① Why did Meitu expect a sharp increase in net profit in the first half of the year? ② How does the agency evaluate this company?
Financial Services Association, July 25 (Editor: Hu Jiarong) Benefiting from the expected increase in net profit for the first half of the year, Meitu (01357.HK) strengthened sharply today, rising more than 10% during the intraday period. As of press release, it rose 8.85% to close at HK$2.46.
Note: Meitu's performance
According to public information, Meitu is a domestic internet platform service provider. Based on AI technology reserves, it lays out video tool applications, beauty supply chain management, and skin measurement services around the “aesthetic economy”.
In terms of news, Meitu announced last night its performance forecast for the six months ending June 30, 2024. Among them, adjusted net profit attributable to company owners increased by no less than 80% compared to the same period last year.
Note: Meitu's announcement
If a number of non-cash and non-operating items are taken into account, the net profit attributable to the company's owners during the period increased by no less than 30% compared to the same period last year.
The market's expectations for Meitu's big increase in performance don't seem surprising. As stated in the announcement, Meitu's performance growth is mainly due to continued rapid growth in revenue from the imaging and design products business. This business is mainly billed through a membership subscription model and is characterized by high gross margins. The rapid growth of this high-margin business has further boosted the company's operating leverage effect, which has led to higher profit growth.
According to the 2023 annual report data, Meitu's imaging and design product business revenue reached 1.33 billion yuan, an increase of 52.8% over the previous year. This significant growth trend shows that the company's products and services in the field of imaging and design have received much attention in the market.
The agency says Meitu is one of the few companies that profit on a large scale through AI
According to the Everbright Securities research report, they pointed out that Meitu is deeply involved in AI technology and is one of the few companies that profit on a large scale through AI. As of June 11, Meitu's global VIP membership reached a record high of 10.63 million, a 49% year-on-year increase from 7.19 million in 2023.
Everbright also pointed out that AI enhances product power and drives payments. As of May 2024, of all Meitu products, the proportion of paid users using AI features was as high as 87%, and the proportion of paid users using generative AI was 41%.
They believe that in a context where domestic AIGC (Artificial Intelligence Generated Content) native applications are still in their infancy, Meitu has established a stable basic market for lifestyle products, and can also seize a certain market share in productivity scene products. Despite an increase in R&D expenses in 2024, Everbright Securities is still optimistic about Meitu's future development.
Based on the above analysis, Everbright Securities slightly lowered its forecast for Meitu's adjusted net profit to mother in 2024 to 0.55 billion yuan, but maintained the adjusted net profit forecast for 2025 and 2026, which were 0.8 billion yuan and 980 million yuan, respectively.