Event: On June 12, 2024, Meitu held the 3rd Meitu Video Festival with the theme of “Talking about AI Workflows” and released 6 products: Meitu Yunxiu V2, Meitu Design Studio V3, Zhanku Design Service, Qimei, and MOKI, covering the fields of commercial photography, broadcast video, e-commerce design, design services, game marketing, and video generation.
Product upgrades solve the pain points of user usage scenarios. Meitu Yunxiu V2 has upgraded AI batch refinement and AI batch color mixing capabilities to further help commercial photography customers greatly improve efficiency; Launch V2 has upgraded AI scripting, AI digital human, video translation, and one-click packaging capabilities to solve the planning, production, and monetization problems of broadcast video creators; Meitu Design Studio V3 has upgraded AI batching capabilities and AI product video creation capabilities, and supports multi-team collaboration to greatly increase e-commerce material design production capacity.
Launch new products and explore new paradigms of AI commercialization. Zhanku launched a design service platform that is efficient in finding people, with a simple process and safe after-sales service, connecting a wide range of design users and tens of millions of professional designers; Qiming combines Meitu's AI imaging technology with Rui Sheng's game marketing experience to provide efficient production and accurate delivery of advertisements for the game marketing industry; MOKI focuses on AI short film creation to help creators create animated short films, online skits, story books, and MVs, making video creation simple and efficient.
MiracleVision's big model upgraded to V5, and AI reshaped creative workflows. The company's Miracle Vision large model has been upgraded to v5. Using the self-developed DIT technology architecture, it covers large image, video, audio, and text models, and has been improved in terms of semantic understanding, image stability, dynamic continuity, subject consistency, content controllability, and generation time. The company thoroughly understands creative design scenarios, constructs AI workflows to replace traditional workflows, and forms a closed loop of commercialization. As of June 11, 2024, the number of the company's global VIP members reached 10.63 million, a record high. Based on estimates of 249 million monthly active people at the end of 2023, the company's current paid penetration rate reached 4.27%, which is a significant increase compared to 3.7% at the end of 2023.
Investment advice: The company aims to become the world's largest video and video productivity software and application subscription service provider. The strategy focuses on the main subscription business, and the payment rate is rapidly increasing; the MiracleVision model has been updated to V5 to enable creative design workflows. We expect the company to achieve operating income of 34.24, 43.29, and 5.447 billion yuan in 2024-2026, and net profit to mother of 5.09, 6.86, and 909 million yuan. The corresponding PE is 25, 18, and 14 times, respectively, maintaining the “gain” rating.
Risk warning: AI product development falls short of expectations; subscription payment conversion falls short of expectations; risk of deteriorating competitive landscape