Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 4.95, up from the previous target of HKD 4.56 [6][11]. Core Insights - DeepSeek (DS) has achieved significant breakthroughs in computing cost savings and open-source technology, which are favorable for AI applications in the company. This includes a major reduction in capital expenditure requirements and the promotion of technological equality [1][2][3]. - The competitive landscape for AI applications is shifting from reliance on algorithms and computing power to product capabilities, which may enhance the company's advantages in product, workflow, and aesthetics [4]. - The company has established a solid commercial ecosystem for its AI applications, with a paid user rate exceeding 6% for its flagship product, Meitu Design Studio [4]. Summary by Sections Investment Rating - The company is rated "Buy" with a target price of HKD 4.95 [6][11]. Financial Forecasts - The revenue forecast for the company shows a growth trajectory from RMB 2,085 million in 2022 to RMB 5,772 million by 2026, reflecting a compound annual growth rate (CAGR) of approximately 22.51% [5][18]. - The net profit attributable to the parent company is projected to increase from RMB 94.13 million in 2022 to RMB 1,115 million in 2026, indicating a significant recovery and growth [5][18]. - The earnings per share (EPS) is expected to rise from RMB 0.02 in 2022 to RMB 0.25 in 2026 [5][18]. Valuation - The report adjusts the valuation to a 2025 price-to-earnings (PE) ratio of 25 times, reflecting the company's entry into a high-growth phase driven by AI capabilities [5][11]. - The estimated adjusted net profit for 2025 is RMB 865 million, leading to a target market capitalization of HKD 225 billion [11][12]. Competitive Landscape - The advancements in DS's low-cost open-source models are expected to benefit the development of AI applications, breaking the technological monopoly of closed-source companies like OpenAI [2][3]. - The company is actively collaborating with domestic large models to leverage its product strengths and seize new industry opportunities [4].

Financial Performance - As of June 30, 2024, the net profit attributable to equity holders was approximately RMB 272.8 million, representing an 80.3% year-over-year increase[10]. - The total revenue for the six months ended June 30, 2024, was RMB 1.621 billion, a 28.6% increase compared to RMB 1.261 billion for the same period in 2023[10]. - Adjusted net profit attributable to equity holders for the six months ended June 30, 2024, was approximately RMB 272.8 million, representing a year-on-year increase of about 80.3%[16]. - Total revenue for the same period reached approximately RMB 1.621 billion, reflecting a year-on-year growth of about 28.6%[20]. - The company reported a profit of RMB 303,721 thousand for the six months ended June 30, 2024, compared to RMB 209,469 thousand for the same period in 2023, representing an increase of approximately 44.9%[103]. - The company reported a total comprehensive income for the six months ended June 30, 2024, of RMB 304,986 thousand, including a profit of RMB 303,428 thousand[109]. - The company’s total equity increased to RMB 4,462,766 thousand from RMB 4,113,700 thousand, representing a growth of about 8.5%[107]. User Engagement - Monthly active users reached approximately 257.7 million, a 4.3% increase from 247.1 million in the same period last year[11]. - The monthly active users of the AI video editing application Wink grew by approximately 99% year-over-year, becoming the third-largest application in the product matrix[8]. - The productivity segment saw a 42.0% increase in monthly active users, reaching 19.2 million compared to 13.5 million in the same period last year[11]. - Monthly active users grew by approximately 4.3% year-on-year to 258 million as of June 30, 2024, an increase from about 2.6% as of December 31, 2023[16]. Revenue Breakdown - Revenue from imaging and design products was RMB 930.6 million, reflecting a significant 54.5% growth year-over-year[10]. - Revenue from advertising increased by 18.3% to RMB 412.9 million compared to RMB 349.2 million in the previous year[10]. - Revenue from beauty solutions decreased by 5.5% to RMB 270.6 million, down from RMB 286.4 million in the previous year[10]. - Revenue from image and design products accounted for 57.4% of total revenue, increasing from 47.8% in the previous year[19]. - Revenue from advertising constituted 25.5% of total revenue, compared to 27.7% in the previous year[19]. - Revenue from beauty solutions, primarily from cosmetics and smart hardware sales, was RMB 258,559,000, down from RMB 273,914,000 in the previous year[144]. Cost and Expenses - The gross profit margin improved to 64.9%, up by 5.1 percentage points from 59.8% in the previous year[10]. - Operating costs rose to RMB 568.5 million for the six months ended June 30, 2024, a 12.2% increase from RMB 506.9 million for the same period in 2023[27]. - Research and development expenses increased by 44.5% to approximately RMB 425.3 million for the six months ended June 30, 2024, compared to approximately RMB 294.3 million for the same period in 2023[30]. - The total operating costs, including sales and marketing expenses, administrative expenses, and R&D expenses, amounted to RMB 1,376,368,000, up from RMB 1,166,827,000, indicating an increase of about 18.0%[147]. Investments and Acquisitions - The company successfully completed the acquisition of Zcool Group in the first half of 2024, launching a new online service platform for freelance designers shortly thereafter[16]. - The company completed the acquisition of a leading visual creative community, which is expected to enhance the synergy with its imaging and design products[23]. - Meitu Investment has agreed to acquire all issued shares of Zcool, totaling 119,158,806 ordinary shares and various series of preferred shares, for a total consideration of $39,640,495 (approximately HKD 309,905,426)[58]. - The acquisition of Zcool was completed on March 27, 2024, making Zcool an indirect wholly-owned subsidiary of the company, with its financial performance consolidated into the group's financial statements[59]. Financial Position and Liquidity - Cash and cash equivalents as of June 30, 2024, were RMB 351.5 million, down from RMB 640.6 million as of December 31, 2023[42]. - The company maintained a healthy liquidity position, with total liquid financial resources of RMB 1.3 billion as of June 30, 2024, compared to RMB 1.4 billion as of December 31, 2023[42]. - The company’s total liabilities increased to RMB 1,938,317 thousand from RMB 1,653,486 thousand, indicating a rise of approximately 17.3%[107]. - The company’s cash flow from operating activities remains a critical area for future focus, as the net cash outflow from financing activities suggests potential liquidity concerns[115]. Shareholder and Equity Information - As of June 30, 2024, the company had a total of 4,535,096,084 shares issued, with significant shareholders holding substantial stakes, including Cai Wensheng with 1,068,100,000 shares (23.55%)[64]. - The employee stock option plan, which was approved prior to the IPO, has a total limit of 116,959,070 shares, with 12,435,144 shares of options granted but not yet exercised as of June 30, 2024[66]. - The company approved a final dividend of RMB 148,827,000, with RMB 146,085,000 paid for the six months ending June 30, 2024, compared to RMB 81,395,000 for the same period in 2023[163]. Financial Risks and Management - The company has not hedged any foreign currency fluctuations as of June 30, 2024, exposing it to foreign exchange risks primarily from its subsidiaries in China and Hong Kong[47]. - The company’s financial risk management policies have remained unchanged since year-end, addressing market, credit, and liquidity risks[126]. - The company continues to monitor the performance of its cryptocurrency investments and will reassess its investment strategy in response to market conditions[54]. Future Outlook - The company anticipates that the growth in subscription penetration will support strong revenue growth in the second half of the year[14]. - The company is actively exploring market expansion opportunities, particularly in the imaging and design product sectors, to drive future revenue growth[118]. - Future financial performance will be closely tied to the successful implementation of new strategies and the management of cash flow dynamics[118].

Investment Rating - The report maintains a "Buy" rating for Meitu Inc (1357 HK) [2] Core Views - Meitu achieved strong profit growth in H1 2024, with revenue of RMB 1 62 billion (YoY +28 6%), gross profit of RMB 1 05 billion (YoY +39 6%), and net profit of RMB 300 million (YoY +45 0%) [3] - The company's adjusted net profit attributable to shareholders reached RMB 270 million (YoY +80 3%), driven by rapid growth in AI-powered imaging and design products [3] - Meitu's globalization strategy is progressing successfully, with overseas MAU accounting for 32 9% of total MAU [3] - The company's AI-driven productivity tools, particularly X-Design and Wink, showed significant user growth and revenue increases [3] Financial Performance - In H1 2024, Meitu's imaging and design product revenue grew 54 5% YoY to RMB 930 million, driven by increased user base and paid penetration rate [3] - The company's total MAU reached 258 million (YoY +4 3%), with paid subscribers hitting 10 81 million (4 2% penetration rate) [3] - X-Design revenue surged 152% YoY, with 960,000 subscribers, while Wink's MAU grew approximately 99% YoY [3] - Beauty solutions revenue declined 5 5% YoY to RMB 270 million, while advertising revenue recovered with 18 3% YoY growth to RMB 410 million [3] Product Development - Meitu launched its WonderVision 5 0 model supporting video generation and six new AI+ imaging design products at its third imaging festival [3] - The company continues to strengthen its position as a leading C-end imaging platform with significant AIGC application realization [3] Market Performance - Meitu's current share price is HKD 2 32, with a 52-week range of HKD 2 13-4 19 [3] - The company's total market capitalization stands at HKD 10,521 42 million [3] - Meitu's stock performance over the past year shows -31 4% return, underperforming the Hang Seng Index's -5 5% [3] Financial Projections - Revenue is forecasted to grow to RMB 3 6 billion in 2024, RMB 4 5 billion in 2025, and RMB 5 4 billion in 2026 [6] - Adjusted net profit attributable to shareholders is projected to reach RMB 560 million in 2024, RMB 800 million in 2025, and RMB 1 06 billion in 2026 [6] - The company's ROE is expected to improve from 9% in 2023 to 16% in 2026 [7] - EPS is forecasted to grow from RMB 0 09 in 2023 to RMB 0 25 in 2026 [7] Valuation Metrics - The company's P/E ratio is projected to decline from 23 46x in 2023 to 9 18x in 2026 [7] - P/B ratio is expected to decrease from 2 33x in 2023 to 1 57x in 2026 [7] - P/S ratio is forecasted to drop from 3 55x in 2023 to 1 77x in 2026 [7]

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]