Tianfeng Securities released a research report stating that maintaining Meitu's (01357) “buy” rating, the estimated revenue for 24/25/26 is 35.25/41.75/4.915 billion yuan, with a target price of HK$6.82. The bank continues to be optimistic that 2024 will be a big year combining AI and tool software. As a leading product on the market segment, subscription member penetration rate and member conversion rate are expected to continue to increase. In this round of generative AI and tool software global opportunities, Meitu may be expected to summarize past lightweight tool software experience and pass it on to the B-side market to establish the experiential advantage of lightweight tool software.
The report cites Meitu's 2023 performance, which achieved annual revenue of 2.7 billion yuan, an increase of 29.3% over the previous year; adjusted net profit to the mother reached approximately RMB 370 million, an increase of 233.2% over the previous year. From the user side, on December 31, 2023, the number of monthly active users of the company reached about 250 million, up 2.6% year on year; the number of productivity app users reached 17.7 million, an increase of 74.3% year on year; and the number of paid subscription users was 9.11 million, a sharp increase of 62.3% year on year.
The bank said that Meitu's annual performance verifies the resilience of free subscription transfers and business growth: the core contribution to 23 years of performance growth is mainly 1) Driven by generative AI technology, the penetration rate of paid subscribers in the video product portfolio increased 2) the steady growth in the number of global paid users under a more clear and aggressive globalization strategy. Earlier discussions about the company's payment rate were difficult to find comparable companies in the same industry, the same competitive pattern, and the same market, so there was great disagreement about the increase in the payment rate and the ceiling.
However, after the release of the company's 2023 results, Tianfeng Securities believes that: 1) after the first acceleration in subscription transfers in many years as a software circuit with deep cultivation of face value tools, it is possible to be moderately optimistic about the natural growth and ceiling of the company's payment rate this year; 2) against the backdrop of no deterioration in the competitive environment and improving subscription habits, we firmly believe that the acceleration in the payment rate of leading tool software companies is expected to continue, so it is expected that the company's payment rate growth will continue to maintain the previous trend.