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Hong Kong company reporting season

Meitu narrows net loss by 94pc in first half as advertising and smartphone sales help

Chinese selfie-enhancing app provider Meitu posts a 94 per cent decline in its net loss, boosted by smartphone sales and its advertising business

PUBLISHED : Friday, 25 August, 2017, 2:13am
UPDATED : Friday, 25 August, 2017, 6:10pm

Meitu, a Chinese photo-enhancing app provider and smartphone maker, posted a 94 per cent decline in net loss in the first half of 2017 on Thursday, helped by strong smartphone sales and online advertising revenue.

Net loss stood at 131.7 million yuan (US$20 million), or 0.03 yuan per share, in the first six months of this year, compared to 2.1 billion yuan in the same period last year.

That topped the consensus estimate of a net loss of 75 million yuan, a Bloomberg poll showed.

“Many high-end advertisers told me they have been waiting for an advertising platform like Meitu for very long, because there is no other internet platform that has so many female users,” said Gary Ngan, the chief financial officer at Meitu.

The company attributed its smaller net loss to strong revenue growth from online advertising, in-app paid items and smartphone sales.

Meitu’s interim revenue soared 272 per cent to 2.1 billion yuan from 585 million yuan a year earlier.

Its smartphone sales during the period rose 274 per cent year-on-year to 1.9 billion yuan, while the segment of internet services and others, which include online advertising and paid services, jumped 762 per cent year-on-year to 246 million yuan.

Meitu’s three apps -- Meitu, BeautyCam and Meipai -- had 481 million monthly active users (MAU) at the end of June, up 7.8 per cent from the same period last year. The main functions of Meitu, the app, and BeautyCam are photo editing and selfie beautifying, while Meipai helps users edit and live-stream short videos.

Meitu has been exploring the possibility of distributing advertisements catering to users’ real interests and needs, especially on beauty and make-up products, said Ngan.

The number of MAUs in mainland China rose 2.7 per cent to 387 million, while overseas users increased 35.9 per cent to 93,743.

Meitu will accelerate its investments in staff and technology in the second half of this year, said Ngan. The company expects to see a net loss for the full year, but predicted that it will start making a profit in 2018.

Shares of Meitu closed up 0.2 per cent to HK$12.98 on Thursday before the financial results were announced.

Its share price has gained 55 per cent since the beginning of this year. It had soared 110 per cent to HK$18 by March 17, following its listing in December, and had fallen 27 per cent since then.

Meitu was the second-largest technology public listing in Hong Kong, behind Tencent Holdings in 2004, as it raised US$4.6 billion.

Hong Lin, an analyst at Haitong Securities, said before Meitu's results were announced that the focus would be on “whether the MAU growth of Meitu continues".