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Public company info - Meitu Inc. , 01357.HK

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Meitu Inc., 01357.HK - Company Profile
Chairman CAI Wensheng
Share Issued (share) 4,350,000,000
Par Currency U.S. Dollar
Par Value 1.0E-5
Industry E-Commerce & Internet Services
Corporate Profile Business Summary: The group is principally engaged in the provision of online advertising and other internet value added services (such as live streaming and e-commerce), development, manufacture and sales of smart hardware and related accessories in the People’s Republic of China (the “PRC”), Hong Kong and other countries and regions. Performance for the year: Revenues reached RMB977.9 million and grew 3.2% year over year. In particular, revenues growth from online advertising remained strong and grew 21.1% year over year to RMB751.9 million in 2019. Gross profit reached RMB699.3 million and grew 42.1% year over year. Gross margin also expanded to 71.5% from 51.9% due to growing proportion of higher-margin businesses in the revenue mix such as premium subscription and online advertising. Adjusted Net Loss from continuing operations attributable to Owners of the Company for the year 2019 reduced significantly by 77.7% to RMB190.8 million, with a positive Adjusted Net Profit attributable to Owners of the Company in the fourth quarter of 2019. Business Review The Group has continued to increase the user engagement of the Group’s social app Meitu, with the average daily time spent of the social users reaching 13.6 minutes in the second half of 2019. In particular, as the Group furthers reinforced the platform’s positioning in beauty-related content in late 2019, the Group has seen encouraging improvement in the number of high-quality content creators in early 2020. After the completion of the acquisition of approximately 57.09% effective equity interest of Dajie Net Investment Holdings Ltd. (“Dajie Net”), the two companies have also started to work closely to further drive Meitu’s social ecosystem. For example, Dajie Net has recently launched a new initiative, a turnkey solution for MCN (multi-channel networks) companies to source, identify, train and manage talents’ human-resources needs, leveraging Dajie Net’s years of recruitment and human resources expertise. On the one hand, this is a meaningful market opportunity as there has been a shortage of new talents (or “KOL”s) while the demand from brands and advertisers for these talents has remained strong; on the other hand, Dajie Net is also able to drive more high-quality content creators through Meitu’s social platform. In 2019, the Group has achieved a significant growth of both gross profits and gross profit margins year over year due to the following: i) Revenue from the Group’s global advertising revenues, which made up 76.9% of the Group’s 2019 total revenue, achieved a robust growth. It is mainly due to an increase in average revenue per domestic key account advertiser, as the Group offer comprehensive marketing solutions geared towards the needs of these large advertisers. The Meitu app has also contributed to the advertising revenue growth through its social features that enriched the advertising formats with higher client interests. In addition, revenue from the emerging premium subscription business surged, which partly offset the decline from the Group’s legacy Meipai live streaming show. ii) The gross profit growth significantly outpaced the revenue growth in 2019 and such growth even accelerated in the fourth quarter, as the fast-growing online advertising and premium subscription business carried much higher gross margins compared to live-streaming. iii) Cost of revenues, such as bandwidth costs and content monitoring fees, had declined year over year due to implementation of a cost optimization program that focused on efficiency enhancement. The Group has also significantly reduced sales and marketing expenses, particularly promotional expenses, as the Group reduced its emphasis in driving user acquisition through paid downloads and large marketing campaigns. Instead, the Group focused on driving organic downloads through introducing innovative features and user experience improvements in its apps. The Group has also completed an expense optimization plan that drove a reduction in both research and development expenses and general and administrative expenses. Its effect on expenses reduction was more pronounced towards the end of 2019. As a result of the foregoing, the Group has generated Adjusted Net Profit in the fourth quarter of 2019. Prospects: Looking ahead, the Group will focus on maintaining the Group’s unique position in the beauty industry by providing a variety of beauty-related offerings and continue to improve the Group’s monetization capability. In the near term, the Group believes how the global public health situation plays out is likely to have significant implications to the Group’s profitability. The Group has already felt some negative impact in the Group’s advertising business due to the Novel Coronavirus (COVID-19) outbreak in China during early 2020 as certain brand advertisers have become more cautious in spending their advertising budgets. On the other hand, some new initiatives such as the remote dermatologist consultation services that the Group is going to launch in the second quarter of this year may potentially benefit as people may continue to avoid going out. In short, it is still too early to predict the Group’s profitability this year given the great uncertainty ahead, but the Group will remain very vigilant and nimble, striving to create long-term shareholder value.

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