On the evening of December 19, Meitu (01357.HK) announced that on December 17, 2021, Meitu Networks, the Sellers, and Meidd entered into a Sale and Purchase Agreement in which Meitu Networks agreed to purchase a 20.67% equity interest in Meidd Technology at an aggregate Consideration of approximately RMB 79,741,920 (equivalent to approximately HK $97,782,857). 

Once complete, Meitu Networks will hold an equity interest of 63.35% in Meidd, and Meidd will become a subsidiary of Meitu. Meitu is optimistic about the future growth prospects of Meidd's ERP SaaS service, which is the top ERP service in the beauty retailer industry. Its business aligns well with Meitu’s vision to “empower the beauty industry and make beauty more accessible to our users”. Meidd's business development will also promote the development of Meitu’s imaging SaaS business and the beauty industry’s SaaS services, bringing synergy to Meitu’s future development in the business landscape.

The development prospect is in line with Meitu's vision and the opportunities for synergy are clear.

Founded in 2014 as an integrated mobile platform, Meidd has focused on providing enterprise services and SaaS products to personal skin care and beauty stores in lower-tier cities in China, helping stores reduce costs and increase efficiency. By the end of the third quarter of 2021, Meidd Technology connected over 11,500 beauty stores through its cloud-based enterprise management system.

In 2021, Meitu has been further deepening the implementation of its "Beauty Strategy", actively exploring the field of Beauty on the basis of stable operations. The completion of the equity purchase is expected to bring good synergy to Meitu's business development efforts.   

In terms of strategic synergy, Meidd aligns well with Meitu’s vision to “empower the beauty industry and make beauty more accessible to our users”. 

At the level of SaaS business collaboration, Meitu and Meidd will produce synergies in three areas: imaging SaaS life and entertainment, imaging SaaS work design, and beauty industry SaaS service.

There is a high degree of overlap between Meitu users and the customers in the beauty field. Meitu can further leverage the VIP customer resources of Meidd to expand the Meitu VIP subscription business, thereby developing an image SaaS business targeting beauty and beautification demands in everyday life scenarios.

Based on its SaaS services, Meidd belongs to a network of over 10,000 cosmetic stores that would benefit the expansion of Meitu’s image SaaS business in terms of design demands in work scenarios from VIP subscriptions.  For example, Meitu Design Studio in the Meitu App can improve the efficiency of beauty stores in design marketing elements.

MeituEve, an artificial intelligence SaaS skin analysis brand incubated by Meitu, will also be able to leverage on the extensive store network owned by Meidd to broaden sales channels.  

MeituEve's skin analysis technology can be functionally bundled up further with Meidd’s store management system in the future, helping beauty collection stores expand their business model and provide high quality SaaS services to the beauty industry.

Regarding social responsibility, Meidd serves customers with SaaS technology and big data insights, fully showing the advanteges of technology to empower the industry. Meitu and Meidd will jointly help beauty stores in second- and third-tier cities in China to reduce costs and increase efficiency, which can enhance the development of small, medium and micro enterprises to promote common prosperity and practice social responsibility.

Accelerating revenue growth will open up more commercial opportunities in the future

On April 9, 2021, Meitu acquired a 9.57% equity interest in Meidd, then holding 42.68% of Meidd's equity after the purchase. After completion, Meitu Networks will hold a 63.35% equity interest in Meidd and Meidd will become a subsidiary of Meitu. Meidd's financial results will be consolidated into Meitu's financial statements.

Based on SaaS services and with its large store network and big data consumer insights, Meidd began providing supply chain services for beauty products in early 2020, distributing beauty-related products to retailers in its network.  

With its strategic transformation and significant business development, Meidd’s revenue has significantly grown. Meidd has accelerated its growth, as evidenced by its revenue increasing by approximately 216% in the second half of 2020 compared to the first half of 2020 and by approximately 73.5% in the first half of 2021 compared to the second half of 2020. Based on estimates, Meidd's revenue in the second half of 2021 will increase approximately 230% compared with the first half of 2021; 2021 annual revenue will increase by approximately 330% compared to 2020; and supply chain revenue in 2021 will increase by approximately 416% compared with 2020.

Meitu is an AI-driven technology company that carries "beauty" as its core ideal, helping its users become more beautiful with image products and beauty management services and assisting the beauty industry toward digital transformation by providing SaaS services.

In the future, Meidd's business development will synergize with Meitu's imaging business and beauty industry SaaS services, opening up more business opportunities.