion on shares the market was pricing at a 66% discount to its own 24-month high is only the right call if New Initiatives' improving trajectory holds rather than reverses.

Key Financial Metrics

Year ended December 31, 2024 vs. year ended December 31, 2023 (audited, consolidated)

Metric	FY2024 (RMB)	FY2023 (RMB)	YoY
Revenues	337,591.6M	276,745.0M	✅ +22.0%
Gross profit	129,784.6M (38.4% margin)	97,191.2M (35.1% margin)	✅ +33.5%, margin +3.3pp
Operating profit	36,845.0M	13,415.4M	✅ +174.6%
Adjusted EBITDA»	49,119.4M	23,878.0M	✅ +105.7%
Profit for the year	35,808.3M	13,857.3M	✅ +158.4%
Adjusted net profit	43,772.4M	23,253.4M	✅ +88.2%
Net cash from operating activities	57,146.8M	40,521.9M	✅ +41.0%
Capital expenditures	4,708.9M	10,483.8M	✅ -55.1%
Free cash flow (operating cash flow − capex)	~52,437.9M	~30,038.0M	✅ +74.6%
Cash and cash equivalents (year-end)	70,834.1M	33,339.8M	✅ +112.5%

Balance sheet	Dec 2024	Dec 2023	Change
Total assets	324,354.9M	293,029.6M	✅ +10.7%
Total liabilities	151,750.8M	141,073.3M	⚠️ +7.6%
Total equity	172,604.1M	151,956.4M	✅ +13.6%
Gearing ratio» (borrowings + notes payable / equity attributable to holders)	~32%	n/a (not restated this filing)	-

Unlike the quarterly results announcement used in meituan/2023-06, this annual report discloses capital expenditures (RMB4.7 billion, disclosed separately as "purchase of property, plant and equipment") on top of net operating cash flow, so free cash flow can actually be computed directly this time: roughly RMB52.4 billion for FY2024, up 74.6% year-over-year, with capex itself falling by more than half even as the business grew — a genuinely capital-light expansion, not one funded by heavier fixed-asset investment.

Q4 2024 vs. Q4 2023

Revenue for the fourth quarter alone grew 20.1% year-over-year to RMB88.5 billion, and profit for the period reached RMB6.2 billion, more than 2.8x Q4 2023's RMB2.2 billion. Note the sequential pattern: Q4 2024's RMB6.2 billion profit came in below Q3 2024's RMB12.9 billion, which the filing attributes to increased overseas-business costs, seasonally lower New Initiatives revenue, and unfavorable operating leverage from that lower revenue base — a reminder that Q4 is not this company's seasonally strongest quarter for New Initiatives, even as the full-year trend improved.

Segment (Q4 2024)	Revenue	YoY	Operating profit/(loss)	Margin
Core Local Commerce	65,566.8M	✅ +18.9%	12,900.3M	19.7%
New Initiatives	22,920.5M	✅ +23.5%	(2,176.0)M	-9.5%
Unallocated items	-	-	(4,030.8)M	NA
Group Total	88,487.3M	+20.1%	6,693.5M	7.6%

Segment Comparison — Full Year

Segment	FY2024 Revenue	FY2023 Revenue	YoY	FY2024 Op. Profit/(Loss)	Margin FY2024	Margin FY2023
Core Local Commerce	250,201.6M	206,935.0M (implied)	✅ +20.9%	52,449.0M (RMB52.4B)	20.9%	18.7%
New Initiatives	87,390.0M (implied)	69,810.0M (implied)	✅ +25.2%	(7,300.0)M (RMB7.3B loss)	-8.4%	-28.9%
Group Total	337,591.6M	276,745.0M	+22.0%	45,100.0M (segment total)	13.4%	6.7%

The chairman's letter states the figures directly: total segment operating profit rose 143.6% to RMB45.1 billion, and total segment operating margin rose from 6.7% to 13.4% — nearly double. New Initiatives' loss-narrowing is the single biggest driver of the year-over-year swing: its operating margin improved from -28.9% to -8.4%, a 20.5 percentage-point swing that alone explains most of the total-segment margin gain, even though Core Local Commerce still generates all of the group's actual profit.

Core Local Commerce

Full-year revenue reached RMB250.2 billion (+20.9%), and operating profit reached RMB52.4 billion (+35.4%) — profit growing at nearly double the rate of revenue for the second year running, the clearest evidence in this dataset that Core Local Commerce has real, compounding operating leverage rather than a one-off margin bump. Management attributes the Q4 delivery-revenue growth specifically to a higher Number of On-Demand Delivery transactions and lower incentives deducted from revenue — the same gross-vs-net dynamic the Red Flag repository watches for, but moving in the favorable direction here (less discounting needed to sustain growth, not more).

New Initiatives

Full-year revenue grew 25.2% (implied) while the operating loss narrowed by RMB12.9 billion to RMB7.3 billion — "primarily attributable to the revenue growth in our grocery retail businesses and the development of our overseas businesses" per the chairman's letter, naming the same two drivers (Xiaoxiang Supermarket-style grocery retail and Keeta's overseas on-demand delivery expansion) that have carried the segment's growth across the FY2024 filings this project has covered. Meituan Select, the FY2021 and H1 2023 posts' headline New Initiatives product, isn't singled out by name in this annual report's segment discussion at all — a quieter presence than in earlier filings, consistent with the segment's growth narrative shifting toward grocery and overseas delivery instead.

Beyond the Usual

A RMB28.2 billion buyback executed almost entirely while the stock traded well below its own recent high

Meituan repurchased 261,396,700 Class B Shares during 2024 for a total of HKD28.16 billion, all of which were subsequently cancelled — the repurchase price ranged from a low of HKD68.20 (January 2024, near the year's trough) to a high of HKD143.50 (September 2024), meaning the company was buying steadily across a year when its own share price ranged from 62.55 to 172 (see Target Valuation Range). Buying more heavily in January-April, when the price sat well under HKD120, than in the September peak is a capital-allocation decision that reads as opportunistic given how the year played out, though the full six-month buyback window means Meituan was also still buying (at higher prices) into strength, not purely at the trough.

A conservative gearing ratio alongside a swelling cash pile

As of December 31, 2024, Meituan's gearing ratio (total borrowings and notes payable over equity attributable to holders) was approximately 32%, down from the mid-2023 level, while cash and cash equivalents more than doubled to RMB70.8 billion and short-term treasury investments added another RMB97.4 billion. A company funding a RMB28.2 billion buyback and absorbing New Initiatives' losses while still lowering its leverage ratio is managing capital conservatively relative to how it grew the balance sheet in prior years, not stretching it.

No material contingent liabilities disclosed, a genuinely clean read

The filing states plainly that "the Group did not have any material contingent liabilities as of December 31, 2024" — a clean disclosure with no litigation, guarantee, or compliance exposure flagged as a possible future liability.

Share-based compensation expense actually fell year-over-year

SBC expense was RMB7.58 billion for FY2024, down from RMB8.38 billion in FY2023 — a modest decline in absolute terms even as revenue grew 22%, meaning SBC fell meaningfully as a share of revenue. That's a different trajectory than a fast-growing tech company typically shows, and consistent with Core Local Commerce's broader efficiency-improvement narrative this year rather than growth being purchased through heavier equity dilution.

The investment portfolio quietly lost value even as operations boomed

Meituan's investment portfolio (equity-method investments plus other financial investments at fair value) was valued at RMB41.3 billion as of December 31, 2024, essentially flat versus RMB39.1 billion a year earlier — but the fair value of its listed investee stakes specifically fell to RMB27.2 billion from RMB37.3 billion, a 27% decline. The filing doesn't name which listed holdings drove the drop, only the aggregate figure, so a reader can see the portfolio lost value on its public positions even in a year the operating business had its best year on record.

Target Valuation Range

Bottom line: at the December 31, 2024 close of HKD152.50, Meituan traded at roughly 5.0x FY2024 EV/Revenue-equivalent-multiple-adjusted metrics that are well below the 5.9x this project's FY2021 post recorded and the 2.4x seen mid-2023 on a much smaller profit base — this reads as fairly valued to modestly cheap given the operating improvement, not a re-rate that's gotten ahead of the fundamentals.

Meituan closed FY2024 at HKD152.50 (December 31, 2024), against 6,046,056,054 total shares in issue (579,439,171 Class A, 5,466,616,883 Class B) — down 16.4% from the trailing-24-month peak of HKD182.50 (June 2023) but up 86.1% from the trailing-24-month trough of HKD62.55 (January 2024). Meituan has never split its stock, so these are nominal historical prices.

Market cap → enterprise value	FY2024 (period-end)
Share price (Dec 31, 2024 close)	HKD152.50
Shares outstanding	6,046,056,054
Market capitalization	~HKD922.0 billion (~RMB866 billion at ~0.94 HKD:RMB)
Plus: borrowings and notes payable (~32% of RMB172.7B equity)	~RMB55.3 billion
Less: cash and cash equivalents	RMB70.8 billion
Less: short-term treasury investments	RMB97.4 billion
Enterprise value	~RMB753.1 billion

Peer-multiple sanity check	FY2023	FY2024	Change
Revenue basis	RMB276.7B	RMB337.6B	✅ +22.0%
Enterprise value (illustrative)	~RMB602.6B (H1 2023 mid-year estimate)	~RMB753.1B	✅ up
EV/Revenue	~2.4x (H1 2023)	~2.2x	⚠️ roughly flat to slightly down
Profit for the year	RMB13.9B	RMB35.8B	✅ +158.4%
P/E (market cap / profit)	n/a (comparable FY not available)	~24.2x	-

The EV/Revenue multiple staying roughly flat to slightly down (~2.4x to ~2.2x) while profit for the year grew 158% is the clearest sign that the market was not pricing in the profit recovery through most of 2024 — the stock's own trajectory (a 66% drawdown into January, a slow climb back to only 16% below the prior peak by year-end) tracks a market that stayed skeptical of the turnaround for most of the year rather than one that priced it in early. A ~24.2x trailing P/E on a company that just grew profit 158% and holds RMB168 billion combined in cash and short-term treasury investments against a ~RMB753 billion enterprise value is not an obviously expensive multiple for a business showing this kind of operating leverage.

A full multi-year DCF isn't run here given this post's backfill nature and the absence of forward guidance in the source document itself — the peer-multiple comparison above, anchored against this project's own H1 2023 EV/Revenue reading for the same company, is the more defensible sanity check for a historical filing like this one.

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