China’s delivery and online services giant Meituan-Dianping has told investors it will rein in spending on some of its subsidiary businesses as well as direct its focus on the domestic market, Bloomberg reports.
The company hopes to raise up to $4.4 billion in its upcoming Hong Kong listing, but its heavy losses from certain arms of its business have made potential investors think twice.
On Tuesday, Meituan posted a near-tripling in losses to Rmb 22.8 billion ($3.3 billion) for the four months ended April, with bike-sharing business Mobike a major contributor. Whilst company executives showed willingness to scale back cashflows to such businesses, it will remain committed to its most popular food-delivery service, which is also loss-making.
Meituan “has yet to become profitable because we are confident in the market’s growth and are still making a lot of investments,” CFO Chen Shaohui said. “We are very confident in our food delivery business turning profitable.”
There are no current goals in terms of overseas expansion, CEO Wang Xing said on Thursday. Instead its focus will remain on the China market, where competition in many online services is intensifying from companies backed by the country’s tech giants such as Alibaba.