New Initiatives

New Initiatives

New Initiatives — grocery retail, overseas delivery under the Keeta brand, and a growing consumer-credit book — earned RMB104.0 billion of revenue in 2025 and lost RMB10.1 billion, and the market assigns the whole segment close to nothing [1] [2]. The loss widened only because Meituan chose to step up overseas investment; its domestic grocery business improved through the year. Keeta is already profitable in Hong Kong. The zero mark is defensible, but on the evidence a touch harsh. Financials are in renminbi (¥); the shares trade in Hong Kong dollars.

What the market pays

The valuation lens (What the Price Implies) leaves this segment carried at roughly nothing. Stripping the net cash out, the enterprise value is close to seven times the RMB52.4 billion of operating profit that Core Local Commerce earned before the 2025 subsidy war — a multiple the core engine alone can justify [3]. What is left over — a business with RMB104.0 billion of revenue, more than a quarter of the group's RMB364.9 billion top line — is thrown in for free.

Source: FY2025 Annual Report, segment revenue and operating profit by segment [4] [5].

A zero — even a slightly negative — mark on a business losing RMB10.1 billion a year is not obviously wrong. The question worth working through is whether what sits inside the segment is a permanent cash sink the price rightly ignores, or a bounded, self-funded option that is worth more than the nothing embedded in the stock.

Narrowing losses, then a step up

The segment's own history cuts both ways. New Initiatives is the bucket where Meituan houses whatever it is trying to build next, and for four years the story was one of retreat from an expensive land grab. The operating loss ran to RMB35.9 billion in 2021 — a negative 84.5% margin, most of it poured into community group-buying — then narrowed each year: RMB28.4 billion in 2022, RMB20.2 billion in 2023, and RMB7.3 billion in 2024, by which point the margin had recovered to negative 8.3% [6] [7]. Revenue climbed the whole way — RMB59.2 billion in 2022, RMB87.3 billion in 2024 — as the segment grew into its cost base [8] [9].

Source: FY2022, FY2024 and FY2025 Annual Reports, segment revenue and operating profit by segment [10] [11] [12].

Then 2025 broke the trend: the loss widened to RMB10.1 billion, a negative 9.7% margin [13]. Revenue still grew 19.1% to RMB104.0 billion, and it did so even as Meituan wound down Meituan Select ("美团優選"), its community group-buying arm — exiting loss-making regions in June 2025, closing the chapter that had cost the segment most of its early losses [14] [15]. The reversal, in other words, was not a domestic business deteriorating. It was capital being redirected.

Why the 2025 loss widened

Management is explicit about the cause: the wider 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] [17]. The quarterly path shows how back-loaded that spending was. The segment loss actually shrank through the first three quarters of 2025 — RMB2.3 billion, RMB1.9 billion, RMB1.3 billion — as domestic grocery kept improving. It then jumped to RMB4.6 billion in the fourth quarter, a negative 17.1% margin, when Keeta pushed into four new countries at once. In the first quarter of 2026 it narrowed again, to RMB2.1 billion [18] [19] [20] [21] [22].

Source: Q1–Q3 2025 Results Announcements, FY2025 Annual Report, and Q1 2026 earnings call [23] [24] [25].

That pattern matters for how the loss should be read. It is discretionary and it is bounded: management guided that the 2026 New Initiatives loss "will not exceed" the 2025 level, and the spending accelerates or slows with the pace of overseas launches rather than with any structural decline at home [26]. A loss a company can dial down at will is a different object from a loss it is fighting to contain.

Keeta, the model exported

The overseas business is where the segment's optionality has its clearest content. Keeta is Meituan's own delivery playbook — courier density, dispatch technology, merchant supply — run outside China. After launching in Riyadh in October 2024, it expanded across the major cities of Saudi Arabia through 2025 [27]. By early 2025 it was the largest food-delivery platform in Hong Kong; Meituan also committed a US$1 billion, five-year investment to enter Brazil [28]. Through the year it reached 20 Saudi cities and launched in Qatar, Kuwait, the United Arab Emirates and, in Santos and São Vicente, Brazil [29] [30] [31].

The evidence that the model travels is Hong Kong. Keeta reached its first profitable month there in October 2025 — ahead of a three-year plan — and delivered positive unit economics for the fourth quarter [32] [33]. A single profitable city is not a profitable overseas business, but it does convert the export thesis from assertion to demonstration. By the first quarter of 2026 management had shifted the emphasis from new-market entry to efficiency in the markets already open, saying it would "prioritize operational improvement over aggressive new-market expansion" [34].

Sources: FY2024 and FY2025 Annual Reports; Q1–Q3 2025 and Q1 2026 earnings calls; company news [35] [36] [37] [38] [39].

What the disclosure does not give is scale. Meituan reports no overseas revenue line, no Keeta order volume or GTV, and no split of the segment loss between overseas and domestic. An outside investor can see that Keeta is growing and that Hong Kong works; they cannot size the business or model its path to group-level profitability. That opacity is itself part of why the market pays nothing — it is hard to value what the company will not quantify.

Grocery and the fintech book

The rest of the segment is domestic. The largest piece is grocery retail, led by Xiaoxiang Supermarket ("小象超市") — a self-operated, first-party grocery model built on front distribution centres, which expanded to 55 cities by the first quarter of 2026 and which management runs toward "a sustainable low single-digit profit margin over the long run" [40]. Meituan agreed to acquire the mainland-China assets of Dingdong for US$717 million to deepen its grocery supply chain and East China coverage [41]. The segment also houses B2B food distribution (Kuailv), bike and e-moped sharing, power banks, and a consumer micro-credit book [42].

Two features temper the grocery optionality. A low-single-digit target margin, even on a business the size grocery could become, is a low-return outcome by the standard of Meituan's core marketing take rate — this is scale, not a second profit engine. And the micro-credit book roughly doubled to about RMB19.5 billion in 2025, carried at a thin loss allowance (Cash Conversion); it adds a genuine credit-risk exposure to a segment already valued as an option, and its ultimate contribution depends on reserving that has not yet been tested through a full consumer downturn.

What New Initiatives is worth

The market's near-zero mark is defensible: this is a business that lost RMB10.1 billion in 2025, discloses too little to be modelled from the outside, and sits in a segment with a track record of funding a land grab and then retreating — community group-buying consumed most of the segment's early losses before Meituan wound it down in 2025 [43]. Against that history, Keeta could be the next expensive experiment rather than the next franchise.

The weight of the current evidence points the other way, modestly. The 2025 loss was a deliberate, bounded investment, not a domestic business breaking down; management can and says it will hold the 2026 loss no higher; and Hong Kong shows the delivery model exports to profitability rather than merely to scale [44] [45] [46]. On that reading the segment is worth more than nothing — a real call option a disciplined buyer gets thrown in, not a reason to own the stock and not a hidden crown jewel.

The strongest fact against that read is the fourth quarter of 2025: the segment's worst loss of the year, RMB4.6 billion, arrived precisely when Keeta was spending fastest, and management would commit only to not exceeding that pace in 2026 — not to shrinking it [47] [48]. Three things would decide the read in either direction: whether Keeta reaches profitability in a market beyond Hong Kong, whether Meituan begins disclosing overseas revenue and unit economics so the option can be sized rather than trusted, and whether the 2026 segment loss holds at or below RMB10.1 billion. A loss that breaks above that line would turn the option back into a sink.