MEITUAN Meituan Turned Profitable Again. Why Did Its Stock Just Hit a New 24-Month Low?

A Real Recovery the Market Isn't Buying

Meituan's second quarter of 2026 is the clearest sign yet that the price war which produced Q1 2026's RMB6.8 billion loss is easing, at least for now. Revenue grew 14.4% year-over-year to RMB104.6 billion, and the company swung back to an RMB2.2 billion profit - up 490.0% from Q2 2025's already-depressed RMB365 million, and a genuine reversal from Q1's loss. Core Local Commerce, the segment that swung to a negative operating margin in Q1, recovered to a 7.9% operating margin - its best since before the price war began - as delivery services revenue returned to growth (+13.1% year-over-year) after Q1's outright decline. Adjusted EBITDA and adjusted net profit rose 47.3% and 69.0% respectively, and total segment operating profit (Core Local Commerce plus New Initiatives, before unallocated corporate items) came in at RMB3.9 billion.

None of that showed up in the stock. Meituan closed the quarter at HKD68.50 on June 30, 2026 - a fresh trailing-24-month low, down 62.5% from the October 2024 peak of HKD182.50, and lower than the HKD81.15 trough the stock hit in February, before this quarter's recovery even began. The market also isn't crediting the balance-sheet repair: Meituan's gearing ratio^», which spiked from roughly 53% to 71% in a single quarter funding Q1's price war (see meituan/2026-03), fell back to 52.4% by June 30 as the company redeemed its outstanding convertible bonds and repaid bank borrowings - nearly back to where it started six months ago. A profitable quarter, a recovering core segment, and a mostly-unwound debt spike would normally be a re-rating story; instead, Meituan trades at roughly 0.6x EV/Revenue^», a fraction of Southeast Asian peer Grab's ~2.5x and U.S. peer DoorDash's ~4.8x (see Target Valuation Range).

The Prescription

Meituan should keep leaning on exactly what produced this quarter's recovery: disciplined marketing spend paired with real supply-side differentiation, not a truce with rivals. The filing's own language ties the margin improvement to "more disciplined marketing spending" and to specific initiatives - the "Trusted Food Delivery" food-safety framework, CatPaw's AI agents for merchants, the expanded Must-Eat List leveraging 1.5 billion user reviews - rather than to any sign competitive intensity has genuinely subsided. Those are moats a rival can't match with a subsidy for a quarter; doubling down on them, rather than reaching for incentives the moment growth needs a boost, is the more durable path back to Core Local Commerce's pre-price-war margins.

What it should stop doing: treating one good quarter as proof the fight is over and resuming shareholder returns on that basis. The buyback that went to zero after Q3 2025 restarted this quarter - a modest RMB199.8 million (see Beyond the Usual), tiny next to FY2024's RMB28.2 billion, but a real change in posture - right as gearing was still working its way back down from Q1's spike and New Initiatives remained loss-making. Meituan's own recent history argues for caution here: both Q2 2025's margin collapse and Q1 2026's loss followed quarters that looked stable in isolation. Resuming capital return before Core Local Commerce's margin recovery has held for more than one quarter risks repeating the same pattern of reading a single data point as a trend.

Key Financial Metrics

Three months ended June 30, 2026 vs. three months ended June 30, 2025 (unaudited; the underlying six-month interim financial information was reviewed, not audited, by PricewaterhouseCoopers under ISRE 2410)

FX: RMB 6.7936 = USD 1, HKD 7.8425 = USD 1 (live market quotes as of June 30, 2026, not sourced from a filed document).

Metric	Q2 2026 (RMB)	Q2 2026 (USD)	Q2 2025 (RMB)	YoY
Total Revenue	Rmb104,643M	~$15.40B	Rmb91,490M	+14.4%
Gross Profit	Rmb35,095M (33.5% margin)	~$5.17B	Rmb30,064M (32.9% margin)	+16.7%, margin +0.7pp
Operating Profit	Rmb2,691M	~$0.40B	Rmb226M	Up nearly 12-fold
Adjusted EBITDA»	Rmb4,098M	~$0.60B	Rmb2,782M	+47.3%
Profit for the Period	Rmb2,155M	~$0.32B	Rmb365M	+490.0%
Adjusted Net Profit	Rmb2,524M	~$0.37B	Rmb1,493M	+69.0%
Net cash generated from operating activities	Rmb9,733M	~$1.43B	Not disclosed on a standalone-quarter basis this filing	Cash inflow
Free Cash Flow	Not available this quarter	-	-	Investing outflows disclosed as a single lump figure without a separate capex breakout - see note below
Cash and cash equivalents	Rmb104,717M	~$15.42B	-	vs. Rmb106,771M at Dec 31, 2025, -1.9%

On FCF: consistent with every quarterly filing in this project's Meituan coverage since H1 2023, this results announcement discloses "net cash flows used in investing activities" as a single lump figure (capital expenditures and other investing items combined) without breaking out capex separately, so free cash flow can't be isolated this quarter either.

Balance sheet	Jun 2026 (RMB)	Dec 2025 (RMB)	Change
Total Assets	Rmb384,682M	Rmb346,910M	+10.9%
Total Liabilities	Rmb215,533M	Rmb195,922M	+10.0%
Total Equity	Rmb169,149M	Rmb150,988M	+12.0%
Accumulated Losses (component of equity)	-Rmb167,712M	-Rmb163,218M	Widened 2.8%
Total Borrowings + Notes Payable	Rmb88,701M	Rmb80,283M	+10.5%
Gearing ratio» (borrowings + notes payable / equity attributable to holders)	52.4%	53.2%	Roughly flat

The flat Dec-to-June comparison hides a sharper move in between: gearing spiked to 71% at March 31, 2026 before falling back - see Beyond the Usual for what drove both the spike and the reversal.

It's also worth noting the six-month picture isn't fully repaired yet: the cumulative loss/profit for the six months ended June 30, 2026 is still a loss of RMB4.7 billion (versus a RMB10.4 billion profit in H1 2025), since Q2's RMB2.2 billion profit only partly offset Q1's RMB6.8 billion loss. Q2 2026 is a genuine quarter-over-quarter turn, not yet a full-year recovery.

Key Operational Metrics

As in Q1 2026, this filing discloses no standalone GTV^» figure, no on-demand delivery transaction count, and no active-merchant count - all "not available" as absolute numbers again this quarter. Qualitatively, the filing attributes Core Local Commerce's improvement to "disciplined spending on incentives" and improving order/user mix, and describes Keeta's international expansion (Hong Kong profitable, Middle East improving sequentially, São Paulo the current focus in Brazil) without quantifying any of it.

Segment Comparison

Meituan reports two segments - Core Local Commerce (food delivery, in-store, hotel & travel, and Meituan Instashopping) and New Initiatives (grocery retail via Xiaoxiang Supermarket, Keeta's overseas delivery expansion, and other retail/tech bets) - unchanged since the H1 2023 filing.

Segment	Revenue (Q2 2026)	Revenue (Q2 2025)	YoY	Op. Profit/(Loss) (Q2 2026)	Margin (Q2 2026)	Margin (Q2 2025)
Core Local Commerce	Rmb71,531M	Rmb64,997M	+10.1%	Rmb5,668M	7.9%	5.7%
New Initiatives	Rmb33,112M	Rmb26,493M	+25.0%	-Rmb1,739M	-5.3%	-7.1%
Unallocated items	-	-		-Rmb1,238M	NA	NA
Group Total	Rmb104,643M	Rmb91,490M	+14.4%	Rmb2,691M	2.6%	0.2%

Both segments improved this quarter, but Core Local Commerce did the heavier lifting: its operating margin gained 2.2 percentage points to a positive 7.9%, while New Initiatives' loss ratio improved by a similar 1.8 points but stayed negative. This is the direct inverse of the pattern the Q1 2026 post described, where Core Local Commerce swung negative while New Initiatives held up better - the group's recovery this quarter is squarely a Core Local Commerce story.

Core Local Commerce

Segment revenue grew 10.1% to RMB71.5 billion, and - unlike Q1, where GTV growth was "resilient" but revenue was flat because of elevated incentives - the revenue growth this quarter is real: delivery services revenue rose 13.1% to RMB26.8 billion, "returning to positive year-over-year growth, primarily due to our disciplined spending on incentives," reversing Q1's 6.5% decline in the same line. Product sales (medicine, alcohol, and other self-operated categories) grew 78.9% to RMB3.6 billion, again the fastest-growing line within the segment. Operating profit more than reversed, from a loss into a positive RMB5.7 billion (a 52.3% year-over-year improvement in absolute terms once measured against Q2 2025's smaller profit base), with margin up 2.2 percentage points to 7.9%.

The filing credits "dynamic optimization of marketing strategy" for both the profit and margin gains, alongside continued investment in supply-side initiatives: an expanded Must-Eat List (1.5 billion user reviews, now covering more cities globally), the "Trusted Food Delivery" food-safety framework rolled out in full this quarter, and new AI tools (Xiaotuan for consumers, CatPaw agents for merchants) aimed at pushing Meituan from being merchants' "online channel" toward their "AI business partner." None of this is quantified as a standalone return figure - see Beyond the Usual for the R&D spend behind it - but it's the operational case The Prescription above argues Meituan should keep funding over renewed subsidies.

New Initiatives

Revenue grew 25.0% to RMB33.1 billion, driven by "the expansion of our grocery retail businesses and overseas businesses," with product sales revenue (mostly Xiaoxiang Supermarket) up 45.1% to RMB23.1 billion. Operating loss narrowed to RMB1.7 billion from RMB1.9 billion a year earlier, and the loss ratio improved 1.8 percentage points to -5.3%, which the filing attributes to "enhanced operational efficiency in our grocery retail and overseas businesses."

One genuine first this quarter: New Initiatives now reports a standalone "Delivery services" revenue line of RMB1.0 billion, where Q2 2025's comparative column shows none at all - a sign Keeta's overseas on-demand delivery business (Hong Kong, the Middle East, and a fledgling São Paulo operation) has scaled to where it's broken out separately rather than folded into "Others." Xiaoxiang Supermarket also opened its third offline store, in Hangzhou in July, continuing the pivot from a pure e-commerce grocery play toward a hybrid online/offline model.

Beyond the Usual

Gearing spiked to 71% in Q1, then mostly reversed by Q2

Meituan's gearing ratio^» rose from roughly 53% at December 31, 2025 to 71% at March 31, 2026 on RMB24.8 billion of fresh bank borrowings (see meituan/2026-03), then fell back to 52.4% by June 30, 2026 - nearly its starting point six months earlier. The reversal wasn't organic deleveraging so much as the scheduled unwind of Q1's borrowing: non-current borrowings fell from roughly RMB42.7 billion in March to RMB35.3 billion in June, and Q2's financing activities used RMB18.2 billion in cash, mainly to redeem the outstanding US$1,481,400,000 zero-coupon convertible bonds due 2028 (redeemed April 27, 2026) and repay bank loans. Read together with the March post, this reads less like Meituan choosing to delever and more like the debt-funded spending spree turning out to have been a short-term bridge that got repaid once the quarter's own cash flow (RMB9.7 billion generated from operations) allowed it.

A second consecutive quarter of a fair-value gain the income statement never sees

Meituan's fair value gain on its stakes in Z.AI (3.86%) and Unitree (7.61%) was RMB22.2 billion for the three months ended June 30, 2026 - nearly three times the RMB7.6 billion gain the Q1 2026 post flagged for the prior quarter. Both gains are recorded in other comprehensive income, not in the profit-or-loss statement that produces the RMB2.2 billion headline profit - standard IFRS treatment for investments classified at fair value through OCI, not an irregularity, but a reader relying on the income statement alone would have no visibility into a swing this large. The combined effect over two quarters (roughly RMB29.8 billion) is itself larger than either quarter's entire reported operating profit.

The buyback restarted, at a fraction of its old scale

After going to zero in Q3 2025, Meituan repurchased 2,924,800 Class B Shares in June 2026 for an aggregate HK$199.76 million - genuinely small next to FY2024's RMB28.2 billion (see meituan/2024-12), but a real change in direction, restarted in the same quarter gearing was still unwinding from its Q1 spike. Whether this continues or stays token-sized is worth watching against The Prescription's concern about resuming capital return too early.

One person still holds both the Chairman and CEO title

The filing discloses that Meituan has not segregated the Chairman and Chief Executive Officer roles - both are held by Mr. Wang Xing - a disclosed deviation from code provision C.2.1 of Hong Kong's Corporate Governance Code. The Board's stated rationale is "consistent leadership" and "effective and efficient overall strategic planning." This sits alongside Meituan's existing WVR^» structure - Wang Xing, Mu Rongjun, and Wang Huiwen together held 55.4% of voting rights via Class A shares as of the FY2021 post, and this filing doesn't update that figure - two separate, individually disclosed governance concentrations that compound rather than offset each other, and neither is new this quarter, but the combination is worth keeping in view given how much capital-allocation discretion (the resumed buyback, the Q1 borrowing decision) sits with the same small group.

Target Valuation Range

Bottom line: Meituan's own EV/Revenue math implies a fair-value range of roughly HKD51-HKD209 per share (~RMB167B-RMB1,005B enterprise value); the actual June 30, 2026 close of HKD68.50 sits almost exactly on the base case - well above a full-crisis bear case, but nowhere near a re-rate toward Grab's ~2.5x or DoorDash's ~4.8x EV/Revenue - the market is pricing this quarter's recovery as real but fragile, not as a discount waiting to close.

Meituan closed at HKD68.50 on June 30, 2026, a fresh trailing-24-month low - down 62.5% from the window's peak of HKD182.50 (October 31, 2024) and below even the prior trough of HKD81.15 (February 27, 2026), despite this quarter's return to profit. Meituan has never split its stock, so these are nominal historical prices, not split-adjusted figures.

This filing's EPS note discloses a weighted average of approximately 6,118.8 million ordinary shares outstanding for the six months ended June 30, 2026 - used below as a period-end proxy, since the quarter's own disclosed share activity (a 2,924,800-share repurchase against a 6.1-billion-share base) is too small to move the count meaningfully.

Market cap → enterprise value	Q2 2026 (period-end)
Share price (period-end, June 30, 2026 close)	HKD68.50
Shares outstanding (H1 2026 weighted average)	~6,118.8 million
Market capitalization	~HKD419.1 billion (~USD53.5 billion / ~RMB363.1 billion)
Plus: borrowings and notes payable	~RMB88.7 billion
Less: cash, short-term treasury investments and restricted cash	~RMB190.3 billion
Enterprise value	~RMB261.6 billion (~USD38.5 billion)

Peer-multiple sanity check	Q1 2026	Q2 2026	Grab (Q2 2026)	DoorDash (Q2 2026)
Revenue basis	~RMB364.2B (annualized run-rate)	~RMB418.6B (annualized run-rate)	FY2026 guidance basis	TTM
EV/Revenue»	~0.98x	~0.62x	~2.5x	~4.8x

The methodology isn't identical across companies (annualized run-rate versus guidance versus trailing-twelve-month revenue), so this is a sanity check, not a precise cross-company ranking - but the gap is too wide to be a methodology artifact. Meituan, now profitable and larger in absolute revenue than either peer, trades at under a third of Grab's multiple and an eighth of DoorDash's. Some of that gap is a real difference in growth trajectory (Grab and DoorDash are both still expanding profitability from a smaller base; Meituan just spent two quarters swinging between a loss and a thin profit) - but a gap this wide is also consistent with a persistent discount the market applies to Chinese ADR/H-share equities generally, separate from anything specific to Meituan's own numbers this quarter.

DCF (illustrative, not a full model): a credible multi-year DCF still needs more than one recovering quarter to trust that Core Local Commerce's margin holds and that New Initiatives' path to profitability is real - neither is yet established. Directionally, applying the same illustrative-annualized-revenue-and-multiple approach as the Q1 2026 post:

Scenario	Key assumption	Implied EV	Implied market cap	Implied share price
Bear	Competitive/regulatory discount persists, market compresses further to ~0.4x EV/Revenue	~RMB167B	~RMB269B (~HKD310B)	~HKD50.8
Base	Current market pricing holds (~0.62x EV/Revenue)	~RMB262B	~RMB363B (~HKD419B)	~HKD68.5
Bull	Market re-rates back toward H1 2023's ~2.4x EV/Revenue multiple	~RMB1,005B	~RMB1,106B (~HKD1,277B)	~HKD208.7
Current (period-end close)	Actual June 30, 2026 close	~RMB262B	~RMB363B (~HKD419B)	HKD68.50

The actual close sits almost exactly on the base case and well above the bear case - the market isn't pricing a full-blown crisis, but it's giving essentially zero credit for a re-rate toward either historical multiple or regional/global peers. That gap between base and bull matters more than where the actual price sits: it would take a lot more than one recovering quarter to close it.

Reverse DCF: at Meituan's current ~0.62x EV/Revenue, the market is pricing in something closer to a permanently discounted, competitively-pressured business than a company that just posted a 490% profit swing and unwound most of a debt spike. That's a materially more skeptical read than the market held even at Q1 2026's ~0.98x, despite this quarter's numbers moving in the right direction on every headline metric - which says the market's concern isn't really about this quarter's data at all, but about whether the recovery holds past it.

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