Citi has released a research report stating that MEITUAN-W (03690) delivered first-quarter results surpassing expectations this year.

The outperformance is attributed to an improved competitive landscape, more rational subsidies, and favorable seasonal factors.

Management anticipates that the food delivery business will achieve unit economics (UE) breakeven in the second quarter.

With profit margins for the in-store business remaining stable, the core local commerce segment is expected to return to profitability in Q2, a pace faster than the bank previously anticipated.

Following an adjustment to its forecasts, Citi has raised its target price for Meituan from HK$110 to HK$113, while maintaining its "Buy" rating.

The bank believes the worst period of intense competition has passed, which will allow Meituan to focus on advancing AI applications and product enhancements while navigating macroeconomic conditions and competitive dynamics.