Meitu: The confirmed impairment loss of cryptocurrency is about 285 million yuan

It is reported that Meitu announced on the Hong Kong Stock Exchange that since the purchase of cryptocurrency, the Group has not purchased or sold any cryptocurrency according to the cryptocurrency investment plan. According to the International Financial Reporting Standards, the Group is expected to recognize an impairment loss of about 285 million yuan in the annual performance of the Group as of December 31, 2022 for the purchased cryptocurrency. The impairment loss of the purchased cryptocurrency hedges the impact of the fair value gains of some financial assets measured at fair value and the changes of which are included in the current profit and loss on the net profit of the group.

Interpretation of this information:

Meitu, a technology company that develops image and video processing software, has reported to the Hong Kong Stock Exchange that they have not purchased or sold any cryptocurrency following their initial investment. However, the Group is expected to recognize an impairment loss of around CNY 285 million in their annual performance as of December 31, 2022, due to the purchase of cryptocurrency. This impairment loss offsets the impact of fair value gains on some financial assets measured at fair value that are included in the current profit and loss on the net profit of the group.

This announcement provides two important updates on Meitu’s cryptocurrency investment. First, the Group has not purchased or sold any cryptocurrency since their initial investment. This may indicate a lack of confidence in cryptocurrency or potentially an approach to wait and see how the market develops. Second, the Group is expecting a significant impairment loss due to their purchase of cryptocurrency. This loss may indicate that the cryptocurrency investment did not perform as anticipated or that there were significant fluctuations in the market that affected the investment’s value.

Additionally, Meitu’s announcement suggests that the impairment loss will offset the impact of fair value gains on some financial assets. This highlights the need for careful financial accounting when investing in cryptocurrency, which can have significant fluctuations in value. The announcement suggests that the Group’s overall financial performance could have been negatively impacted by the cryptocurrency investment if it were not for the offsetting impairment loss.

In summary, Meitu has not made any further purchases or sales of cryptocurrency since its initial investment, and the Group is expecting a significant impairment loss in their annual performance due to the investment. The impairment loss mitigates the impact of fair value gains on some financial assets, highlighting the importance of careful financial accounting when investing in cryptocurrency.