On June 25th, GF Securities released a report covering Meitu (1357.HK) for the first time, giving a "buy" rating with a fair value of HKD 3.44 per share. The report stated that the company is a leader in photo editing and AI-driven user payment rate improvement, actively promoting product globalization. According to Questmobile, Meitu Xiuxiu has the highest user activity in the field of photo editing, and as of April, the company's MAU market share reached 54%, showing high user stickiness. The company has launched AI-related functions to enhance user payment willingness, and the payment rate has increased from 0.65% in 2020 to 3.7% in 2023. The company is actively promoting product globalization and launching multiple new functions overseas to attract users. In addition, the company has launched commercial products such as Meitu Design Studio, and continuously iterated through AI design services to reduce design costs for SMEs. Due to the cost sensitivity of SMEs, the achievements of AI cost reduction and efficiency improvement are expected to accelerate penetration and drive payment growth. GF Securities expects Meitu's net profit from 2024 to 2026 to be HKD 508 million, HKD 700 million, and HKD 920 million, respectively. With reference to comparable companies with a P/E ratio of 28x, the corresponding P/S ratio is 3.9x. The reasonable valuation of Meitu is estimated to be RMB 14.219 billion, and the fair value is HKD 3.44 per share. The report gives a "buy" rating for the first coverage.