Goldman Sachs expects U.S. revenue to fall 9% in the first quarter of this year and maintain its buy rating

As the outbreak continues, the impact on the first quarter results of internet companies is beginning to show. Goldman Sachs recently released a new study of the U.S. mission, said it will revalue the impact of the outbreak on the three main businesses of Meituan Dianping, the short-term impact of the outbreak is expected to be deeper, the first quarter of this year’s revenue may be reduced by 9%, mainly to reduce the take-out orders, wine travel and stores and other business expectations severely affected by the outbreak.

The report also pointed out that the United States launched a series of measures to support the business is likely to lead to a large net outflow of cash, resulting in a lot of financial pressure, but this may further strengthen its relationship with merchants, in difficult times to further promote the digitalization of the industry, driving supply-side reform.

Goldman Sachs expects U.S. revenue to fall 9% in the first quarter of this year and maintain its buy rating

Goldman Sachs said it had re-evaluated the group’s three main businesses because of the outbreak and expectations of a short-term contraction. In the takeaway business, takeaway orders fell in the first two quarters, cutting their expected revenue for 2020 by 14 per cent, while cutting its expected 2020 ebitda to Rmb1bn from Rmb4.5bn previously, as a result of the short-term negative impact on the store and liquor business. In the first quarter of 2020, expected revenue fell 40% year-on-year and full-year expected revenue decreased by 16%, while after positive changes in new business during the Spring Festival, Goldman Sachs reduced its full-year 2020 revenue forecast by 13% and reduced its adjusted expected net profit by 87%.

But Goldman also stressed that the U.S. mission has also made considerable efforts to deal with the outbreak. Since the outbreak, the U.S. Group has launched a series of business support measures, such as takeaway business from February 1 to all food and beverage takeaway merchants in Wuhan area to waive a one-month commission, while the nationwide to the restaurant merchants to reduce commission; Tianjin Bank and more than a dozen other banking partners, for local businesses to provide no less than 10 billion yuan of preferential interest rate loans, and the capital needs of merchants in Hubei region priority acceptance. Goldman Sachs has judged that while the support for merchants will have a negative impact on the short-term profitability of the Group, in the long run, the relationship between the Group and the merchant may be strengthened through this joint response to the crisis, thereby advancing the industry’s online ization process and accelerating supply-side digitalization during this critical period. As a result, Goldman reiterated its “buy” rating, saying its long-term bullish view remained unchanged, and it believed the group would maintain its leading position in local life services and would continue to be one of China’s most promising companies in the Internet in the coming years.