--- title: "Meitu 1H26 Flash: Where Next for the 'Small but Beautiful' Strategy?" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/43604679.md" description: "After the HK market close on Aug 26 (Beijing time), $MEITU(01357.HK) posted its 1H26 results, a mixed picture. Growth has slowed as the company tightens focus and prioritizes operating efficiency.Given the profit alert issued on Jul 30, trading on Jul 31 suggested the market was broadly satisfied with the print. However, the subsequent re-rating lacked momentum, indicating investors remain unconvinced about the forward growth trajectory.Before sharing Dolphin Research's view, we will first revisit the core takeaways from our FY25 review. The foundational thesis around lifestyle use cases has been challenged..." datetime: "2026-08-26T12:26:46.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/43604679.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/43604679.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/43604679.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # Meitu 1H26 Flash: Where Next for the 'Small but Beautiful' Strategy? **After HK market close on Aug 26 (Beijing time),**$MEITU(01357.HK) **released 1H26 results; overall impression was mixed, with growth slowing and decent execution on efficiency-focused retrenchment.**The company had pre-announced on Jul 30. From the Jul 31 tape, the initial read was relatively positive, but the ensuing re-rating momentum was weak, suggesting low confidence in the forward growth path. Before Dolphin Research shares its view, a quick recap of our FY25 take: the core logic in lifestyle scenarios took a hit, while visibility in productivity scenarios was limited.**Has it improved over six months? Our core conclusion: the lifestyle contraction seems largely price-in, and the key driver still hinges on a breakout in productivity. The rapid user growth there is a major positive; next, we need to validate monetization.** Note: BBG consensus appears skewed; vs. the latest sell-side estimates we track, profit may be slightly better. Stripping out expectations, H/H core OPM improved by 300bps on tight cost control. **1) Biggest miss: Gross profit, missed by 7 pct.** **Top line:** core subscription revenue missed by 5 pct.Drivers: **a) MAU:** Per UBS, the overall lifestyle market is contracting; company MAU fell from 252 mn to 249 mn in 1H, and the thesis that LLMs erode its use cases remains hard to refute.**Productivity MAU materially beat at 33 mn (+43.5% YoY).** By region, Intl MAU was ~5 pct below expectations, a headwind to the overseas ramp. **b) Subscribers:** total subs hit a record 18.44 mn, but net adds slowed sequentially.**At the margin, paid-user growth decelerated in both scenarios, raising concerns around monetization.** **c) Subscription penetration:** overall reached 6.6%, continuing to climb, but the lift fell short of our expectations.Details: \- Lifestyle penetration was 6.5%, with steady growth, implying further ARPPU decline. This partly reflects intensified competition as MAU shrinks in the segment. \- Productivity penetration fell H/H from 9% to 7.1%. We see the drop driven by rapid enterprise (B-side) MAU expansion alongside slower paid-user growth.That said, with enterprise ARPPU rising H/H, monetization quality is solid. **The 2H focus is whether monetization delivers on management’s guided breakout pipeline.** **COGS:** a sizeable miss for two consecutive prints. This time, three main reasons: first, the mix of high-margin ads declined further; second, productivity products are still early-stage—despite strong user growth, API costs are a high share of revenue and scale benefits have yet to kick in; third, third-party API costs continue to compress GP (as noted last time, the strategy to spread compute costs via subscription plans may be coming at the expense of margin). **2) Opex control remains solid.** \- Although we previously flagged potential user acquisition via heavier promo, marketing spend remained disciplined.- The Model Container strategy shifts R&D toward vertical model training and app-layer optimization. For a focused player, this is a pragmatic path. **3) Shareholder returns:** assuming a 40% cash dividend and the remaining HK$70 mn buyback authorization, total shareholder return would be approx. HK$600 mn. Versus a current market cap of ~HK$16 bn, **implied yield is ~3.5%.** **4) On the earnings call, watch guidance on overseas strategy, productivity, monetization, and new products; cf.**[**Meitu (Trans): Monetization Focus Shifts to AI Compute**](https://longbridge.com/zh-CN/dolphin/post/43604029)**.** All in, while the stock does not look expensive and Dolphin Research reiterates Meitu’s autonomy and controllability as core moats in the AI era—offering bottom value—the market needs imagination.The biz remains in the proof phase of its second growth curve; opportunities are still mainly tactical in the near term, with limited clarity on long-term growth. We will track whether AI erodes or enables vertical applications hereafter. \ Related articles: [Meitu (Trans): Monetization Focus Shifts to AI Compute](https://longbridge.com/zh-CN/dolphin/post/43604029) [Meitu: In the AI Agent Era, Is There No Room for 'Small but Beautiful' SaaS?](https://longbridge.com/zh-CN/dolphin/post/39590126) [Meitu: As AI Sweeps Through, Do Vertical SaaS Have a Path?](https://longbridge.com/zh-CN/dolphin/post/37196476) [Meitu: A Bumpy 'Small but Beautiful' — Where Is the Bottom?](https://longbridge.com/zh-CN/dolphin/post/37380799) **Risk disclosure and statement:**[**Dolphin Research Disclaimer and General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [01357.HK](https://longbridge.com/en/quote/01357.HK.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**