GF SEC's research suggests that Meitu (01357) is a leader in photo editing, with deep user recognition and a leading MAU. According to Questmobile, Meitu Xiu Xiu has the highest user activity level in the field of picture editing. In April 2024, the company's MAU market share reached 54%, and the MAU market share has remained above 50% for the past two years, with high user stickiness. Xingtu, the second-ranked MAU, had a market share of about 28.6% as of April 2024. Other competing products have lower MAU shares and a considerable gap compared to Meitu Xiu Xiu.
According to the company's financial report, as of 2023, the company's monthly active users reached 250 million, an increase of 3% year-on-year. The company has launched AI-related functions to enhance users' willingness to pay, and the payment rate has increased from 0.65% in 2020 to 3.7% in 2023. The company actively promotes product globalization and launches multiple new features overseas to acquire users. The bank believes that compared with other subscription-based apps, the company's user payment rate is lower. With the continuous increase of user subscription data and the continuous expansion of products overseas, there is broad room for growth in C-end subscription revenue.
The bank stated that it expects the company's revenue for 2024-2026 to be 3.663 billion, 4.707 billion, and 5.646 billion yuan, with net profits attributable to shareholders of 508 million, 700 million, and 920 million yuan, respectively. The company's business model has shifted to subscriptions, and its profitability has improved. The bank evaluated the company using the PE method and combined it with PS for discussion. Based on comparable companies at 28X PE and corresponding to 3.9X PS, the expected reasonable valuation of Meitu Company is 14.219 billion yuan, corresponding to HKD 1.5585 billion (with an exchange rate of RMB to HKD of 0.91:1), and a reasonable value of HKD 3.44 per share. First-time coverage with a "buy" rating.