New Initiatives

New Initiatives

New Initiatives — grocery retail at home plus overseas delivery under the Keeta brand — has never turned an operating profit, and lost roughly ¥102bn over 2021 to 2025 [1]. But the single loss line hides two opposite trajectories: a domestic grocery business management cut from a ¥35.9bn loss to near-breakeven, and a deliberate overseas expansion that re-widened the segment in 2025 [2]. The ¥10.1bn drag is a dial management turns, not a fixed leak.

Five years of deliberate losses

New Initiatives is the one segment the report has not valued on its own. It houses everything outside Core Local Commerce: self-operated grocery (Xiaoxiang Supermarket), B2B food distribution (Kuailv), bike- and moped-sharing, power banks, micro-credit, and — increasingly — overseas food delivery [3]. Revenue more than doubled over five years, from ¥42.5bn in 2021 to ¥104.0bn in 2025, yet the segment has never earned an operating profit in its life as a public company [4].

Source: FY2025 Annual Report, segment revenue and operating results [5] [6]; cumulative loss derived from FY2021-FY2025 segment results [7].

The loss did not simply shrink and then re-widen at random. It fell for four straight years — from ¥35.9bn in 2021 to ¥28.4bn in 2022, ¥20.2bn in 2023, and ¥7.3bn in 2024 — as the operating margin climbed off a ¥42.5bn-revenue base of roughly negative 85% toward negative 8% [8] [9]. That narrowing was mostly one thing: the retreat from community group-buying. Meituan Select, the loss-leading community programme that drove the 2021 burn, was wound down and finally discontinued in 2025 [10].

Source: FY2021-FY2025 segment operating results; FY2021 loss on the current segment definition [11] [12] [13].

Then, in 2025, the loss widened again for the first time in four years — to ¥10.1bn, a margin of negative 9.7% against negative 8.3% the year before [14]. The reversal is easy to misread as a failing business. It is the opposite of the four-year story: revenue still grew 19.1%, and the wider loss came almost entirely from a new investment management chose to make, not from the old one going wrong [15].

Two businesses inside one loss line

The ¥10.1bn masks two segments moving in opposite directions, and Meituan describes the split in words rather than numbers. The wider 2025 loss was "primarily driven by more investments in our overseas businesses, partially offset by our efforts in improving operating efficiency in our grocery retail businesses" [16]. Grocery is getting better; overseas is a deliberate new drain.

On the domestic side, Xiaoxiang Supermarket — a self-operated grocery chain run through front distribution centres — kept scaling and improving its economics, and Meituan is doubling down: in February 2026 it agreed to buy Dingdong Fresh, a Chinese online-grocery operator, for an initial US$717m [17] [18]. This is the leg with a track record of narrowing losses.

On the overseas side, Keeta is a fresh, front-loaded bet. It launched in Hong Kong and Riyadh in 2023, expanded across Saudi Arabia through 2024, and in the second half of 2025 opened in Qatar, Kuwait, the United Arab Emirates and Brazil [19] [20]. Its one disclosed proof point is meaningful: in Hong Kong, its most mature market, Keeta reached positive unit economics in the fourth quarter of 2025 [21]. That single data point is the strongest available evidence that the density economics behind Core Local Commerce (Density Moat) can travel — but it is the only country-level economic figure Meituan gives. Overseas revenue, Keeta order volumes, and the overseas loss itself are never broken out. The reader is asked to size the biggest swing factor in the segment from directional language alone.

A managed loss, not a forced one

The quarterly path makes the discretionary nature of the loss visible. Through 2025 the segment margin actually improved to negative 4.6% by the third quarter, then jumped to negative 17.1% in the fourth as new-market launches landed and Meituan Select wound down — its worst quarter in over a year [22]. One quarter later, in the first quarter of 2026, the loss narrowed back to ¥2.1bn and a margin of negative 7.8%, as Keeta's mature markets gained efficiency [23].

Source: quarterly segment operating margins — FY2025 Annual Report Q4 disclosure [24] [25]; Q1-Q2 2025 from the Q2 results announcement [26]; Q1 2026 from the Q1 results announcement [27].

The two losses differ in kind. The Core Local Commerce loss in 2025 was forced on Meituan by a subsidy war it did not start (Unit Economics). The New Initiatives loss is chosen — the discretionary redeployment of Core Local Commerce cash the balance-sheet chapter traced (Capital Allocation). Management can throttle the overseas ramp quarter to quarter, as the swing from negative 17.1% to negative 7.8% in a single quarter shows, and it has already proven on the domestic side that it will cut a loss-leader — Meituan Select — when the returns do not come.

The read here is that New Initiatives is best understood as two claims on capital, not one drag. The domestic grocery leg is a near-breakeven business with a demonstrated ability to narrow, now being scaled by acquisition; the overseas leg is an early-stage option with one real proof point in Hong Kong and an off-switch management controls.

The strongest fact against that read is that the off-switch cuts both ways, and the "proven ability to cut" is partly a one-time event. The four-year narrowing was largely the wind-down of community group-buying, which is now complete and cannot repeat; the fresh overseas burn has no disclosed ceiling, no country-level economics beyond Hong Kong, and no stated timeline to group breakeven. Management widened the segment loss 38% in 2025 by choice, and could do so again. What would change the read is disclosure: an overseas revenue and loss line, a breakeven horizon for Keeta, or a sustained return of the segment margin toward the negative-single-digits it briefly touched in mid-2025.

What it is worth in the valuation

The sum-of-the-parts chapter (Sum-of-the-Parts) treated New Initiatives as a single ¥10bn-a-year drag, a subtraction in every scenario. Splitting the loss line argues for a more differentiated treatment. The ¥10.1bn segment loss is material — it is 19% of the ¥52.4bn of Core Local Commerce operating profit Meituan earned in the last normal year, 2024, and about 40% of the group's ¥25.0bn total operating loss in 2025 [28]. But most of that magnitude now sits in the overseas leg, which carries option value rather than a permanent claim, while the domestic grocery leg is close enough to breakeven that valuing it as a deep loss understates it.

The honest limitation is the same disclosure gap that runs through the report: without a separate overseas income statement, the grocery-versus-overseas split is inferred from Meituan's own directional commentary, not from disclosed magnitudes. A reader can bound the segment's drag on group earnings, but cannot yet price the overseas option or the grocery turn with precision. That is a reason to watch the segment closely, not to treat its loss as fixed.