Summary of Meitu Inc. Conference Call Company Overview - **Company**: Meitu Inc (1357.HK) - **Industry**: Greater China IT Services and Software - **Current Stock Rating**: Overweight (OW) - **Price Target**: HK$15.70, representing a 33% upside from the closing price of HK$11.82 on August 29, 2025 [6][9][10] Key Points and Arguments 1. **Growth Trajectory**: Meitu's growth is considered intact despite competition from new AI models like Google's Nano Banana. The evolution of AI models is expected to enhance Meitu's AI features [1][15]. 2. **AI Model Neutrality**: Meitu has adopted a model-neutral approach, integrating various AI capabilities into its offerings, including the recent incorporation of Google Nano Banana into its international products [9][15]. 3. **Last Mile Value**: The company emphasizes the importance of delivering the "last mile" in AI applications, which involves optimizing outcomes that general AI models cannot fully achieve. This complexity creates a high entry barrier for competitors [9][16]. 4. **Focus on Non-Professional Scenarios**: Meitu targets non-professional leisure and productivity scenarios, particularly in e-commerce design, allowing it to accumulate specialized knowledge and optimize user experience [16][19]. 5. **Data Utilization**: The company has amassed significant vertical data, which it uses for post-training its models, resulting in better performance compared to general AI models [16][19]. 6. **Core vs. Gameplay Features**: Meitu's core features, such as AI face retouching, drive user subscriptions, while gameplay features attract users for fun. The company believes it can integrate new AI models to enhance gameplay features without compromising its core offerings [16][19]. Financial Metrics - **Revenue Projections**: Expected revenue growth from Rmb3,341 million in FY 2024 to Rmb6,771 million by FY 2027 [6]. - **EBITDA Projections**: Anticipated increase from Rmb584 million in FY 2024 to Rmb2,131 million by FY 2027 [6]. - **Earnings Per Share (EPS)**: Projected EPS growth from Rmb0.13 in FY 2024 to Rmb0.40 by FY 2027 [6]. Risks and Considerations 1. **Upside Risks**: Faster penetration of paying users due to AI adoption, higher-than-expected average revenue per paying user (ARPPU), and improved operating leverage [25]. 2. **Downside Risks**: Slower growth in paying users, increased R&D expenses for AI development, and intensified competition from larger internet companies [25]. Additional Insights - **Market Reaction**: Meitu's share price dropped 14% following the viral success of Google's Nano Banana, raising concerns about AI cannibalization of software [9][10]. - **Strategic Partnerships**: Meitu has partnered with Alibaba to enhance its e-commerce design capabilities, leveraging private data for better AI model training [16][19]. This summary encapsulates the essential insights from the conference call regarding Meitu Inc.'s strategic positioning, financial outlook, and market dynamics.

Core Insights - The company has experienced significant growth in its imaging and design business, with revenue increasing by 45.2% year-on-year to 1.351 billion CNY, while advertising revenue grew by 5.1% to 434 million CNY, together accounting for 98% of total revenue [1] - The overall gross margin improved by 4.9 percentage points to 73.6%, and the adjusted net profit attributable to shareholders rose by 71.34% to 470 million CNY, aligning with voluntary announcement expectations [1] - The company is focusing on solid development of vertical models, leveraging AI to boost domestic user growth and sustain international user expansion, with monthly active users (MAU) increasing by 8.6% year-on-year to 280 million [2] Revenue and Profitability - The imaging and design business revenue reached 1.351 billion CNY, reflecting a 45.2% increase year-on-year, while advertising revenue was 434 million CNY, up 5.1% [1] - The adjusted net profit attributable to shareholders was 470 million CNY, marking a 71.34% year-on-year increase [1] - The overall gross margin improved to 73.6%, up 4.9 percentage points [1] User Growth and Market Expansion - The company reported a 42.5% year-on-year increase in subscription users, reaching 15.4 million, with a penetration rate of 5.5% [2] - Domestic MAU grew by 5.2% year-on-year to 182 million, while international MAU increased by 15.7% to 98 million [2] - The growth in international users is attributed to localized strategies and collaborations with local KOLs [2] Strategic Initiatives - The company is enhancing its AI product capabilities through the integration of third-party multimodal models and proprietary fine-tuning [2] - New AI design agent "RoboNeo" is being introduced for innovative editing and design interactions [2] - A collaboration with Alibaba is expected to be signed within the year, promoting e-commerce applications and vertical AI development [2]

Investment Rating - The investment rating for the company is "Buy" with a target price of 12.11 HKD, maintaining the rating from previous assessments [4]. Core Insights - The company's revenue from imaging and design business continues to grow, with a year-on-year increase of 45.2% to 1.351 billion RMB in the first half of 2025. Advertising revenue also saw a growth of 5.1% to 434 million RMB, together accounting for 98% of total revenue [1][10]. - The overall gross margin improved by 4.9 percentage points to 73.6%, and the adjusted net profit attributable to shareholders increased by 71.34% to 470 million RMB, aligning with voluntary announcement expectations [1][12]. - The company is focusing on AI-enabled applications in imaging and design, enhancing its product matrix to meet diverse creator needs, and has launched the AI design agent "RoboNeo" to innovate productivity tools [3][10]. Summary by Sections 1. Imaging and Design Core Business Optimization - The imaging and design product revenue is on a continuous rise, with a strategic adjustment in the beauty and other business sectors. The revenue from imaging and design reached 1.351 billion RMB, while advertising revenue was 434 million RMB, making up 98% of total revenue [1][10]. - The company is leveraging AI capabilities to enhance product offerings, focusing on both consumer and business segments, including KOLs and small enterprises [10]. 2. Overseas Strategy and Productivity Tool Layout - The company has seen a significant increase in Monthly Active Users (MAU), with an 8.6% year-on-year growth, reaching 280 million. The number of subscription users rose by 42.5% to 15.4 million, with a subscription penetration rate of 5.5% [2][15]. - The MAU in the domestic market grew by 5.2% to 182 million, while overseas MAU increased by 15.7% to 98 million, driven by localized strategies and collaborations with local KOLs [16]. - The productivity tools are entering a growth phase, with a 90% year-on-year increase in MAU and even faster growth in paid users [16].

Summary of Meitu Company Conference Call Company Overview - **Company**: Meitu Company - **Industry**: Image editing and design software Key Financial Metrics - **Revenue**: - 2024 revenue reached 3.3 billion (33 亿), a year-on-year increase of 29% - 1.8 billion (18 亿) in the first half of 2025, a year-on-year increase of 6% [2] - **Gross Margin**: - 69% in 2024, expected to rise to 74% in the first half of 2025, with a target of around 80% in the future [2][7] - **Net Profit**: - Adjusted net profit of 590 million (5.9 亿) in 2024, up 59% year-on-year - 470 million (4.7 亿) in the first half of 2025, up 71% year-on-year [2][8] - **Net Profit Margin**: - Increased from 18% in 2024 to 26% in the first half of 2025 [8] User Engagement - **Monthly Active Users (MAU)**: - Grew from 270 million (2.7 亿) at the end of 2024 to 280 million (2.8 亿) in the first half of 2025, a year-on-year increase of 7% [2][6] - **Paid Users**: - Increased from 12.61 million (1,261 万) in 2024 to 15.4 million (1,540 万) in the first half of 2025 [6] - **Payment Rate**: - Rose from 4.7% in 2024 to 5.5% in the first half of 2025, indicating increased user willingness to pay [2] Business Segments - **Core Business**: - Image and design products accounted for 62% of revenue in 2024 and 74% in the first half of 2025, with a strong growth rate of 44% [2][6] - **Non-Core Business**: - Significant reduction in beauty services, with a nearly 90% decline, impacting overall revenue growth [6] Competitive Landscape - **Market Position**: - Meitu Xiuxiu holds a 56% market share in image editing, followed by ByteDance's Xinkit with about 30% [4] - In video editing, Meitu has seen MAU surpass competitors, with a market share second only to ByteDance's Jianying [4][5] - **AI Integration**: - AI technology has lowered operational barriers, enhancing Meitu's competitive edge in B-end markets [4][11] Future Development Focus - **Key Areas**: - Increasing domestic payment rates, expanding overseas MAU, and leveraging AI technology for B-end market expansion, particularly in e-commerce [2][9] - **AI Applications**: - New AI features include AI model generation and product image creation, targeting the creator economy [15][20] Market Potential - **Overseas Market**: - The overseas market is fragmented, presenting opportunities for Meitu to capture a larger share, with potential MAU doubling if market share reaches 10%-20% [14] - **Pricing Strategy**: - Higher pricing for overseas products compared to domestic offerings, enhancing revenue potential [14] Profitability Outlook - **Future Profit Projections**: - Expected adjusted net profits of over 1 billion (10 亿) and around 1.4 billion (14 亿) for 2025 and 2026, respectively, with a compound annual growth rate exceeding 50% [22]

FF301 致：香港交易及結算所有限公司 公司名稱: 美图公司 (於開曼群島註冊成立的有限公司，並以「美圖之家」名稱於香港經營業務) 呈交日期: 2025年9月2日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 01357 | 說明 | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | | 6,000,000,000 | USD | 0.00001 | USD | | 60,000 | | 增加 / 減少 (-) | | | 0 | | | USD | | | | 本月底結存 | | | 6,000,000,000 | USD | 0.00001 | USD | | 60,000 | 本月底法定/註冊股本總額： USD 60,000 第 1 頁 共 10 頁 v 1.1.1 股份發行人及根據《上市規 ...

Group 1 - The report from Credit Lyonnais indicates that Meitu (01357) has launched RoboNeo, which outperforms Nano Banana in several functional aspects [1] - Merchants typically utilize multiple productivity tools simultaneously to leverage their strengths and compensate for limitations, enabling the creation of images that meet specific demands [1] - Credit Lyonnais maintains a positive outlook on Meitu, reiterating an outperform rating with a target price of HKD 14.1 [1]

Core Viewpoint - UBS maintains a positive outlook on Meitu Inc. (01357), setting a target price of HKD 14.1 and a "Buy" rating [1] Group 1: Company Strategy - Meitu has shifted its strategy to focus on vertical model training and application scenario development [1] - The company aims to leverage its product design, user experience, and deep understanding of vertical workflows to rapidly iterate foundational models into advanced product features that meet user needs [1] Group 2: Market Potential - The continuous evolution of model capabilities is expected to expand the overall size of the graphic design market [1]

Core Viewpoint - Citi has reiterated its "outperform" rating for Meitu (01357), setting a target price of HKD 14.1, based on the superior performance of RoboNeo compared to Nano Banana in various functionalities [1] Group 1 - Citi's research indicates that RoboNeo outperforms Nano Banana in multiple functional aspects [1] - Merchants typically utilize a combination of productivity tools to leverage their strengths and mitigate limitations, resulting in images that meet specific demands [1] - The firm maintains an optimistic outlook on Meitu, reaffirming its outperform rating [1]

Market Overview - A-shares experienced a volatile rise, with major indices such as the Shenzhen Component Index, ChiNext Index, and CSI 300 reaching multi-year highs, while the Shanghai Composite Index and other indices showed slight gains [1] - The market turnover decreased to 2.83 trillion yuan, indicating a slight contraction in trading activity [1] Sector Performance - The defense and military, new energy vehicles, rare metals, and consumer electronics sectors saw significant gains, while logistics, semiconductors, cloud services, and education sectors faced declines [1] - The power equipment industry attracted over 14.7 billion yuan in net inflows, with non-ferrous metals and pharmaceutical sectors also receiving over 8 billion yuan each [1] Investment Trends - The computer sector experienced a net outflow of over 10.8 billion yuan, while the electronics sector saw a net outflow of over 7.3 billion yuan [1] - Real estate and telecommunications sectors also faced net outflows exceeding 2 billion yuan [1] Defense and Military Sector - The defense and military concept saw a resurgence, with the ground equipment sector leading the gains, and the index rising from 2% to over 6% in the last hour of trading [2] - Notable stocks such as Beifang Changlong and Changcheng Military both hit the 20% limit up in the final minutes of trading [2] New Energy Vehicle Sector - The new energy vehicle sector continued its strong performance, reaching a new phase high, with several stocks hitting their daily limit [2] - The China Passenger Car Association raised its forecast for 2025 passenger car retail sales to 24.35 million units, a 6% year-on-year increase, and adjusted the export forecast to 5.46 million units, a 14% increase [2] - In the new energy vehicle segment, wholesale sales are expected to reach 15.48 million units in 2025, reflecting a 27% year-on-year growth, with a market penetration rate projected to reach 56% [2]

Market Overview - A-shares experienced a rebound with major indices such as the Shenzhen Component Index, ChiNext Index, and CSI 300 reaching multi-year highs, while the Shanghai Composite Index and other indices showed slight gains [2] - The market turnover decreased to 2.83 trillion yuan, indicating a slight contraction in trading activity [2] Sector Performance - The defense and military, new energy vehicles, rare metals, and consumer electronics sectors saw significant gains, while logistics, semiconductors, cloud services, and education sectors faced declines [2] - The electric equipment industry attracted over 14.7 billion yuan in net inflow from major funds, with non-ferrous metals and pharmaceutical sectors also receiving over 8 billion yuan each [2] Investment Trends - The defense and military sector showed a strong performance, particularly in ground equipment, with notable stocks like Beifang Changlong and Changcheng Military Industry hitting the daily limit [3] - The new energy vehicle sector continued its upward trend, with the index reaching a new phase high and several stocks, including Rongyi Precision and Xian Dao Intelligent, hitting their daily limits [6] Sales Forecasts - The automotive industry is entering a peak sales season, with the China Passenger Car Association raising its forecast for 2025 retail sales of passenger cars to 24.35 million units, a 6% year-on-year increase [8] - In the new energy vehicle segment, wholesale sales are expected to reach 15.48 million units in 2025, reflecting a 27% year-on-year growth, with a market penetration rate projected to reach 56% [8]