Investment Rating - The report maintains an "Outperform" rating for Meitu (01357 HK) [1][4][11] Core Views - Meitu's total revenue grew 29% YoY to RMB 1 62 billion in H1 2024 driven by strong growth in imaging products [1][5] - Adjusted net profit attributable to shareholders increased 80% YoY to RMB 270 million with a 17% margin up 5 percentage points YoY [1][5] - Gross profit rose 40% YoY to RMB 1 05 billion with gross margin improving to 65% up 5 percentage points YoY [1][5] - Meitu positions itself as an AI application company focusing on enhancing product capabilities rather than competing in large model development [1][5] - The company plans to flexibly acquire model capabilities through self-development procurement and open-source approaches [1][5] Financial Performance - Imaging and design product revenue surged 55% YoY to RMB 931 million in H1 2024 [1][5] - Advertising revenue increased 18% YoY to RMB 410 million with programmatic advertising growing 45% YoY [2][9] - Overseas advertising revenue excluding mainland China jumped 129% YoY [2][9] - Beauty solutions revenue declined 6% YoY to RMB 270 million in H1 2024 [2][9] - R&D expenses rose 45% YoY to RMB 431 million with RMB 59 million allocated to large model computing power [1][5] - Sales expenses decreased 7 5% YoY to RMB 210 million while promotion expenses grew 13% YoY [1][5] Operational Metrics - MAU reached 258 million in H1 2024 up 4% YoY [1][8] - VIP paying members increased 50% YoY to 10 81 million with a 4 2% paying penetration rate up 1 3 percentage points YoY [1][8] - ARPPU remained stable at RMB 187 [1][8] - Meitu Design Studio subscribers reached approximately 960 000 up from 870 000 at the end of 2023 with product revenue growing over 152% YoY [1][8] - Meitu's global market share for imaging and design products is around 13% with significant growth potential [1][8] Financial Forecasts - Revenue is projected to grow 27 3% 23 1% and 21 0% YoY in 2024E 2025E and 2026E respectively [3] - Adjusted net profit attributable to shareholders is forecasted to reach RMB 560 million RMB 790 million and RMB 970 million in 2024E 2025E and 2026E respectively [2][11] - Gross margin is expected to improve to 64% 66% and 67% in 2024E 2025E and 2026E respectively [15] - ROE is projected to be 8 0% 13 1% and 15 8% in 2024E 2025E and 2026E respectively [3] Valuation - The report assigns a fair value range of HKD 4 50 to HKD 4 80 [4] - Current share price is HKD 2 37 with a market capitalization of HKD 10 748 million [4] - PE ratios are forecasted at 17 6x 12 4x and 10 1x for 2024E 2025E and 2026E respectively [3]

Investment Rating - The investment rating for the company is maintained at "Buy - A" with a target price of HKD 3.45, which corresponds to a dynamic price-to-earnings ratio of 25 times for 2024 [4][7]. Core Insights - The company reported a total revenue of RMB 1.62 billion for the first half of 2024, representing a year-on-year growth of 28.6%. The adjusted net profit attributable to the parent company was RMB 270 million, up 80.3% year-on-year [1]. - The revenue from the image and design products, primarily from paid subscriptions, reached RMB 930 million, a 54.5% increase year-on-year, accounting for 57.4% of total revenue. The number of paid subscription users exceeded 10.81 million, marking a historical high with a penetration rate of approximately 4.2% [2]. - The advertising business generated RMB 410 million in revenue, reflecting an 18.3% year-on-year increase, driven by strong performance in programmatic advertising, which grew by 45% [2]. - The company achieved significant growth in its global user base, with monthly active users reaching 258 million, a 4.3% increase year-on-year. The number of monthly active users outside mainland China grew by 15%, accounting for 32.9% of the total [3]. Financial Summary - The projected revenues for the company from 2024 to 2026 are RMB 3.58 billion, RMB 4.46 billion, and RMB 5.50 billion, respectively. The net profits for the same period are expected to be RMB 570 million, RMB 820 million, and RMB 1.14 billion [7][9]. - The company’s gross profit margin for the first half of 2024 was 64.93%, an increase of 5.13 percentage points year-on-year, primarily due to the higher proportion of high-margin image and design products [2]. - The earnings per share (EPS) for 2024 is projected to be RMB 0.13, increasing to RMB 0.25 by 2026 [9].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - In H1 2024, the company achieved revenue of 1.621 billion RMB, a year-on-year increase of 28.6%, and an adjusted net profit of 273 million RMB, up 80.3%, aligning with previous forecasts [3] - The company's imaging and design products continue to grow rapidly, with revenue from this segment reaching 931 million RMB in H1 2024, a year-on-year increase of 54.5%, driven by generative AI technology enhancing product appeal [3] - The company has successfully executed its globalization strategy, with overseas monthly active users (MAU) reaching 85 million, a year-on-year increase of 15.0%, now accounting for 32.9% of total MAU [3] - The company is expanding its product matrix, focusing on AI workflows for digital content, with significant growth in subscription users for its design tools [3] - The gross margin improved to 64.93%, up 5.13 percentage points year-on-year, primarily due to the higher revenue share from high-margin imaging and design products [4] - The report slightly lowers profit forecasts for 2024-2026, expecting adjusted net profits of 550 million, 900 million, and 1.18 billion RMB respectively, with corresponding P/E ratios of 27, 18, and 11 times [4] Financial Summary - Total revenue for 2022 was 2.085 billion RMB, with projections of 2.696 billion RMB for 2023, 3.612 billion RMB for 2024, and 4.688 billion RMB for 2025, reflecting a compound annual growth rate [2] - Adjusted net profit for 2023 is projected at 368 million RMB, increasing to 553 million RMB in 2024 and 901 million RMB in 2025 [2] - The company’s MAU reached 258 million in H1 2024, a year-on-year increase of 4.3% [3]

Financial Performance - For the six months ended June 30, 2024, the adjusted net profit attributable to equity holders of the parent company was approximately RMB 272.8 million, representing a year-on-year increase of 80.3%[3]. - Revenue for the same period grew by approximately 28.6% to about RMB 1.621 billion, compared to RMB 1.261 billion in the previous year[5]. - Total revenue for the six months ended June 30, 2024, increased by approximately 28.6% to RMB 1,621,159,000 compared to RMB 1,260,881,000 for the same period in 2023[13]. - The net profit for the six months ended June 30, 2024, increased to RMB 303.7 million, compared to RMB 209.5 million for the same period in 2023[30]. - Adjusted net profit attributable to equity holders increased to RMB 272,800,000, compared to RMB 151,296,000 in the previous year[11]. - The adjusted profit for the six months ended June 30, 2024, was RMB 273,778,000, compared to RMB 135,251,000 for the same period in 2023, representing a significant increase[31]. - Earnings per share for the period was RMB 0.07, compared to RMB 0.05 for the same period in 2023, showing an increase in shareholder value[48]. - Basic earnings per share for the six months ended June 30, 2024, was RMB 0.07, up from RMB 0.05 in the same period of 2023, reflecting a growth of 40%[70]. - Diluted earnings per share for the six months ended June 30, 2024, was RMB 0.06, compared to RMB 0.05 for the same period in 2023, indicating a 20% increase[72]. User Growth and Engagement - The total monthly active users reached approximately 258 million, a year-on-year increase of 4.3%, with significant growth from regions outside mainland China, which accounted for about 32.9% of total users[6]. - The AI-driven video editing application Wink saw its monthly active users increase by approximately 99% year-on-year, becoming the third-largest application in the company's product matrix[8]. - Monthly active users in the productivity segment increased by 42.0% year-on-year, indicating strong demand for productivity-focused applications[6]. - The number of paid subscription users for the application exceeded 10.81 million, with a subscription penetration rate of approximately 4.2% as of June 30, 2024[14]. Revenue Breakdown - Revenue from image and design products increased by 54.5% year-on-year, while revenue from beauty solutions and advertising grew by 18.3%[5]. - Revenue from image and design products grew by about 54.5% to RMB 930,573,000, accounting for 57.4% of total revenue[14]. - Revenue from beauty industry solutions decreased by 5.5% to RMB 270,574,000, reflecting a cautious outlook for future growth in this non-core business[17]. - The revenue from advertising reached RMB 412,914,000, representing 25.5% of total revenue, up from 27.7% in the previous year[13]. - Advertising revenue increased by 18.3% year-on-year to RMB 412.9 million for the six months ended June 30, 2024, compared to RMB 349.2 million for the same period in 2023[18]. - Programmatic advertising revenue grew by 45% year-on-year, contributing significantly to overall advertising growth[18]. - Global advertising revenue (excluding mainland China) surged by 129% year-on-year due to successful product globalization efforts[18]. Costs and Expenses - Operating costs rose to RMB 568.5 million, an increase of 12.2% from RMB 506.9 million for the same period last year[20]. - Research and development expenses increased by 44.5% to approximately RMB 425.3 million, primarily due to rising costs associated with generative AI training[22]. - Sales and marketing expenses decreased by 7.5% to approximately RMB 205 million, attributed to a reduction in related personnel costs[23]. - The company’s total operating costs, sales and marketing expenses, administrative expenses, and R&D expenses totaled RMB 1,376,368,000 for the six months ended June 30, 2024, compared to RMB 1,166,827,000 in 2023, an increase of approximately 18.0%[63]. Acquisitions and Strategic Developments - The company successfully completed the acquisition of Zcool Network Technology Limited in the first half of 2024, enhancing its capabilities in generative AI tools[8]. - The company completed the acquisition of the leading visual creative community, Zcool, enhancing its ecosystem in the image sector[16]. - The company launched and upgraded six productivity tools during the third Meitu Image Festival, expanding its product matrix[15]. - The productivity tool X-Design was launched in markets including the United States, Canada, Australia, and the United Kingdom, expanding the company's global footprint[8]. - The company plans to seek strategic investment opportunities to enhance synergies in technology development and product portfolio expansion[44]. Financial Position and Assets - Cash and cash equivalents as of June 30, 2024, totaled RMB 351,504,000, down from RMB 640,629,000 as of December 31, 2023, indicating a decrease of approximately 45%[33]. - The company’s cash and other liquid financial resources totaled RMB 1,298,503,000 as of June 30, 2024, down from RMB 1,404,438,000 at the end of 2023[33]. - The company reported a total of 2,285 full-time employees as of June 30, 2024, compared to 2,212 employees a year earlier, indicating a growth in workforce[41]. - The company’s total equity rose to RMB 4,462,766 thousand as of June 30, 2024, up from RMB 4,113,700 thousand as of December 31, 2023, reflecting an increase of approximately 8.5%[51]. - The total assets increased to RMB 6,401,083 thousand from RMB 5,767,186 thousand as of December 31, 2023, representing a growth of approximately 11%[50]. - The total liabilities increased to RMB 1,938,317 thousand as of June 30, 2024, compared to RMB 1,653,486 thousand as of December 31, 2023, marking an increase of about 17.3%[51]. - The company’s accumulated losses improved to RMB (2,765,690) thousand as of June 30, 2024, from RMB (3,069,118) thousand as of December 31, 2023, showing a reduction of approximately 9.9%[51]. Cryptocurrency and Impairment - The company recognized a reversal of impairment losses on purchased cryptocurrencies amounting to approximately RMB 68.1 million[25]. - The company incurred a loss of RMB 68,145,000 from cryptocurrency impairment during the six months ended June 30, 2024, compared to a loss of RMB 185,563,000 in the same period in 2023[31]. - The company recognized an impairment loss of RMB 68,145,000 for the six months ended June 30, 2024, compared to an impairment reversal of RMB 185,563,000 for the same period in 2023[85]. - The company held approximately 31,000 units of Ethereum and 940.4970 units of Bitcoin, with a fair value of approximately USD 10.521 million and USD 5.795 million, respectively, as of June 30, 2024[42]. - The total cost of cryptocurrencies held by the company amounts to RMB 712,680,000, with Ethereum at RMB 360,018,000 and Bitcoin at RMB 352,662,000[85]. Corporate Governance and Compliance - The company has complied with the corporate governance code, except for the separation of the roles of Chairman and CEO, which the board believes is appropriate under current circumstances[97]. - The audit committee has reviewed the unaudited interim financial statements for the six months ending June 30, 2024, and believes they fairly present the financial position and performance of the group[100]. - The company has adopted the standard code for securities trading by directors and confirmed compliance by all directors for the six months ending June 30, 2024[98]. - The board does not recommend the distribution of an interim dividend for the six months ending June 30, 2024[101]. Forward-Looking Statements - The announcement includes forward-looking statements regarding the group's business outlook and financial performance estimates[104]. - The forward-looking statements are based on existing data and assumptions at the time of the announcement[104]. - There are risks and uncertainties associated with the forward-looking statements, which may not be realized in the future[104]. - Shareholders and potential investors are advised not to overly rely on the forward-looking statements provided[104].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 4.50 [8]. Core Views - The company is expected to achieve a year-on-year adjusted net profit growth of no less than 80% in 1H24, with an absolute profit value of at least RMB 270 million [3]. - The company continues to implement a productivity and globalization strategy, focusing on generative AI to enhance product capabilities and drive user growth and subscription penetration [3]. - The report anticipates revenue growth of 36% year-on-year for 1H24, reaching RMB 1.7 billion, and an adjusted net profit of RMB 280 million, reflecting an 85% increase year-on-year [3]. Summary by Sections Financial Forecasts - The company forecasts revenues of RMB 3.748 billion, RMB 4.857 billion, and RMB 5.978 billion for 2024, 2025, and 2026 respectively, representing year-on-year growth rates of 39%, 30%, and 23% [11]. - Adjusted net profits are projected to be RMB 580 million, RMB 804 million, and RMB 1.066 billion for the same years, with year-on-year growth rates of 56%, 50%, and 31% [11]. User Growth and Product Development - The company has a solid user base, with 106.3 million global members as of June 2024, a 48% increase from the previous year [4]. - The introduction of innovative AI-driven features is expected to enhance product capabilities and drive user engagement and subscription rates [4]. Global Expansion - The company has successfully replicated its domestic product capabilities in overseas markets, achieving top rankings in app stores in countries like Thailand and India [6]. - Continued expansion of productivity products into international markets is anticipated to sustain growth momentum [6]. Valuation - The report assigns a valuation premium to the company, estimating a 2024 PE ratio of 32x, based on the long-term potential of its AI-driven productivity scenarios [13]. - The target market capitalization is set at RMB 18.4 billion, corresponding to a target price of HKD 4.50 per share [13].

Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Insights - The company is expected to achieve a year-on-year growth of no less than 80% in adjusted net profit for the first half of 2024, with a net profit growth of no less than 30% [2]. - The increase in subscription payment rates and strong overseas performance are the core drivers of the company's outstanding performance [2]. - The company has strengthened its collaboration with AI vendors, enhancing the application range of its tools [2]. - Revenue and profit forecasts have been revised upward, with expected revenues of 3.77 billion, 4.73 billion, and 5.67 billion RMB for 2024, 2025, and 2026 respectively [2][3]. - The estimated net profits for the same years are projected to be 585 million, 789 million, and 978 million RMB respectively [3]. Financial Summary - The company's main revenue for 2022 was 2.085 billion RMB, with a growth rate of 25.2% [3]. - The EBITDA for 2024 is projected to be 715 million RMB, with a significant increase from previous years [3]. - The earnings per share (EPS) is expected to rise from 0.08 RMB in 2023 to 0.13 RMB in 2024 [3]. - The price-to-earnings (P/E) ratio is projected to decrease from 38.9 in 2023 to 16.0 in 2024, indicating improved valuation [3][8]. - The return on equity (ROE) is expected to increase from 8.9% in 2023 to 13.3% in 2024 [3][8].

Investment Rating - The report gives a "Buy" rating for Meitu Inc with a target price of HKD 3 44 per share [4] Core Views - Meitu is a leader in photo editing with a strong user base and high MAU market share of 54% in April 2024 [2] - AI-driven features have increased the user payment ratio from 0 65% in 2020 to 3 7% in 2023 [2] - The company is expanding globally with new features in overseas markets [2] - AI tools like "Meitu Design Studio" are helping SMEs reduce costs and improve efficiency [2] - Revenue for 2024-2026 is projected to be RMB 3 663 billion RMB 4 707 billion and RMB 5 646 billion respectively with net profits of RMB 508 million RMB 700 million and RMB 920 million [2] Company Overview - Meitu founded in 2008 focuses on AI-driven beauty and imaging products with a strong presence in both B2B and B2C markets [13] - The company has a diverse product portfolio including Meitu Xiuxiu Meiyan Camera and Meitu Cloud Repair [13] - Meitu has a stable management team with extensive experience in the internet industry [16][17] Imaging and Design Products - Meitu Xiuxiu dominates the photo editing market with a 54% MAU share in April 2024 [2] - AI features have significantly boosted user payment ratios and subscription revenues [2][24] - The company is expanding into productivity tools for commercial use such as Meitu Design Studio [2][38] - Meitu's AI-driven tools are expected to enhance efficiency in industries like e-commerce advertising and gaming [38] Financial Performance - Revenue for 2023 was RMB 2 696 billion a 29% YoY increase [52] - Gross margin improved to 61 42% in 2023 driven by higher-margin imaging and design products [53] - Net profit margin rose to 13 58% in 2023 due to improved gross margins and cryptocurrency impairment reversals [53] - R&D expenses increased to RMB 635 million in 2023 reflecting the company's focus on AI technology [54] Profit Forecast - Revenue for 2024-2026 is projected to grow at a CAGR of 28 5% reaching RMB 5 646 billion by 2026 [2] - Net profit is expected to grow at a CAGR of 34 2% reaching RMB 920 million by 2026 [2] - The imaging and design products segment is expected to drive growth with a projected revenue of RMB 3 357 billion by 2026 [63] Industry Trends - The imaging digitalization market in China is expected to grow from RMB 12 5 billion in 2022 to RMB 16 billion by 2025 [20] - AI-driven tools are becoming increasingly important in both B2B and B2C markets [20][38] - Meitu's AI tools are well-positioned to capitalize on the growing demand for digital imaging solutions [20][38]

Investment Rating - Buy-A rating with a 6-month target price of HKD 3.70 [4] Core Views - Meitu is a leader in the aesthetic and creative tools industry, leveraging its flagship app Meitu Xiuxiu to dominate the market with high user stickiness [1] - The company has expanded its product matrix from consumer-facing (ToC) to business-facing (ToB) applications, targeting both individual users and small businesses (e.g., KOLs, e-commerce sellers) [1] - Meitu's revenue from its productivity tools, such as Meitu Design Studio, exceeded RMB 100 million in 2023, a 229.8% YoY increase [1] - The shift from a traffic-driven model to a subscription-based model has led to a positive cycle of revenue growth and user retention, with paid subscription users reaching 9.11 million by the end of 2023, a 62.3% YoY increase [2] - AIGC (AI-generated content) has lowered the barriers to content creation, enabling non-professionals to produce digital content efficiently, which opens up a vast market for creators, estimated at USD 31 billion [3] Business Expansion and Market Potential - Meitu has successfully transitioned from a free-to-use model to a subscription-based model, with subscription penetration increasing from 1.7% in 2021 to 3.7% in 2023 [2] - The company's B2B products, such as Meitu Design Studio, WHEE, and Kaipai, have shown strong market potential, with Meitu Design Studio generating over RMB 100 million in revenue in 2023 [28] - AIGC has significantly reduced the learning curve for content creators, allowing non-professionals to produce high-quality digital content, which is expected to drive further growth in the creator economy [3] - Meitu's global expansion strategy has been successful, with its products ranking high in non-gaming app revenue charts in overseas markets, particularly in Southeast Asia and Africa [23][24] Financial Performance and Projections - Meitu's revenue in 2023 reached RMB 2.7 billion, a 29.3% YoY increase, with adjusted net profit attributable to shareholders growing by 233.2% YoY to RMB 370 million [19] - The company's gross margin improved to 61.43% in 2023, driven by higher-margin businesses such as imaging and design products [22] - Meitu's paid subscription user base grew to 9.11 million by the end of 2023, a 62.3% YoY increase, with ARPPU (Average Revenue Per Paying User) also rising due to higher-priced productivity tools [2] - The company projects revenue of RMB 3.61 billion, RMB 4.47 billion, and RMB 5.42 billion for 2024, 2025, and 2026, respectively, with net profit expected to reach RMB 522 million, RMB 744 million, and RMB 995 million in the same periods [8][61] AI and Technological Advancements - Meitu's self-developed visual AI model, MiracleVision, has been a cornerstone of its AI product ecosystem, enabling features such as AI-generated portraits, AI design, and AI video editing [48] - The company has integrated AI capabilities across its product suite, with 83% of daily image and video processing involving AI functions [49] - MiracleVision has been approved under China's AI service management regulations, making it the first visual-focused AI model to receive such approval in Fujian Province [51] - The AI model is expected to enhance efficiency in industries such as e-commerce, advertising, gaming, animation, and film production, reducing costs and improving workflow [52] Market Opportunities and Competitive Landscape - The creator economy, particularly the "spreader" segment (e.g., KOLs, e-commerce sellers), represents a significant growth opportunity for Meitu, with a market size estimated at USD 31 billion [3] - Meitu's strong user base and AI-native capabilities position it well to capture market share in the growing AIGC space, competing with players like Adobe, Canva, and emerging AI image generation platforms [56] - The company's focus on productivity tools and subscription-based models aligns with the broader trend of AI democratizing content creation, enabling it to tap into higher-value B2B markets [54]

2024年6月13日 公司研究 美图发布 6 款新品，付费用户数稳健提升 ——美图公司（1357.HK）第三届影像节点评 要点 买入（维持） 事件：6月12日，美图公司举办第三届影像节，发布6款AIGC驱动的围绕 当 前价/目标价：2.78/4.42港元 “影像与设计”AI工作流的产品，覆盖商业摄影、口播视频、电商设计、设 计服务、游戏营销、视频生成等领域。 作者 美图深耕AI技术，是为数不多通过AI规模化盈利的公司。AI驱动用户规模 分析师：付天姿 CFA，FRM 增长：截至6月11日，美图全球VIP会员数创下历史新高达1063万（2023 执业证书编号：S0930517040002 年同期为719万，yoy+49%）。1）据QuestMobile数据，自2020年至2024 021-52523692 futz@ebscn.com 年，美图秀秀在图像编辑赛道中MAU份额维持在50%上下，市占率维持第 一；2）美图设计室市场反馈良好，22年1月-24年5 月，每月活跃用户数 联系人：杨朋沛 最高达1773万，每月付费用户最高达93万，月度毛利逐步攀升，已服务了 021-52523878 将近 200 万的电商 ...

美图公司(01357) /软件开发 /公司点评 /2024.06.13 AI 重塑创意工作流，VIP 会员创历史新高 证券研究报告 投资评级:增持(维持) 核心观点  事件：2024年6月12日，美图公司举办以“聊聊AI工作流”为主题的第三届 基本数据 2024-06-12 美图影像节，现场发布6款产品：美图云修V2、开拍V2、美图设计室V3、 收盘价(港元) 2.78 流通股本(亿股) 45.35 站酷设计服务、奇觅、MOKI，覆盖商业摄影、口播视频、电商设计、设计服 每股净资产(港元) 0.91 务、游戏营销、视频生成领域。 总股本(亿股) 45.35  产品升级，解决用户使用场景的痛点。美图云修 V2 升级了 AI 批量精修 最近12月市场表现 和AI批量调色能力，进一步帮助商业摄影客户大幅提效；开拍V2升级了AI 脚本、AI 数字人、视频翻译、一键包装能力，解决口播视频创作者的策划、 美图公司 恒生指数 软件开发 制作、变现等难题；美图设计室V3升级了AI批量化能力和AI商品视频创作 100% 能力，并支持团队多人协作，大幅提升电商物料设计产能。 70% 40%  发布新品，探索 AI商业化落地 ...