Citi: Initiates "Buy" rating on MEITU (01357) with a target price of HKD 7.
Meitu has a user base with high spending power that supports profitability, focused on beauty and cosmetics, while LLM still faces challenges in controllability and consistency required for high-quality facial editing.
Citi has initiated coverage on MEITU (01357) with a Buy/High Risk rating and a target price of HK$7. The bank believes that the market has underestimated Meitu's AI-driven potential as an early mover in the transformation of its product and monetization models. Citi also thinks that Meitu's commitment to enhancing shareholder returns and the chairman's continuous share purchases can provide support for the stock price.
The bank pointed out that Meitu is leveraging AI to penetrate its visual workflows, evolving from a subscription model to an AI-driven monetization model to enhance user value and ARPU. Meitu also enjoys a profitable user base characterized by high spending capacity and a focus on beauty, while LLM still faces challenges in controllability and consistency required for high-quality facial editing. Meanwhile, the sustained strong growth of its overseas business is expected to drive higher ARPU.
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