Guotai Haitong: Maintain a "Buy" rating on MEITU (01357) with a target price of HK$11.59.

Guotai Haitong released a research report stating that it has raised the EPS estimates for MEITU (01357) in 2025-2027 to be 0.21 yuan, 0.30 yuan, and 0.39 yuan respectively. The bank, based on the PE and PS valuation methods, cautiously considers using the average of reasonable valuations, corresponding to a target price of 11.59 Hong Kong dollars, and maintains a "hold" rating. Guotai Haitong's main points are as follows: Meitu continues to focus on the image field, creating a comprehensive product matrix to meet diverse vertical scene needs. In the first half of 2025, the company's total revenue increased by 12.3% year-on-year to 1.8 billion yuan, with a gross profit margin of 73.6% up 8.7 percentage points year-on-year, net profit attributable to shareholders increased by 30.8% year-on-year to 397 million yuan, and adjusted net profit attributable to shareholders increased by 71.3% year-on-year to 467 million yuan. In June 2025, the company's overall MAU reached 280 million, up 8.5% year-on-year, including a 15.3% year-on-year increase to 98 million people in markets outside mainland China, and a 21.1% year-on-year increase to 23 million people in the productivity tools scene; subscription users increased by over 42% to around 15.4 million people, with a subscription penetration rate of 5.5%. With the help of AI, the image and design business continues to accelerate its development around "productivity and globalization". In the first half of 2025, revenue from the company's image and design products business increased by 45.2% year-on-year to 1.351 billion yuan, accounting for 74.2% of total revenue. According to Quest Mobile data, the company's flagship products in the lifestyle scene, Meitu Xiuxiu and Beauty Camera, continued to rank first in the MAU rankings for mobile photo beautification and license photography races in China for the six months ending in the first half of 2025. In the first half of 2025, Meitu Xiuxiu took first place in the overall rankings of the App Store in Cambodia, Laos, Brunei, and Italy, Turkey, and other 12 countries, and in early October, with the AI group photo feature, ranked first in the overall list of App Store in 14 European countries; Beauty Camera ranked first in the overall rankings of App Store in 12 countries such as Thailand, Vietnam, and Japan with the "AI Try-on" feature. In the productivity scene, the e-commerce design product Meitu Design Studio focuses on e-commerce design AI workflows, and the video production AI workflow-focused product, Open Pai, was launched in July 2025. In the first half of 2025, the MAU for productivity tools in markets outside mainland China achieved a year-on-year growth of over 90%.