This report (Reporter Li Haoyue)
Bitcoin has continuously hit historical highs since the beginning of this year. As of December 30, Bitcoin was at $93,574.2, hovering below the $100,000 mark.
Prior to this, Meitu Inc. (Xiamen Meitu Mobile Technology Co., Ltd.), a Hong Kong-listed company that had entered the cryptocurrency investment market in China, chose to sell all of its holdings of cryptocurrencies and focus on AI applications in the fields of imaging and design.
On the evening of December 4th, Meitu, Inc. announced that as of December 4, 2024, it had sold all of its purchased cryptocurrencies for approximately $180 million in total cash consideration, realizing a profit of approximately $79.63 million (equivalent to about 571 million RMB).
Meitu Inc. said that the board of directors plans to use about 80% of the net proceeds from the sale for special dividends, and the remaining net proceeds from the sale will be used as general operating funds for image and design products mainly based on paid subscriptions.
Take profits at the high point to cut off the risk
The cryptocurrency that Meitu liquidated this time was purchased in 2021.
Public information shows that Meitu purchased Ethereum and Bitcoin three times in 2021, with a total purchase of approximately 31,000 Ethereum and 940.89 Bitcoin, at a total price of 50.5 million US dollars and 49.5 million US dollars respectively, with a total cost of up to 100 million US dollars.
However, the investment risk is huge. In 2022, the sharp decline of Ether and Bitcoin once caused losses to Meitu’s performance. In July of that year, Meitu issued a profit warning, expecting a net loss of approximately 274.9 million to 349.9 million yuan as of June 30, 2022, mainly due to the devaluation of purchased cryptocurrencies.
In recent years, the price of Bitcoin has experienced large fluctuations, and its speculative nature has been increasing. Now, with the booming cryptocurrency market, Meitu has chosen to end its “cryptocurrency journey”.
Chen Xiaohua, director of the Blockchain and Data Elements Professional Committee of the China Mobile Communications Federation, told Securities Daily that from the perspective of financial soundness, Meitu’s sale of cryptocurrencies is a rational choice to reduce volatility risks and improve financial liquidity in the current market environment. In addition, as countries continue to tighten regulations on the cryptocurrency market, selling cryptocurrencies will help companies avoid potential legal troubles.
Focus on the main business and actively go global
This time, the clearance of cryptocurrencies, Meitu also said that due to the strong growth momentum of image and design products mainly based on paid subscriptions, it will focus more on this main business.
In fact, in 2024, Meitu’s image and design products business made remarkable progress. Its performance report for the first half of 2024 showed that Meitu achieved a total revenue of 16.2 billion yuan, an increase of 28.6% year-on-year. The adjusted net profit attributable to the parent company’s equity holders was 270 million yuan, an 80.3% increase year-on-year. Among them, the revenue from image and design products business, mainly driven by paid subscriptions, reached 9.3 billion yuan, accounting for 57.4% of the total revenue. In the first half of the year, Meitu’s paid subscription users exceeded 10.81 million, reaching a historical high, with a paid penetration rate of approximately 4.2%.
What opportunities has Meitu seized? Meitu told Securities Daily that with the outbreak of generative AI, the image and design product industry has ushered in a great wave of innovation dividends. “Generative AI technology further enhances the attractiveness of Meitu’s series of products, providing users with better image and video processing, visual design creation, and other functions, leading to a rapid increase in the penetration rate of paid subscribers and a substantial growth in subscription revenue.”
The international investment bank Morgan Stanley also sees the value of Meitu. In October of this year, it first gave Meitu a “buy” rating and emphasized two key factors that are optimistic about Meitu in its research report: the business model of paid subscriptions and the penetration rate of paid services.
It is worth mentioning that while major enterprises are still exploring the commercial landing scenarios of AI large models, Meitu has already made profits early with the help of AI, taking a shortcut. Based on this, Meitu has made a big move to cut off and encrypt the connection with cryptocurrency, and inject funds into its main business, which can provide huge support for subsequent strategic businesses.
It is understood that Meitu is aiming at the global market and actively going global in the next step.
“We will focus on the image and design product business around the ‘productivity and globalization’ strategy. As more products are successively launched in different countries, we are also accelerating the global talent layout to support the follow-up development of new and old products,” said Meitu.
Morgan Stanley has also recently disclosed the overseas strategic layout of Meitu Inc. According to its introduction, in the past six months, Meitu has set up offices and recruited overseas staff in the United States, Australia, the United Kingdom, and other places. Meitu actively expands overseas, partly based on the payment habits and willingness of overseas users, and the huge growth space of payment penetration in overseas markets; on the other hand, Meitu believes that its flexible product strategy and accumulation in specific vertical fields are expected to gain a larger market space overseas.
(Edited by Zhang Yupeng)
Securities Daily Voice
Securities Daily is sponsored by the Economic Daily and is designated by the China Securities Regulatory Commission (CSRC), China Insurance Regulatory Commission (CIRC), and China Banking Regulatory Commission (CBRC) as the newspaper for disclosing information.
Source: Sina
Author: Securities Daily Voice
