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<Research>JPM: Alibaba's Launch of 'Amap Street-food-hopping Rank' Key Step in Super-App Strategy, Expected to Hit Meituan's 'Cash Cow' In-Store
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JPMorgan released a report on BABA-W (09988.HK), which announced its comeback to offline physical store business, with its mobile map application Amap officially launching the “Amap Street-food-hopping Ranking” in-app feature yesterday. Furthermore, Amap announced the distribution of over RMB1 billion in subsidies through the “Local Gems Support Initiative” to encourage offline consumption, covering transportation and in-store spending. Alibaba's transformation of the Chinese local service market business may not pose an imminent profit risk to the current bellwether MEITUAN-W (03690.HK), but from a market sentiment perspective, it is boon to Alibaba's stock price, while expected to exert pressure on Meituan, mainly due to Alibaba's strong execution in China’s food delivery and quick commerce market. In the coming quarters, the market will eye on changes in Meituan's core local commerce margin to gauge the actual impact of Alibaba's new business. JPMorgan stated that the launch of “Amap Street-food-hopping Ranking” is a crucial step in Alibaba's super-app strategy. Amap is estimated to become the main entry point for Alibaba's offline local services, operating alongside Taobao's online traffic entry. This move can also create synergies with Ele.me and Alipay, enhancing user stickiness and monetization capabilities, and potentially opening up more offline consumption scenarios. However, the success of this plan hinges on technological capabilities and cultivating user habits. This is another hit to Meituan’s “cash cow”, the broker opined. Meituan's in-store business operating profit was RMB18 billion in 2024, while the food delivery business was RMB32 billion, with in-store business accounting for 35% and 42% of core local commerce and group-level adjusted OP in 2024, which is major “cash cow”. With Alibaba joining the competition, the broker saw downside risk to Meituan's in-store business OP forecasts of RMB26 billion and RMB32 billion for 2026-27. JPMorgan maintained an Overweight rating on Alibaba's H-shares with a target price of HKD165. AASTOCKS Financial News Website: www.aastocks.com |
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