Meituan (3690 HK): BUY, 12m target: HKD 185

JD.com (9618 HK): BUY, 12m target: HKD 195

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Competition and Future in the China Food Delivery Sector

If you live in the Greater China regions, even if you never use food delivery platforms, most likely you have heard of Meituan (美团) or Ele.me (饿了么), the dominant players in mainland China’s food delivery sector. Imagine living in Shanghai, where the rhythm of life moves at lightning speed. For millions of office workers, students, and families, the day begins not with a stove or a coffee maker but with a few taps on a smartphone.

Apps like Meituan and Ele.me—household names in China—have redefined convenience, delivering everything from steaming breakfast dumplings to midnight snacks in under 30 minutes. These platforms are more than just tools; they are lifelines in a society where time is currency, and efficiency is king.

But beneath this seamless convenience lies a fierce battle for dominance. In February, JD (京东), a titan of e-commerce renowned for its lightning-fast logistics, threw its hat into the food delivery ring. The spark? A fiery open letter published by JD last weekend, accusing Meituan of strong-arming delivery riders into exclusive contracts. JD’s message was clear: “Enough is enough.”  The letter criticized Meituan’s alleged “either-or” policy, which threatened riders with penalties—even account bans—if they worked for competing platforms. JD vowed to protect couriers, promising stable income and rallying the industry against monopolistic practices.

This clash isn’t just corporate drama—it’s a glimpse into China’s rapidly evolving digital economy. JD’s bold move signals its ambition to carve a slice of the lucrative food delivery pie, challenging Meituan’s long-standing reign. But can an e-commerce giant outmaneuver a seasoned delivery specialist? Let’s dig deeper.

China’s Food Delivery Sector: A Tale of Two Titans

China’s food delivery market is a realm ruled by two giants. Meituan, with its iconic yellow-and-black branding, commands a staggering 75% of order volume and revenue, while Ele.me (backed by Alibaba) claims most of the remainder. JD, the new kid on the block, holds less than 5% up-to-date but is betting on its advanced logistics network to shake up the game. The sector is attractive, with our projection to grow by 15% in 2025 and 10% in 2026/27, fueled by government efforts to stimulate consumer spendings.

The Players: Strengths and Strategies

• Meituan: Founded in 2010 as a Groupon-like platform, Meituan has evolved into a tech behemoth. By 2024, it processed over 60 million daily orders and generated RMB 337.6 billion in revenue—a 22% annual growth compared to revenue in 2023. Its secret sauce? A vast ecosystem of restaurants, grocery stores, and even travel services, all tied together by AI-powered logistics. Meituan has expanded its business in Hong Kong in 2023 and Saudi Arabia in 2024. Less than 1 year after its Hong Kong launch, the market share of Keeta surpassed Deliveroo to become the largest delivery platform by orders in the region.

• Ele.me: Acquired by Alibaba in 2018, Ele.me thrives on integration with Alibaba’s payment and retail networks. In late 2024, Alibaba reported revenue of RMB 59.8 billion in Local Servies Group (combination of Ele.me and Amap高德地图), with roughly 19% growth rate. Ele.me is estimated to currently hold 20 million average daily orders. By leveraging Amap’s advanced AI technologies, Ele.me can optimize delivery routes for riders.

• JD.com: Known for its obsession with speed and quality in e-commerce area, JD entered food delivery in early 2025. The food delivery service, as is built on top JD’s supply chain and logistics network, is a natural extension of JD’s core retail business, having great potential to improve the business’s overall profitability in the long run. On one hand, food delivery service enhances user experience ---- clients can order food and shop on the same app. On the other hand, this initiative will enhance user loyalty and engagement.

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Technology: The Invisible Backbone

Behind every quick delivery lies cutting-edge tech. Meituan uses artificial intelligence to map the fastest routes for its 400,000 riders, slashing delivery times even during rush hour. Its self-developed large language model called “Longcat”—think ChatGPT solely for customer service and business operation — handles millions of user queries daily, resolving complaints about cold noodles or missing chopsticks.

JD.com, meanwhile, is actively leveraging AI and logistics automation to improve supply chain efficiency. For example, JD utilizes AI tools including sales forecasting, AI marketing campaigns, AI pricing, AI customer services, etc. These innovations aim to reduce the operating and marketing costs, which is critical in improving profitability.    

Financial Face-Off

Let’s break down the numbers in simple terms:

• Meituan’s 2024 Profit Surge: Meituan’s net revenue increased 22% to RMB 337.6 billion, thanks to its core food delivery business which generated 74% of its revenue. The overall operating profit before tax is RMB 36.8 billion with 11% operating margin. As the core of Meituan, core local commerce business contributed revenue of RMB 250.2 billion with operating margin at 21%. New initiatives business include overseas business (primarily Keeta) and grocery retail contributed RMB 87.3 billion revenue, a 25% increase from 2023. While these new initiatives are not yet profitable, the loss has been narrowed by 64% from 2023. We think Meituan will leverage its technologies and capabilities in Hong Kong and Saudi Arabia to sustain its growth in 2025 and 2026.

• JD’s Quiet Rise: JD achieved higher growth in revenue and operating profits in 2024, with revenue increased 7.5% to over RMB 1 trillion and operating profits increased 14.3% to RMB 41.1 billion. The higher margin improved was due to increasing profitability in JD logistics.

The Future of Food Delivery: Speed, Smarts, and Survival

Battleground 1: The Tech Arms Race

The fight for supremacy will hinge on who masters technology first. Meituan is betting big on AI to predict what you’ll order next—like suggesting spicy hotpot on a chilly evening. Its “Longcat” model could soon power voice-activated ordering, letting users reorder their favorite dishes with a simple command.

JD.com, meanwhile, is testing drones and autonomous robots to bypass traffic jams. Imagine a self-driving cart rolling up to your apartment with a pizza, tracked in real-time via JD’s app. For rural areas, where delivery networks are sparse, these innovations could be game-changers.

Battleground 2: Winning Hearts (and Stomachs)

Consumers today want more than speed—they crave personalization and sustainability. Meituan caters to students and young professionals with budget-friendly group meals (an innovation named Pin Hao Fan 拼好饭, while JD targets affluent households pursuing high-quality lives with premium, farm-fresh produce. The next frontier? Subscription models. Meituan’s loyalty program offers free delivery for frequent users, while JD Plus members get discounts on groceries and electronics.

Battleground 3: Regulatory Tightropes

China’s regulators are watching closely. In 2021, Meituan was fined RMB 3.4 billion for forcing merchants into exclusivity deals—a practice JD is now capitalizing on. Stricter gig-worker laws could also force both platforms to offer riders better benefits, like health insurance or accident coverage.

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Conclusion: More Than Just a Food Fight

The battle between JD and Meituan isn’t just about who delivers your dumplings faster. It’s a high-stakes chess match that will shape how millions live, work, and eat. For JD, the challenge is to replicate its e-commerce magic in a cutthroat new arena. For Meituan, it’s about defending its throne while appeasing regulators and riders alike and expanding overseas.

One thing is certain: China’s food delivery sector will keep evolving, blending tech innovation with human grit. Whether through drone deliveries, AI chefs, or greener packaging, the winners will be those who make life not just convenient, but improved.

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Valuation

Meituan and JD currently trade at HKD 127 and HKD 139.2, respectively. We hold both BUY ratings on Meituan and JD with 12-month target of HKD 185 and HKD 195, implying 2025E/2026E 20.68x/16.74x and 5.53x/4.94x P/E, respectively. We forecast EPS of Meituan to be RMB 8.5 and 10.5 in 2025 and 2026 due to expansion in overseas markets and sustainable leadership in China market; and EPS of JD to be RMB 33.5 and RMB 37.5 in 2025 and 2026 due to continuous margin improvement and reliable customer stickiness for high-quality services.

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