At the intersection of the generative AI wave and global expansion, MEITU is presenting a clear growth blueprint to the market.

According to a Morgan Stanley research report published on August 25, MEITU's management has set a key target: to increase the company's overall paid user conversion rate from 4.7% in 2024 to 8-10% within the next three years. If achieved, this goal would mean the potential for doubling revenue from its core subscription business.

Meanwhile, the company is adjusting its overseas strategy, shifting from solely pursuing paying users to emphasizing both monthly active user (MAU) growth, aiming to unlock new growth opportunities in European and American markets and capitalize on new opportunities brought by TikTok's proliferation.

Based on this growth roadmap, Morgan Stanley raised MEITU's target price by 9% to HK$15.7 and maintained an "overweight" rating. Analysts Lydia Lin and Yang Liu noted in their report that MEITU's demonstrated capabilities in leveraging generative AI, focusing on core businesses, and prudently defining business boundaries make its long-term growth potential worth watching.

Investors are closely monitoring the upcoming September 2025, when MEITU plans to launch the commercialization of its AI tool RoboNeo and begin integrating it into other applications, while substantial progress in its collaboration with Alibaba is also expected. These initiatives are viewed as critical milestones for testing the effectiveness of its new strategy.

Core Objective: Doubling Paid Conversion Rate Within Three Years

According to the Morgan Stanley report, MEITU's management has provided clear financial guidance, with the core of its growth strategy being to enhance users' willingness to pay.

The company's first milestone is to increase the overall paid conversion rate to 8-10% within three years (2025-2028). The report indicates this represents a significant leap from the 4.7% baseline in 2024. Looking at the long term, MEITU's goals are even more ambitious: achieving paid conversion rates of over 10% for leisure products and over 20% for productivity tools.

To achieve this objective, the company plans to maintain sales and marketing (S&M) expenses at around 16% of picture, video & design (PVD) and advertising revenue, while R&D spending over the next three years will grow at approximately 15% annually, demonstrating the company's commitment to continued investment in growth while controlling costs.

Overseas User Expansion, Domestic Value Mining

MEITU's product strategy presents a clear "dual-engine" model: driving user growth through overseas markets while mining user value deeply in the domestic market.

Overseas leisure business: The main engine for MAU growth. The report states that management has noticed that influenced by TikTok, Western younger generations are increasingly accepting of photo and video editing. Therefore, MEITU began restructuring its core applications in European and American markets (such as Airbrush and BeautyPlus) in July 2025, shifting from a previous focus on paying users to emphasizing both MAU growth. Given that existing leisure products in the US market have paid conversion rates of approximately 50%, once MAU scale increases, it will not only drive overall user growth but also significantly contribute to paid revenue.

Domestic business: Focus on paid conversion rates and ARPPU. For the domestic market, leisure products are viewed as mature "cash cows" contributing short-term revenue, while productivity tools (such as Kaipai and DesignKit) do not pursue MAU expansion but instead focus on improving paid conversion rates and average revenue per paying user (ARPPU).

AI Empowerment: RoboNeo as Paid Conversion Accelerator

AI is another core pillar of MEITU's growth strategy. According to the report, MEITU's AI tool RoboNeo carries high expectations, as it is expected to address the long-standing issue of insufficient personalized feature recommendations in the company's products, thereby effectively accelerating paid conversion rate improvements.

RoboNeo's positioning is twofold: First, it will serve as an independent productivity application targeting non-professional user markets; second, and more critically, starting from September 2025, RoboNeo will be integrated into MEITU's other applications.

MEITU's management believes that if the integration is successful, by significantly enhancing applications' recommendation mechanisms, RoboNeo could bring substantial revenue growth to the company in 2026.

Partnership with Alibaba: Opening New Chapter in E-commerce Monetization

The collaboration with Alibaba is viewed as key to MEITU opening new business models. The report reveals that cooperation between both parties is expected to launch before the convertible bond (CB) transaction is completed in the second half of 2025.

Key collaboration projects include:

AI Try-on: This feature will launch in the second half of 2025 through an independent application (Wearnow) and integration within Meitu Xiuxiu and Meitu Camera. After users utilize the feature, they will be directed to Alibaba's e-commerce platforms to place orders, with MEITU monetizing through a revenue-sharing model.

DesignKit Integration: Starting from September 2025, one to two functions of MEITU's DesignKit are expected to appear on Alibaba's merchant workbench (TTG portal), directly serving e-commerce sellers.