GMTEight ExclusiveMEITU (01357) repeatedly reduce holdings at high points, Caesars and his family have cashed out nearly 1.7 billion Hong Kong dollars since going public.

Even with the help of AI to achieve performance and stock price taking off together, MEITU (01357) still can't "quit" selling shares. On February 25, Meitu announced that a major shareholder, Cai Wensheng, sold 128 million shares of the company through Longlink Capital Ltd from February 17 to February 21, 2025, accounting for approximately 2.81% of the total issued shares of the company. After this reduction, Cai Wensheng's shareholding decreased further to 20.62%. Although MEITU emphasized in the announcement that the company's founder, chairman and CEO Wu Zeyuan will further increase the company's shares at an appropriate time after the publication of the annual performance announcement and the end of the lock-up period (after March 18, 2025), the stock price still fell, leading the Hong Kong stock market AI concept stocks to drop by a 12% opening rate. By the close, the company was at 5.92 Hong Kong dollars, with a trading volume of 1.857 billion Hong Kong dollars, a decrease of 4.2%, and a total market value of 27.03 billion Hong Kong dollars. It is understood that benefited from the continued efforts to monetize AI, MEITU's stock price has risen strongly, with a cumulative increase of up to 1.25 times since the beginning of the year. However, this proud valuation cannot withstand the anxiety of the major shareholder. Selling off Since its listing, the Cai Wensheng family has cashed out nearly 1.7 billion Hong Kong dollars According to observations, since its listing, Cai Wensheng and his family have conducted large-scale selling of MEITU shares multiple times. Cai Wensheng's shareholding has decreased from an initial 38.32% to the current 20.62%. More importantly, the selling behavior of Cai Wensheng and his family often occurs at temporary high points in the stock price (such as 2017 and 2025), causing controversy over "cashout exits". At the end of 2016, MEITU was officially listed on the Hong Kong Stock Exchange. The company, following Tencent, became the largest Internet company listed in Hong Kong. The prospectus showed that Cai Wensheng and his son Cai Rongjia held 38.32% and 7.1% of the shares, respectively, at the time of listing. At that time, in the trend of "mobile social + beauty economy", after joining the Hong Kong stock connection, it received countless funds. From the end of 2016 to mid-March 2017, MEITU's stock price reached a high of 23.05 Hong Kong dollars, with a market value approaching 100 billion Hong Kong dollars. Just as investors were celebrating the capital feast, Cai Rongjia, the son of Cai Wensheng and a major shareholder, began the "selling off Meitu" road. Public information shows that on April 12, Cai Rongjia sold 300,000 shares of Meitu on the market at an average price of 11.86 Hong Kong dollars per share. After the reduction, Cai Rongjia held about 254 million shares of MEITU through Ultra Colour, with a shareholding ratio of 5.99%. On May 5th, Cai Rongjia sold another 0.01% on the market at 10.8 Hong Kong dollars per share, about 300,000 shares, reducing the shareholding to 4.99%. As the shareholding has dropped below 5%, no further disclosure is required for future reductions. For the period from April 12 to May 5, using the average share price of 11.239 Hong Kong dollars for Meitu during that period, Cai Rongjia cashed out 475 million Hong Kong dollars in just 14 trading days, in addition to the sales from the listing to April 12, the cashed out amount was about 912 million Hong Kong dollars. The founder's son decisively left the field, causing a stir in public opinion. Cai Wensheng responded by saying that his son reducing his shareholding was part of the "greenshoe arrangement". Regardless of whether the explanation is reasonable, for the Cai Wensheng family, the 912 million Hong Kong dollars are finally secure. Coincidentally, at this time, Cai Wensheng once again sold off at a high point, undoubtedly once again damaging investor confidence. Since 2025, AI has brought glory to MEITU once again. From 0.485 Hong Kong dollars in 2022 to 6.75 Hong Kong dollars this year, the stock price has increased nearly 14 times. As MEITU surged in the AI investment wave, Cai Wensheng's large-scale selling followed suit. From February 17 to 21, the average price of Meitu was 6.162 Hong Kong dollars. If calculated based on 128 million shares, Cai Wensheng has cashed out 790 million Hong Kong dollars. According to the Zhitong App's calculation, with two large-scale sells, Cai Wensheng and his family have cashed out nearly 1.7 billion Hong Kong dollars since the company's listing. Significantly higher-than-expected annual profit Is the AI momentum enough? MEITU's unexpectedly strong profit growth and the accelerated landing of domestic AI applications undoubtedly provide confidence for the company chairman to "increase holdings". Since Wu Xinhong took the helm, Meitu has focused on AIGC while moving away from the currency circle. In December 2024, Meitu sold all of its bitcoins. The announcement showed that Meitu began selling its cryptocurrency holdings in November 2024 and had sold them all by December 4, with a total profit of about $79.63 million. Meitu's story of speculating in cryptocurrencies ended with a "narrow victory". For Meitu now, throwing itself into the AI strategy wholeheartedly has become the key to gaining favor from investors. Fortunately, monetizing AI has made Meitu a bit tougher. The financial report shows that the company's adjusted net profit attributable to shareholders may achieve a year-on-year growth of about 52%-60% in 2023. This data far exceeds Morgan Stanley's forecasted 49% growth rate. Looking back at Meitu's adjusted net profit attributable to shareholders in 2023 was 370 million yuan, and Morgan Stanley estimates that the median value of this data will reach 575 million yuan in 2024, 5% higher than market expectations and 4% higher than their previous guidance, which undoubtedly shows that Meitu has made significant breakthroughs in profitability in 2024. This significant growth in performance is not accidental. The company stated that the most core reason for the significant improvement in profitability is the rapid growth in revenue of the core business "image and design products" driven by AI technology, and the high gross profit nature of this business drove the company's overall gross profit and gross profit margin to double year-on-year. This was already reflected in the first half of the year. At the same time, although the research and development investment related to AI technology and products has significantly increased, the company's comprehensive operating expenses have increased less than the gross profit, further enhancing the profitability. Specifically, AI improves product strength and drives payments, 24M7 Meitu's entire product line paid MA.In China, 41% of users use generative AI to generate images. In 2024, the company's native AI product, Meitu Design Studio, ranked third in the online design track (China region). The product's revenue in 2024 is expected to double to over 200 million yuan, and the company is actively promoting the product's overseas expansion. Meitu Design Studio has already adopted DeepSeek technology, primarily for AI-generated PPT-related functions.In addition, Meitu's AI large model technology has tested cooperation with Kelin and DeepSeek besides self-research. DeepSeek solves the pain points of computing power constraints and performance of large models, and it is expected that Meitu's AI application product performance and efficiency will be improved. CMSC expects the company to achieve revenue of 3.63, 4.64, and 5.76 billion yuan in 2024-2026, with adjusted net profit attributable to the parent company of 0.58, 0.81, and 1.02 billion yuan, corresponding to PEs of 31.8, 22.7, and 18.0x. However, in the long term, the market potential has been verified, and competition among players is increasing. As a leading player in the industry, after seizing the first wave of AI dividends, how Meitu achieves the long-tail effect is a focus of the market attention. A very important issue is that after nearly two years of technological iterations, everyone is laying out AIGC, the difficulty is not in technology, but in user experience. In this regard, Meitu, which is sprinting on the AI road, seems to be lacking. It is worth noting that with the fierce competition among similar products domestically, in the first half of 2024, Meitu's monthly active users in mainland China showed signs of decline. According to its semi-annual report, when dividing monthly active users by geographical location, mainland China had 173 million, a year-on-year decrease of 0.2%. AI applications are not speculative behaviors of small bets on big returns, but a marathon that requires time and patience. While it is pleasing to seize the dividend and lead temporarily, continuous efforts in the later period are also very important. In conclusion, regardless of how the behavior of reducing holdings evolves, Cai Wensheng has already withdrawn completely. While retail investors are still contemplating and eagerly hoping to discover a universal abstract rule that can be applied everywhere in the value, the deep and complex nature of the capital market has repeatedly played out stories of harvesting great wealth with just one announcement.