Meitu (01357.HK): The continuous development of generative AI, while being a core catalyst

$MEITU(01357.HK)  delivered solid performance in the first quarter of 2026, with revenue from its core imaging and design products (PVD) surging 34.3% year-on-year to RMB 852 million. The group's total number of paying subscribers exceeded 17.9 million, an increase of 30.2% compared to the same period last year.

In terms of business segments, productivity applications became a growth highlight, with their revenue growing 45.4% year-on-year on a comparable basis, and the number of paying subscribers soaring 52.9% to 2.34 million. The AI-driven productivity application ARR (Annual Recurring Revenue) has reached RMB 580 million, and AI computing power point consumption has significantly increased, reflecting users' deepening reliance on advanced features. Furthermore, lifestyle applications benefited from the globalization strategy, performing strongly in overseas markets such as Japan, South Korea, and Southeast Asia, effectively alleviating market concerns about large language models (LLMs) replacing professional photo editing tools.

Looking ahead, the continued development of generative AI (AIGC), while a core catalyst, also brings multiple challenges. Market competition is intensifying, and rising R&D and AI computing power costs may compress profit margins. Although Meitu possesses strong growth momentum and reasonable valuation, investors still need to remain patient during the rotation of market funds into the software sector.

Source: KGI Securities