S&P Global Ratings downgraded Meituan's (HKG:3690) issuer credit rating to BBB+ from A-, among other ratings, according to a Wednesday release.

The Chinese online retailer's capacity to maintain and expand its market share has eroded, partly because of Alibaba's push within the on-demand delivery market, S&P said.

S&P believes the company may face difficulty in reclaiming lost shares given Alibaba's determination to expand its shares.

Still, the company retains its core competitive edge especially in consumer mindshare given its speed, service quality, and user stickiness in the on-demand delivery segment.

The company's profitability and cash flow generation also face pressure from competition across several segments, the rating agency said.

S&P views the company as having sufficient financial buffers, with unrestricted cash and short-term investments of about 141 billion yuan enough to cover 16.3 billion yuan in short-term debt maturities over the next 12 months.

The outlook is negative, stemming from the likelihood of the company's profitability to further decline under reintensified competition, according to S&P.