Orient Securities has released a research report, forecasting that MEITU (01357) will achieve adjusted net profits attributable to the parent company of 13.53, 16.53, and 19.54 billion yuan for the years 2026 to 2028. Using a PE valuation method and referencing the average valuation levels of comparable companies, the firm has assigned MEITU an 18x PE multiple for 2026. This corresponds to a market capitalization of 249 billion yuan, or 286 billion Hong Kong dollars (using an exchange rate of 0.87 HKD/CNY), resulting in a target price of HK$6.24 per share. The 'Buy' rating is maintained. The key viewpoints from Orient Securities are as follows:
Agent Integration Drives Workflow Innovation and Compute Demand
The company is intensifying its focus on productivity scenarios in 2026. Its core products are embedding Agent capabilities into workflows. For instance, the recent RoboNeo update introduced an Agent Teams feature, incorporating expert skill libraries across various domains like advertising, e-commerce, and animation production. It also allows users to save editing preferences and video styles to a memory bank. Other features include AI-powered short marketing drama and video diary templates. The report notes that the company excels at creating differentiated advantages in workflow details. An example is the launch of an AI layer separation function, addressing a common industry pain point of being unable to edit specific layers on demand. Such product insights stem from the company's accumulated industry know-how gained through serving vertical clients, making them difficult for generic services from large models to replicate. The firm is optimistic about the ongoing refinement and maturation of Agent workflows in 2026, which will lead to more sophisticated processes for handling complex tasks. This is expected to significantly increase token consumption, gradually translating into higher ARPU and forming a dual-driver model of paid subscriptions and rising ARPPU, jointly supporting steady revenue growth in the productivity segment.
Established Strength in Lifestyle Segment Backed by Product Insight
Based on manual tracking, using Meitu Xiuxiu as an example, the app had rolled out 21 new features by the end of May 2026 (compared to 20 in the same period last year), with AI features accounting for 81% of them. The report observes that the company's reliance on hit features in the lifestyle segment has been relatively lower in 2026. Instead, product iteration is more driven by the company's insights into user aesthetics and refined operations. For example, features like the slimming trapezius muscle function launched in May are based on capturing and quickly responding to social media trends. According to a previous company announcement, the number of paying users in the lifestyle segment reached 15.56 million by March, a year-on-year increase of 27%, while ARPU saw a slight rise of approximately 5%. The firm is positive about the steady growth trend in paying users driven by product iteration and expects ARPU improvement to be supported by overseas expansion.
Potential Risks to Consider
Risks include slower-than-expected iteration of lifestyle products, slower-than-expected overseas business expansion, and slower-than-expected progress in productivity products.
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