Key Takeaways:
- S&P assigned MEITUAN a BBB+ rating with a Negative outlook
- Operating margin narrowed to -7% in 1Q26 from -21% in 3Q25
- EBITDA expected to turn positive in 2H26 as subsidies decline
Back
S&P hands MEITUAN BBB+ rating with negative outlook on subsidy risks
S&P Global Ratings assigned MEITUAN-W a BBB+ credit rating with a Negative outlook, citing risks from potential subsidy competition.
"MEITUAN faces hurdles in its path back to profitability as renewed promotional spending by competitors could slow margin recovery," S&P Global Ratings said in a report dated June 5.
The agency said MEITUAN's first-quarter 2026 operating margin improved to negative 7% from negative 21% at the peak of the subsidy war in the third quarter of 2025, driven by reduced subsidies in its core local commerce segment. Losses from new initiatives also narrowed, supported by improved efficiency at its international brand Keeta in Hong Kong and Saudi Arabia. The company reported a non-IFRS adjusted loss of 4.968 billion yuan for the quarter, beating analyst expectations.
The Negative outlook reflects the risk that increased promotional spending by competitors such as Alibaba could delay margin recovery and prevent the company from generating positive free cash flow. S&P expects MEITUAN's EBITDA margin to recover to around 3% in 2026, assuming subsidies continue to decline and EBITDA turns positive in the second half of the year.
The company may adopt a more targeted subsidy strategy focused on cross-selling and enhancing user stickiness, S&P said. MEITUAN continues to emphasize raising net transaction value rather than absolute order volume, while improving food delivery operating efficiency and accelerating deployment of AI agents through a partnership with Tencent's AI assistant Yuanbao.
The rating action puts MEITUAN's credit profile under scrutiny as it navigates the balance between defending market share and restoring profitability. Investors will watch whether the company's strategy of targeting high-value orders and deploying AI tools can attract enough premium customers to offset competitive pressure. The stock's short selling ratio stood at 30.4% as of June 4, reflecting heavy bearish positioning.
This article is for informational purposes only and does not constitute investment advice.
[1] S&P: MEITUAN-W (03690.HK) Faces Hurdles in Return to Profitability Amid Subsidy Risks[2] S&P Global: Meituan (03690.HK) faces challenges in returning to profitability amid subsidy-related risks. - 富途牛牛[3] S&P: MEITUAN-W (03690.HK) Faces Hurdles in Return to Profitability Amid Subsidy Risks - AASTOCKS.com[4] Meituan (3690.HK) 1Q26 Commentary: We expect the core local commerce segment to turn profitable next quarter. - 富途牛牛
© 2026 Edgen Powered by