FAST NEWS: Meitu’s profit soars on higher VIP subscriptions

The latest: Chinese beauty app Meitu Inc. (1357.HK) announced on Monday it recorded a net profit of 228 million yuan ($31.3 million) in the first half of 2023, reversing a net loss of 266 million yuan in the same period last year. Its non-IFRS net profit surged 320% to 151 million yuan.

Looking up: Revenue from the company’s photo, video and design products jumped 62.2% to 602 million yuan, benefiting from higher VIP subscription rates, making it Meitu’s largest revenue source and fueling a 29.8% overall revenue increase to 1.26 billion yuan.

Take Note: The company’s R&D expenses rose by 10.8% to 294 million yuan, due to increased investment in its artificial intelligence generated content (AIGC) technologies.

Digging Deeper: Founded in 2008 and listed in Hong Kong in 2016, Meitu began as operator of a consumer-oriented beauty app for editing photos. It later started providing B2B services to businesses like cosmetic shops and photo studios. Since shifting its focus to business-, rather than consumer-oriented, customers, the company’s revenues have grown significantly, and it recorded its first-ever net profit of 94.14 million yuan last year. Entering 2023, the strong growth in VIP subscriptions and a one-time gain of 186 million yuan related to cryptocurrency investments helped to significantly improve its profits.

Market Reaction: Meitu shares jumped on Tuesday to close up 19.3% at HK$2.91 by the midday break. The stock now trades at the upper end of its 52-week range.

Translation by A. Au

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