Citi has released a research report stating it maintains a "Buy/High Risk" rating on Meituan-W (03690), with a target price of HK$113. Meituan is set to announce its second-quarter results at the end of August, and Citi expects the results to meet or slightly beat expectations.

Citi is keeping its existing forecasts unchanged, predicting Q2 total revenue will grow 10.7% year-on-year to 101.7 billion yuan, with adjusted net profit reaching approximately 633 million yuan. This compares to the market consensus of 100.9 billion yuan in revenue and 270 million yuan in profit.

Amid regulatory oversight of subsidies and competition, the investment bank believes the unit economics of Meituan's food delivery business may recover faster than anticipated, which could drive positive results. By business segment, Citi forecasts core local commerce revenue to grow 5.7% year-on-year to 69.1 billion yuan. It expects the operating profit margin for the food delivery business to rise by 0.2 percentage points year-on-year, while in-store, hotel, and travel revenue is predicted to increase 8.4% year-on-year to 19 billion yuan. New business revenue is forecast to grow 22.9% year-on-year to 33 billion yuan.

Looking ahead to the third quarter, Citi projects total revenue for Meituan-W will grow 13% year-on-year to 107.4 billion yuan, with an operating profit of approximately 2.2 billion yuan from its core local commerce segment.