Hua Chuang Securities has issued a research report maintaining its assessment of MEITU's core strategy centered on "productivity + globalization," focusing on the realization of subscription revenue, usage-based payments, and profit margins in the formal H1 2026 results. The bank forecasts the company's operating revenue for 2026-2028 to be RMB 4.76 billion, RMB 5.76 billion, and RMB 6.62 billion, representing year-on-year growth of 23%, 21%, and 15%, respectively. Adjusted net profit attributable to shareholders is projected at RMB 1.33 billion, RMB 1.61 billion, and RMB 1.94 billion, with year-on-year increases of 38%, 21%, and 21%. Using a relative valuation method, a price-to-sales ratio of 7x is applied to the core business revenue for 2026, yielding a target market capitalization of RMB 26.9 billion and a corresponding target price of HK$6.7. The "Recommend" rating is maintained.
Hua Chuang Securities' key viewpoints are as follows:
Event: On May 6, MEITU released its latest business update for the first quarter of 2026. The announcement provides operational data and is not the formal semi-annual financial report. Key disclosures include the number of paying subscribers, growth rates for imaging and design revenue, annual recurring revenue for productivity applications, and AI computing power point consumption. While a complete income statement was not disclosed, the operational data clearly validates the growth quality of the imaging and design business and the efficiency of AI commercialization.
Strong growth in imaging and design revenue for Q1 2026 continues to demonstrate the resilience of the core business. MEITU's imaging and design product revenue for Q1 2026 increased by 34.3% year-on-year to RMB 852 million, maintaining growth above 30% following a high base in 2025. This indicates that the subscription model, globalization efforts, and iterations of AI features continue to jointly drive revenue growth. Breaking it down: revenue from lifestyle scenario applications increased by 35.5% year-on-year, accounting for approximately 82% of imaging and design revenue; revenue from productivity applications increased by 45.4% year-on-year, accounting for approximately 18% of imaging and design revenue. Paying subscribers exceeded 17.9 million, a year-on-year increase of 30.2%, including 15.56 million for lifestyle scenarios (up 27.4% year-on-year) and 2.34 million for productivity applications (up 52.9% year-on-year). This segment remains the fundamental revenue base, with future catalysts including overseas user payment conversion rates, average revenue per user, and the ongoing monetization of AI special effects features.
First disclosure of AI productivity annual recurring revenue and AI computing power point consumption; the growth trajectory for productivity applications remains steep. As of the end of March, the annual recurring revenue for AI productivity applications was approximately RMB 580 million, a year-on-year increase of 56.2%. It is anticipated that the proportion of productivity revenue within imaging and design revenue will continue to rise from the current 18%, signaling a shift from a tool-based model to an "AI-powered creative productivity platform." In March, total user consumption of AI computing power points increased by 59% compared to December 2025. Specifically, consumption for KaiPai surged by 360%, for RoboNeo by 316%, for MEITU Design Studio by 107%, and for Vmake by 78%. The integration of AI Agents has shown a noticeable positive impact on productivity tools.
The company's core advantages lie in the closed-loop formed by its user base, vertical data, and AI productization capabilities. The medium-to-long-term strategy remains focused on productivity and globalization. MEITU is evolving from a single-point tool provider into an AI-powered creative productivity platform, expanding its business model from subscriptions to include computing power points and usage-based payments. Leveraging its overseas-validated product matrix, including MEITU Xiuxiu, BeautyCam, and Wink, along with the research and development foundation of MT Lab, the company maintains its traffic base in lifestyle scenarios. Productivity tools are penetrating high-value sectors such as e-commerce design, video content creation, and retail, with the long-term potential to enhance average revenue per user and payment conversion rates.
Risk factors include risks associated with AI technology iteration, potential intensification of market competition, compliance risks related to data security and copyright, and potential underperformance of the globalization strategy.
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