1. Food Delivery War & Alibaba’s Profits

Alibaba’s Exposure: Alibaba participates in the food delivery sector mainly through Ele.me, which competes directly with Meituan. While Ele.me’s market share has stabilised somewhat, the sector remains intensely competitive, with subsidies, discounts, and logistics costs weighing heavily on profitability.

Impact on Earnings: Given that Alibaba’s core commerce still contributes the bulk of revenue and profit, food delivery is not its primary earnings driver. However, if competition escalates, it will:

Pressure local services EBITA, worsening the margin outlook.

Reinforce investor concerns that Alibaba is overextended across too many verticals.

Conclusion: The food delivery war will not dominate Alibaba’s Q2 results, but it could weigh on investor sentiment if management signals prolonged losses in local services.

---

2. PDD’s Risk After Management’s Comments

Background: PDD has faced rising scrutiny over its pricing model, subsidies, and aggressive expansion (particularly through Temu abroad). Management’s recent comments—emphasising sustainable growth, compliance, and efficiency—helped soothe near-term concerns.

Risk Assessment:

Regulatory risk in China is never truly “gone”; it can resurface quickly depending on policy focus.

PDD’s international expansion (Temu) adds execution and geopolitical risk, particularly in the U.S.

That said, PDD’s low-cost positioning and market share gains remain intact, meaning the core investment case is resilient.

Conclusion: Management comments have reduced immediate risk premiums, but PDD is still not “risk-free.”

---

3. Price Target for Meituan

Earnings Shock: The massive profit miss (RMB 1.49B vs RMB 9.85B expected) highlights how severe competitive pressures have become.

Valuation Consideration: At this stage, Meituan trades largely on expectations of long-term leadership in local services. But the risk is that profitability may not recover quickly if subsidy wars persist.

Base Case PT:

If competition moderates, Meituan could stabilise margins and trade back towards HKD 160–170 (base case, 12-month horizon).

In a prolonged price war, downside risk could pull it towards HKD 120–130.

Bias: Neutral to slightly cautious until visibility on profitability improves.

---

✅ Summary

Food delivery wars will pressure Alibaba’s local services, but not derail its overall profit engine.

PDD’s risk isn’t gone, but short-term regulatory and sentiment pressure has eased.

Meituan: PT range HKD 130–170, depending on intensity of subsidy competition.