Beat market expectations. In 2Q26, Meituan reported revenue of RMB104.6bn, up 13.9% YoY and 4% ahead of Bloomberg consensus, while adjusted net profit of RMB2.5bn came in well ahead of consensus of RMB317mn. The revenue beat was mainly driven by: (1) Core Local Commerce revenue coming in 5% above consensus, aided by more benign-than-expected competition in the food delivery business;(2) New Initiatives revenue exceeding consensus by 2%. The earnings beat was supported by: (1) ~5ppt OPM beat in the in-store business, as Meituan maintained a disciplined and efficient subsidy strategy alongside an efficiency focused operating approach; (2) stronger-than-expected operating efficiency gains in New Initiatives; (3) better-than-expected UE improvement in the FD business.

Core local commerce revenue beat and profit in-line with market expectations. We estimate 3Q26 total on-demand order volume (food delivery + Instashopping) came in at -5% yoy on a high base, and expect 3Q26E food delivery/Instashopping order growth to be at -8%/+17% yoy, with CLC 3Q26 operating profit of Rmb4.2bn.

1.Food delivery (we estimate 2Q26 EBIT per order came at Rmb0.3 vs. Market expectation at breakeven; we expect unit economics to decline sequentially to Rmb0.1 for 3Q26E/at -Rmb0.1 for FY26E): We estimate food delivery + instashopping losses came in at Rmb1bn, compared with Alibaba Quick Commerce’s losses of -Rmb10bn over the same period. The company continued to sustain clear leadership in order/GTV share, helped by its higher-quality user base and stronger mid-to-high AOV order mix between the top two players.

2.Instashopping (flat loss qoq in 2Q26): Meituan maintained c.60% order/GTV share in native 30-minute instashopping scenario, with losses flat sequentially. For 3Q26/FY26E, we now estimate 17%/21% Instashopping volume growth (prior: 21%/21%) and -Rmb-0.4/-Rmb0.4 EBIT per order (prior: -Rmb0.7/-Rmb0.6).

3.In-store, hotel and travel (2Q26 EBIT margin beat on strategic focus and better-than-expected in-store dining margins): 2Q26 IHT GTV growth moderated to high-single-digits % (from low-teens in 1Q26) and we estimate EBIT margin improved to c.30% sequentially on the back of the company’s strategic focus on high-quality scenarios. Meituan’s IHT continues to differentiate through category mix, content/review system and user experience.

New initiatives revenue inline and profit beat. New initiatives revenue came broadly in-line at Rmb33bn (+25% yoy, 2% above market expectation) on the growth of Xiaoxiang and overseas Keeta business, despite the impact of discontinuation for Meituan Select. EBIT loss narrowing outpaced expectation at -Rmb1.7bn (vs. consensus of -Rmb2.4bn), reflecting efficiency gains across domestic and overseas businesses. During the 2Q26 conference call, management provided the following updates: (1) Keeta: The Hong Kong market has achieved stable profitability, while operating efficiency in the Middle East continues to improve (with the Saudi Arabian market turning profitable in July 2026). Management expressed strong confidence in the long-term potential of the Brazilian market. (2) Xiaoxiang Supermarket is accelerating its market expansion, and the contribution of private-label products to GMV has further increased.

Progress around technology/AI. Meituan prioritized using AI to enhance workflows and user/merchant experience rather than as a standalone business, with LongCat 2.0 and full-stack domestic training/inference infrastructure providing long-term cost advantages. The company reiterated a disciplined investment approach across LLM, AI agents for work and AI-powered products (in-app Xiaotuan and partnership with Tencent), with limited intention in pursuing SOTA-level model performance or token monetization.

Amid more benign industry competition, steady path on an improvement cycle. As the food-delivery subsidy war tapers off, Meituan is entering a favorable improvement cycle, evidenced by both accelerating revenue growth and progressive profit unlocking. Meituan’s stock is currently trading at HK$78.40 per share, with a diluted EPS of RMB4.12 in 27E, corresponding to 16x P/E. This compares to the peer group, which is trading at 21x P/E.