Alibaba And Meitu Forge Strategic Tech Partnership

Meitu Stock Soars on Alibaba Partnership News

Shares of Chinese photo-editing app operator Meitu experienced a significant surge in Hong Kong, reaching a seven-year high on Wednesday. This followed a major announcement: a strategic partnership with e-commerce titan Alibaba Group Holding and the issuance of US$250 million in convertible bonds to an Alibaba subsidiary.

Details of the Strategic Investment

According to Meitu's filing after trading hours on Tuesday, Alibaba.com China conditionally agreed to subscribe to the convertible bonds. These bonds come with a three-year term and feature "an initial conversion price of HK$6 per conversion share." It is worth noting that Alibaba owns the South China Morning Post.

Expanding Horizons: E-commerce, AI, and Cloud Collaboration

Meitu, headquartered in Xiamen, a city in southern Fujian province, outlined that this strategic collaboration will span several key technological areas. These include e-commerce, artificial intelligence (AI) technology, and leveraging Alibaba's extensive cloud computing capabilities.

The market reacted positively to this news. Meitu's shares jumped an impressive 18.98 per cent, closing at HK$7.02 on Wednesday, marking the highest point for the stock since 2018. Concurrently, Alibaba’s shares also saw an uptick, closing 1.15 per cent higher at HK$123.10.

Commitment to Cloud Infrastructure

As part of the agreement, Meitu has also committed to purchasing at least 560 million yuan (approximately US$77.6 million) worth of cloud computing services from Alibaba over the next three years. Cloud computing is crucial for modern enterprises, enabling them to manage and distribute a wide array of software and digital resources over the internet as an on-demand service, much like electricity from a power grid.

A Foundation for Long-Term Growth and AI Innovation

The filing emphasized that this strategic collaboration is anticipated to serve as "the foundation of a long-term partnership" between Meitu and Alibaba. Furthermore, this partnership is expected to empower Meitu "to seize the opportunities brought by AI, driving the company’s long-term growth."