Core Viewpoint - The report from Dongfang Securities projects Meitu Inc. (01357) to achieve adjusted net profits of 0.943 billion, 1.234 billion, and 1.593 billion CNY for the years 2025 to 2027, with a target price of 13.25 HKD per share and a "buy" rating [1] Group 1: Financial Projections - Expected adjusted net profits for Meitu are 0.943 billion CNY in 2025, 1.234 billion CNY in 2026, and 1.593 billion CNY in 2027 [1] - Target price set at 13.25 HKD per share [1] Group 2: Market Dynamics - The image editing sector benefits from significant advancements in diffusion models for generative tasks, providing foundational support for product innovation [1] - Meitu's accumulation of technical and aesthetic data positions the company to capitalize on technological dividends [1] Group 3: Product Development - The company is accelerating product version iterations and introducing new features, with a notable increase in AI functionality [1] - The domestic market is characterized by stable competition, while overseas markets contribute significantly to user growth [1] Group 4: Competitive Landscape - In the domestic market, Meitu and Byte (Xingtu) are the core players, with intense competition having stabilized [1] - Meitu's domestic monthly active users (MAU) remain stable at 170 to 180 million, with user growth primarily driven by overseas markets [1] Group 5: AI and Monetization Potential - The company is optimistic about AI driving accelerated paid penetration of its products, as AI features enhance product effectiveness [2] - Current paid feature penetration for Meitu's products is relatively low compared to competitors, indicating significant room for growth [2] - The paid penetration rate for tool-based products is around 10%, while content-based products range from 20% to 30% [2]