Deliveroo called 'underappreciated' after quitting Hong Kong as rivals 'muscle it out'

London brokerage firm Panmure Liberum has hailed Deliveroo as "underappreciated" following its strategic withdrawal from the Hong Kong market. The firm downplayed concerns that the takeaway behemoth might be ousted from other markets by wealthier rivals, labelling such worries as mere "noise".

This morning, Deliveroo disclosed its departure from Hong Kong, offloading some assets to Foodpanda and winding down others, as reported by City AM.

The London-traded delivery service explained that persisting in Hong Kong "would not serve shareholders' best interests" Panmure Liberum analysts believe that Deliveroo's financial performance will see a positive impact from this move: "Both earnings before interest, tax, depreciation and amortisation (EBITDA) and group GTV growth [revenue] are set to benefit from this market exit," they commented.

"[We think] Deliveroo can generate a level of cash flow over the long-term that is currently underappreciated by the market," Panmure further stated.

While acknowledging the narrative that Deliveroo could be forced out of smaller markets by larger, better-funded competitors, analysts insisted that such fears should be considered "noise around the investment case."

Keeta, an aggressive on-demand delivery titan from China known for its price-cutting tactics, entered the Hong Kong scene in May 2023 and swiftly dominated order volumes by the following May.

Data from Measurable AI indicates that by January 2025, Keeta had captured a commanding 55.2 per cent market share.

Analysts have noted: "With Hong Kong one of the most discount sensitive markets in Deliveroo's portfolio, it's clear that Meituan's Keeta has been able to muscle it out of the market through discount spend."

In 2024, Hong Kong accounted for five per cent of Deliveroo's revenue and negatively impacted international revenue growth by five percentage points.

Deliveroo reported a six per cent rise in revenue in the fourth quarter of 2024, aligning with its projected growth of between five and nine per cent.