UBS: Meitu (1357.HK) GCC 2026 — Business Development on Track
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Following a GCC conference meeting with Meitu, UBS notes that business development remains firmly on track. The company reported increased token usage within its productivity products following the integration of AI agents. With core features now largely in place, management's execution focus has shifted toward fine-tuning and quality enhancements to drive paid user growth and boost ARPU. Notably, Meitu has observed some customers spending well above their subscription fees, primarily driven by usage-based AI functionalities.
The company's partnership with Alibaba is not expected to generate significant new user growth, given Meitu's already high penetration among e-commerce users. However, the collaboration should help Meitu better understand customer needs and refine its products. Meitu views large language model (LLM) providers as upstream suppliers rather than competitors. Its recent viral features are built upon leading image and video LLMs. As LLM capabilities continue to evolve, Meitu anticipates delivering superior user results, thereby enhancing willingness to pay.
Valuation remains a key consideration, with the stock currently trading at 29x 2026E P/E. UBS forecasts EPS of 0.21, 0.28, and 0.37 RMB for 2025, 2026, and 2027, respectively.
UBS maintains a Buy rating on Meitu (1357.HK) with a 12-month target price of 14.10 HKD based on a target P/E methodology. As of January 12, 2026, the current share price stands at 8.86 HKD. Upside risks include faster-than-expected global expansion and accelerated paid user growth driven by the DesignKit product. Downside risks encompass slower globalization and intensified competition from tech giants or AI startups leveraging declining LLM inference costs.