Meitu (1357.HK): Initiate at Buy/High Risk: Built for AI Era

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11 Aug 2026 05:18:58 ET │ 43 pages

Meitu (1357.HK)

Initiate at Buy/High Risk: Built for AI Era

CITI'S TAKE

Despite market fears that LLMs are a threat to Meitu’s product functions

and monetization moat, we initiate the stock at Buy/High Risk with a TP of

HK$7.00 (16x 27E adj. EPS). In our view the Street is underestimating Meitu’s

AI-driven upside potential as an early mover in transforming its products

and monetization model. Profits appear resilient: 1) From subscription to

consumption: leveraging its decade-long insights into photo/video

designs, Meitu is using AI to penetrate visual workflows and evolve from

subscriptions toward AI consumption-based monetization to increase

value per user and ARPU. 2) Resilient leisure product earnings: Meitu’s high

spending power, beauty-focused user base supports earnings, while LLMs

struggle with controllability and consistency required for high-quality

human-face editing.3) Continued robust overseas growth should drive

higher ARPU. Meitu’s committed shareholder return programs and the

Chairman’s rising stake should also provide downside support, in our view.

Where we are non-consensus — The Street fears that LLMs will make Meitu’s

editing tools less relevant, whereas we see upside from AI as an enabler across visual

workflows in more verticals and markets. Examples: a) 96% of its generative AI calls

were fulfilled by its MiracleVision model, on average, showcasing the value of its

visual data insights without surrendering margins to external models; b) ARR for AIdriven productivity applications as of Jun’26 was Rmb620m, +48% yoy. AI credits

consumed by users recorded over 46% sequential growth in 1Q26 and 2Q26,

reflecting increasing user engagement and monetization. Meitu differentiates itself

by leveraging AI into easy-to-use, industry-specific visual workflows.

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Buy / High Risk

Short-Term View: Upside

Price (10 Aug 26 16:10)

HK$4.83

Target price

HK$7.00

Expected share price return

44.9%

Expected dividend yield

2.9%

Expected total return

47.8%

Market Cap

HK$21,847M

US$2,785M

Price Performance

(RIC: 1357.HK, BB: 1357 HK)

Leisure product monetization: resilient — We see continued robust overseas

…