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<Research>Citi: SAMR's Statement Marks Normalization of Food Delivery Competition; Subsidies Expected to Converge in Coming Mths
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The strong statement made by China's State Administration for Market Regulation (SAMR) on March 25 may signify the beginning of normalization in the food delivery industry competition, and subsidies are likely to converge significantly in the coming months, Citi wrote in its report. In Citi's estimation, this regulatory stance will lead to a substantial reduction in subsidies within the food delivery industry and a recovery of the sector's overall profitability. This is a positive signal for MEITUAN-W (03690.HK), as the easing of competitive pressure is likely to accelerate its profit recovery. It will also alleviate the pressure on the EBITA of BABA-W (09988.HK)'s China commerce segment. As for JD-SW (09618.HK), while Citi believes that a more rational competitive landscape will also be beneficial, the company may still view its food delivery business as an investment for traffic acquisition. AAStocks Financial News |
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