Ethereum continues to skyrocket! The company has made a lot of money, and funds are joining forces again

With the help of the two major assets of Ethereum and Bitcoin, Meitu, which has been forgotten or even disliked by public fund managers for many years, finally became a fund group stock in just three months. It has received heavy positions from 31 public funds.

Market data on the evening of March 11 showed that since Meitu announced its investment in digital currencies in March 2021, its investment return on Ethereum has been as high as 1.45 times, and its capital position has been 65%.； Meitu's rate of return on Bitcoin is currently 35%, and its capital position accounts for 35%. The cumulative profit rate of its two major positions is 92%, and the market value of its positions is equivalent to RMB 1.379 billion.

Brokerage China reporters noticed that Meitu had been forgotten by fund managers for many years before deploying Bitcoin. As Meitu entered the digital currency market, especially the accelerating surge of Ethereum, Meitu entered the portfolio of public fund managers for the first time in 2023. The surge in digital currencies at the end of the fourth quarter of last year further attracted more funds to buy. Brokerage China reporters noticed that there are currently GF Fund, Southern Fund, E Fund, Yinhua and CCB Fund, etc., which have heavy positions in Meitu. Meitu recently announced on the Hong Kong Stock Exchange that the company's net profit in 2023 is expected to be approximately RMB 330 million to 370 million yuan, a year-on-year increase of approximately 200% to 230%.

Splitting Ethereum brings maximum benefits to Meitu

Meitu Company, a major holding of public funds, not only made huge profits on Bitcoin, but its return on investment on Ethereum exceeded investor expectations.

Data on the evening of March 11th showed that the price of Ethereum, the world's second largest digital currency, exceeded US$4,000, and its market value also exceeded US$480 billion. Ethereum is currently second only to Bitcoin in market value, and its current market value is about 34% of the latter. Bitcoin's current market value is as high as US$1.4 trillion, which is very close to the market value of Nvidia, the US technology leader.

Meitu is currently the first listed company in Hong Kong to announce its investment in digital currency assets. Its investment in Bitcoin is well known, but in fact, in addition to Bitcoin, Meitu adopts a multi-equilibrium strategy for digital currencies. Meitu’s investment position in Ethereum is higher and the cost is lower.

Brokerage China reporters noticed that Meitu announced two years ago that in announcements on March 7, 2021, March 17, and April 8, 2021, it announced that the company had purchased a total of approximately 31,000 Ethereum, 940 .89 Bitcoin, the capital size of the investment positions is approximately US$50.5 million in total in Ethereum, and a total of US$49.5 million in Bitcoin. The average holding cost is approximately US$1,629 per Ethereum, and US$52,600 per Bitcoin.

The above information is crucial, which means that among Meitu's total positions in digital currency assets, Ethereum has the highest position and the lowest cost, while Bitcoin's position is less than 50% and the cost is relatively high. This means that when Meitu suffered losses due to the decline of Bitcoin more than a year ago, the total position it invested in digital currencies did not actually suffer a loss.

And when the price of Ethereum, the world's second largest digital currency, skyrocketed, Meitu's profit on Ethereum was far greater than its return on Bitcoin. According to data on March 11, Meitu’s cumulative investment return on Ethereum is astonishingly high at 145%. The US$50.5 million it invested in Ethereum has become the current US$125 million, equivalent to RMB 898 million.

What about Bitcoin? The latest price of Bitcoin as of March 11 was US$71,100. Meitu's purchase amount was 940.89 Bitcoins, and the cost of the Bitcoin position was US$52,600. The total market value of Meitu's current Bitcoin positions was US$66.8973 million. Meitu's investment return rate on Bitcoin so far is only 35%, significantly lagging behind its earnings on Ethereum.

Calculated based on the size of various digital currencies held by Meitu, the current total position funds are approximately 192 million U.S. dollars, equivalent to RMB 1.379 billion. The total return rate over the three years of this investment in early March 2011 was 92%. These 9 Among the 2% return rate, Ethereum is the largest contributor to the return rate. Because Ethereum later rose faster and more violently than Bitcoin, Ethereum’s proportion of Meitu’s digital currency positions increased from about 51% before to 65% currently.

Due to the surge in Bitcoin, Meitu became a public offering group stock in 3 months

Fund managers' attention to Meitu is closely related to Meitu's large holdings of Ethereum and Bitcoin, especially when the holdings stabilize and rebound.

Before 2023, Meitu had been forgotten by fund managers and brokerage researchers for many years. However, as Bitcoin and Bitcoin continued to advance in the digital currency market, the market value of digital currencies held by Meitu continued to rise. Fund managers finally entered the fund manager's heavy position for the first time at the end of the second quarter of 2023, and the first public offering product after many years came from the leading public offering Southern Fund.

Industry insiders speculate that Southern Fund’s heavy position in Meitu is related to the company’s own business. Brokerage China reporters noticed that CSOP, a Hong Kong subsidiary of China Southern Fund, deployed Ethereum and Bitcoin businesses for the first time in December 2022. This "magic operation" of this leading public offering Hong Kong subsidiary provided the basis and reason for the "academic" public offering fund managers to buy Meitu. According to information disclosed by the fund company, the Southern Hong Kong Growth Fund managed by Wang Shicong included Meitu as a heavyweight for the first time at the end of June 2023.

“Even if public fund managers are optimistic about Ethereum and Bitcoin, they cannot directly say they are optimistic or buy them directly. They can only arrange listed companies with digital currency positions through a curve. The Hong Kong subsidiary of the leading public fund carries out digital currency business, which further provides some ingenious reasons and environment for fund managers to hold positions in Hong Kong stocks. "An industry insider in Shenzhen believes.

The "magic operation" of Southern Fund's Hong Kong subsidiary provides Southern Fund's fund managers with a reason to buy, and the fact that Southern Hong Kong Growth Fund, the leading public offering, holds a large position in Meitu, provides other public offering fund managers with a reason to buy Meitu. It is obvious that for academic-style public offering fund managers, buying a listed company that holds a large amount of Ethereum and Bitcoin goes against the "academic style" of public offering, which requires more reasons and excuses.

Three months after Southern Fund took a heavy position in Meitu, especially at the end of last year, Ethereum and Bitcoin started to accelerate again, and other public fund managers also began to flock in. Brokerage China reporters noticed that not only Southern Fund has deployed as many as six products to heavily position Meitu, but Yinhua Fund, GF Fund, CCBIT Fund, Yifang Fund, Dongcai Fund, etc. also began to invest heavily in Meitu at the end of last year, making this product that was once judged by fund managers as "unsavory" and "lack of coverage value" to become a group stock intensively held by funds for the first time at the end of December 2023.

Potential sale plan attracts fund managers to ease AI’s cash-burning needs

It is worth mentioning that the continued rise of Ethereum and Bitcoin assets has provided great support for Meitu’s performance, especially the potential disposal of digital currencies currently close to 1.4 billion yuan.

Meitu recently announced on the Hong Kong Stock Exchange that it is expected that the company's net profit will be approximately RMB 330 million to 370 million yuan as of December 31, 2023, a year-on-year increase of approximately 200% to 230%. Considering that Meitu will accelerate the deployment of AI visual large-scale models, and the technical competition and R&D layout of artificial intelligence require a large amount of R&D and computing resources, if Meitu sells related digital currency assets at the price on March 11, it will bring up to 1.379 billion yuan in cash.

Obviously, the continued rise of Ethereum and Bitcoin has provided financial conditions for Meitu to increase its investment in artificial intelligence. Wu Xinhong, founder and CEO of Meitu, once said that the development of AI technology has brought huge demand, and also prompted Meitu to accelerate the pace of customer acquisition. In the new field, Meitu is no longer the only player and must look for opportunities among many competitors. The company also stated that with the advancement of the company's globalization strategy, its products have covered approximately 195 countries and regions around the world, prompting the continued rapid growth of subscribers outside mainland China, thereby driving an increase in global imaging and design product revenue. In other words, the company's imaging and design products business has high gross profit margins, and the rapid growth of gross profits in this business has driven the operating leverage effect. Therefore, as of December 31, 2023, the company's net profit has increased significantly. “Looking to the future, we will continue to implement the systematic AIGC strategy, launch more applications and functions for productivity scenarios, and optimize pricing strategies. ”Meitu said it believes there is still a lot of room for growth in subscription penetration and average revenue per paying user in the future.

Regarding the assets of Ethereum and Bitcoin, relevant sources from Meitu pointed out that the company has not made any further investments in this area. The company has judged that AI artificial intelligence is expected to make a significant contribution to the company's profits in the future. Ethereum and Bitcoin are no longer the company's central focus. Although Meitu is willing to sell Ethereum and Bitcoin at the appropriate time, it currently lacks a specific disposal plan.

But for fund managers, any possible sale of Ethereum and Bitcoin assets means that this Internet player, which is about to embark on the artificial intelligence competition track, will greatly ease the demand for funds in technology research and development and talent competition, and significantly improve the cash reserves of listed companies.

Editor: Wang Yunpeng

Proofreading: Peng Qihua

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