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Meituan: A Compounder In The Making

Long Meituan Dianping with a $112 HKD price target, reflecting an 87% return. Meituan’s value is driven by growth in its food delivery GTV and path to monetization and cross-sale opportunities. The company’s IPO in 2018 was accompanied with the news of Alibaba’s acquisition of Ele.me (its main competitor).  Concerns with competition from Alibaba led to suppressed valuation for the fast-growing tech company. Trade war headlines also irrationally affected its valuation in December even though it has no exposure to international trade. Headline news seems to have clouded the market’s view on what I believe is a sustainable moat. With the recent industry consolidation, Meituan’s management team has shown ability and willingness to further monetize its growing GTV.
 
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