Fitch Ratings has changed the outlook on Meituan's (HKG:3690) long-term issuer default rating to negative from stable while maintaining the rating at BBB+, according to a recent release.

The outlook revision stems from a slower-than-expected rebound in the Chinese e-commerce platform's profitability and free cash flow (FCF), following aggressive competition in food delivery amid subsidy efforts.

Fitch sees dampened near-term earnings visibility due to high subsidy spending, while FCF will only be positive in 2027 if there is significantly less competition.

The affirmation points to Fitch's belief that the company will continue its recovery trajectory, albeit delayed.

The company's leading market position in the country's local services sector and efficiency advantage will anchor the recovery, Fitch said.

The company's net cash position should also help in cushioning near-term earnings constraints, the rating agency said.

Material changes in the company's EBITDA trajectory, net cash position, or FCF could result in future rating actions.