Orient Securities issued a research report stating that it expects MEITU (01357) to achieve adjusted net profit attributable to shareholders of 9.43/12.34/15.93 billion yuan for 2025-2027, setting a target price of HK$13.25 per share and assigning a "Buy" rating.

In the image editing sector, benefiting from significant progress of diffusion models in generation tasks, technological generational advancement provides underlying capability support for transformative product development. MEITU's accumulation in technology and aesthetic data lays the foundation for the company to capture technological dividends. From a product validation perspective, the company has accelerated product version iterations and feature launches, with AI functionality accounting for a significantly increased proportion.

The report noted that the company's domestic lifestyle scenarios face steady-state competition, while overseas markets contribute the main user growth. In lifestyle scenarios, the Chinese mainland market tends toward stock competition, with MEITU and ByteDance (Xingtu) as core players. The most intense competition phase between the two has passed, with MEITU's domestic MAU stabilized at 170-180 million. Growth mainly comes from overseas markets, where AI functionality is creating differentiation between the company's products and overseas competitors. The company's differentiated competition in segmented scenarios such as body and hair beautification, and its ability to capture trend dynamics by launching AI-featured gameplay, may provide sustained momentum for overseas user growth.

The firm is optimistic about AI driving acceleration in the company's product payment penetration, with the core being strong AI functionality effects combined with the company's product payment feature ratio currently at mid-to-low levels. Looking at the payment penetration rates of existing products in 2024, tool-based products (such as Duolingo and Keep) have payment penetration rates of around 10%, while content-oriented products like text, music, and video have payment penetration rates basically in the 20%-30% range. In the past content copyright industry, payment penetration rates for platforms like QQ Music and NetEase Cloud Music increased from approximately 4% in 2018 to 20%-30% in H1 2025, with the underlying reason being the continuous increase in the proportion of paid content in the content pool and the gradual formation of user payment habits. Currently, MEITU's payment feature ratio is at a mid-to-low level compared to competitors. In the future, with better product experiences brought by strong AI effects and user payment habit cultivation, the company's product payment penetration still has significant room for improvement.