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<Research>M Stanley: Competition in Food Delivery Sector Becoming Rational; MEITUAN-W/ BABA-W Rated at Overweight
Recommend 48 Positive 75 Negative 39 |
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The worst period of competition in the food delivery industry has passed, but the process of rationalizing the competitive landscape has been very slow, Morgan Stanley issued a research report saying. Stricter 'anti-involution' efforts by regulators may help further promote rational competition and accelerate the narrowing of losses, but the implementation has been less effective than expected. The broker expected BABA-W (09988.HK)'s quick commerce (QC) losses to continue narrowing, from RMB35 billion in 2FQ26 to RMB22 billion in 3FQ26. Morgan Stanley noted that, during BABA-W's 3FQ26 results meeting, management set a target to achieve RMB1 trillion gross merchandise volume (GMV) for its local life business by FY2028 and turn profitable in FY2029. The broker believed that this provides a clear profit roadmap and timeline, helping to alleviate market concerns about long-term cash burn, which is a positive signal. Therefore, Morgan Stanley rated BABA-W at Overweight and considered the stock as one of its top picks. Morgan Stanley believed that, whether driven by BABA-W's profit roadmap or regulatory anti-involution efforts, the potential rationalization of food delivery competition is positive news for MEITUAN-W (03690.HK). However, the broker will monitor intensified competition from Douyin's in-store business. Therefore, Morgan Stanley rated MEITUAN-W at Overweight. AASTOCKS Financial News Website: www.aastocks.com |
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