Meitu Reports Cryptocurrency Purchase but No Transactions

02/20/2023 15:04 • Tech Trends • 108 views

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.

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

Analysis based on this information:

Meitu, a renowned Chinese tech firm, has recently announced its purchase of cryptocurrency in a statement released on the Hong Kong Stock Exchange, but since then, it has made no transactions relating to this investment. Meitu further stated that the Group would not be selling the cryptocurrency they purchased, according to its cryptocurrency investment plan.

In a recent development, Meitu has estimated a loss of approximately 285 million yuan in its annual performance as of December 31, 2022, based on the International Financial Reporting Standards. The loss is expected to be caused by the impairment of the cryptocurrency purchased by the Group. The company’s decision to recognize the impairment loss might be due to the volatile nature of cryptocurrencies, which can experience significant price changes over a limited period.

However, according to the statement, the impairment loss of the purchased cryptocurrency would offset the fair value gains of some of the Group’s financial assets. The changes of these financial assets would be included in the current profit and loss of the Group’s net income. Thus, the group may have purchased cryptocurrency with the primary purpose of hedging their financial assets against fair value gains.

The decision by Meitu to purchase cryptocurrency highlights the growing trend of big corporations investing in digital assets. Over the past few years, cryptocurrency has seen a surge in popularity and demand, especially with bitcoin’s record-breaking achievements last year. Meitu’s purchase of cryptocurrency may be a strategic move to capitalize on this trend and safeguard against losses to its financial assets. However, recognizing the possible loss in value demonstrates the potential risks of such investments.

In conclusion, Meitu’s recent announcement of cryptocurrency investment but no transactions raises good questions. While the decision to recognize loss in cryptocurrency might appear unpopular, it highlights the potential risks and volatility associated with the digital asset world. Furthermore, Meitu’s hedging of cryptocurrency investments against financial assets’ fair value gains showcases the increasing trend of corporations investing in digital assets.

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Meitu Reports Cryptocurrency Purchase but No Transactions

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

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