Meituan's (HKG:3690) spending boost to counter competitors will weaken its operating margin in 2025, S&P Global Ratings said in a Thursday release.

The China-based online delivery giant has offered more incentives to both users and merchants amid JD.com's (HKG:9618) entry into the market.

This aggressive stance will curb the company's EBITDA expansion even with solid first-quarter earnings, S&P said.

The rating agency lowered its forecast for the company's EBITDA margin by 100 to 200 basis points over the next two years to between 12% and 13%.

Although government efforts to support merchants will have a limited direct impact on the company, it will also contend with competitive pressures, new business losses, and the implementation of rider benefits, the rating agency said.

Despite these headwinds, S&P expects the company's credit profile to improve, given its financial discipline and a decent cash buffer.