Goldman Sachs initiates coverage on MEITU with a "Buy" rating and a target price of 16 yuan

Goldman Sachs' research report points out that generative artificial intelligence has driven MEITU (01357.HK) to upgrade from a "beautification tool" to an "AI photo and video generation and editing application," expanding its market from consumer entertainment to enterprises (such as e-commerce and advertising) as productivity tools, thereby boosting monthly active users, payment ratios, and average revenue per user (ARPU) growth.

Goldman Sachs has initiated coverage on MEITU with a "Buy" rating and a target price of HKD 16, which corresponds to a forecasted price-to-earnings ratio of 33.1 times for 2027, compared to an expected average annual net profit growth of about 44% from 2027 to 2028; the operating profit margin is expected to rise from 21% in the first half of 2025 to a forecasted 34% in 2028.

Goldman Sachs also predicts that MEITU's revenue compound annual growth rate from 2025 to 2030 will be 29%, with the share of enterprise/productivity revenue expected to rise to 44% by 2030 (compared to an expected 12% in 2025); the global AI video and image creative market size is projected to grow at a compound annual growth rate of 44% from 2025 to 2030, reaching USD 39 billion, with MEITU's global AI video/image market share expected to rise to 2% and 17% by 2030 (compared to an expected 1% and 13% in 2025)