Daily Investment Strategy

Daily focus：Meituan（3690）

Meituan has underperformed other tech names since we last recommended the share in Dec. The market is concerned that its Saudi expansion could increase new business losses. However, we previously noted that Meituan’s Saudi push is a worthwhile venture, and recent developments show it has successfully gained market share. Unlike AI-driven stocks, Meituan has not benefited from the AI rally, which partly explains its underperformance. However, this also means it carries less geopolitical risk. We remain bullish and view any pullback as opportunity. In 3Q24, the number of instant delivery transactions (food delivery + Instashopping) reached 7.078 billion, a yoy increase of 14.5%, i.e. 76.93 million orders per day. Among these, the daily order volume for Instashopping exceeded 10 million, with both user numbers and transaction frequency achieving double-digit yoy growth. Management sees that many new categories still have very low penetration rates in instant retail. As user consumption scenarios expand from basic needs like food and daily necessities to various aspects such as “eating, using, gifting, entertainment, and shopping,” the range of consumer goods will also expand, potentially increasing the average order value. Additionally, Meituan's "Shen Qiang Shou " program is proving effective, allowing users to utilize discounts across various scenarios such as food delivery, group purchases, foot massages, and beauty services. This significantly broadens the applicability of membership benefits. With the help of cross-selling, "Shen Qiang Shou" is expanding into in-store dining, hotels, and tourism sectors. We see Meituan as a nice pick under the backdrop of consumption boosting in China. Target price is HK$180.5.

Trump delays tariffs on U.S. autos for one month

The White House announced on Wednesday that Trump has granted a one-month tariff deferral to automakers that comply with the United States-Mexico-Canada Agreement (USMCA). Auto stocks including General Motors Co. (NYSE: GM), Ford Motor Co. (NYSE: F) and Stellantis Corp. (NYSE: STLA) surged. The news raised hopes that tariffs on Mexico and Canada, which take effect on Tuesday, may be short-lived. U.S. Commerce Secretary Howard Lutnick said in a Fox Business interview on Tuesday that President Trump is willing to " meet in the middle" with Canada and Mexico on new tariffs. The tariffs, which include a 25% tax on imports from Canada and Mexico and an increase to 20% on Chinese goods, have raised concerns about U.S. economic growth and consumer prices, and that the U.S. will face high inflation. Meanwhile, data on Wednesday showed U.S. private payrolls grew at the slowest pace in seven months in February, further fueling worries about the economy, especially after a recent series of declines in economic data. The ADP national jobs report showed private payrolls rose by just 77,000 jobs last month, the smallest gain since July 2024 and down from an upwardly revised 186,000 job gain in January.

Hong Kong Stock Connect had a net inflow of HK$8.36bn Wednesday of which Alibaba (9988) had the largest net inflow, reaching HK$2.89bn; followed by China Mobile (941). SMIC (981) recorded the largest net outflow at $0.23bn, followed by Li Auto (2015).