By Kimberley Kao

Meituan is scheduled to report results for the fourth quarter on Friday. Here's what you need to know:

NET PROFIT FORECAST: The Chinese food-delivery company is expected to report net profit of 7.94 billion yuan, equivalent to $1.10 billion, according to the consensus estimate by analysts polled by Visible Alpha. That would be more than triple profit of 2.22 billion yuan reported for the year-earlier period.

REVENUE FORECAST: Revenue is estimated at 87.77 billion yuan, according to Visible Alpha, up 19% from a year ago.

The company's Hong Kong-listed shares have gained 10% so far this year, after losing about 12% in the fourth quarter. The stock and China's broader market rally from last September have lost steam amid a lack of further stimulus measures from Beijing to boost domestic demand. China has been struggling to shake off disinflationary pressures as trade risks remain an overhang, but Meituan's earnings have shown resilience in recent quarters despite competition and China's economic woes.

WHAT TO WATCH:

--OVERSEAS BUSINESS: Investors are concerned about the potential drag on margins that Meituan's accelerated pace of overseas expansion efforts could have, Citi Research analysts said in a note. Meituan will likely remain prudent in spending but could still report a higher loss in new initiatives due to this overseas investment, they said. Keeta, its international brand for food delivery, has been topping the download chart in Saudi Arabia, which could drive it to expand into other countries in the region later this year, they add.

--GUIDANCE: The outlook for its food-delivery business will remain in focus, with the weak Chinese macro environment likely to weigh on the segment's growth, Nomura research analysts said in a note. The "market may want to temper expectations" this year, they said, as the company earlier toned down its own outlook for food delivery as well.

--HONG KONG: While Meituan will continue to focus on defending its mainland China business, it will benefit from Deliveroo's exit from the Hong Kong market this year, Morningstar Asia equity market strategist Kai Wang said in a note. However, the operating loss in Saudi Arabia could offset the benefits in Hong Kong, given the latter's minimal revenue contribution so far, the strategist added.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

March 21, 2025 01:12 ET (05:12 GMT)

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