Investment Rating - The investment rating for Newborn Town (09911.HK) is "BUY" with a target price of HK$ 3.31, reduced from the previous target price of HK$ 3.78 [20][28]. Core Insights - Newborn Town reported a total revenue of RMB 3.3 billion and a profit attributable to shareholders of RMB 512.8 million, slightly exceeding estimates. The strong performance of apps like Sugo and TopTop in the MENA market contributed significantly, with revenue increases of approximately 3x and 2x year-on-year respectively. However, the app Mico experienced a significant decline of over 30% year-on-year, which was unexpected and negatively impacted overall performance [9][26][28]. - The company aims to develop two more flagship social networking apps with expected monthly revenues exceeding USD 10 million within three years, although details on these apps remain limited [9][28]. Financial Performance - Revenue projections for the upcoming years are as follows: RMB 4,190.7 million in 2024, RMB 4,542.0 million in 2025, and RMB 4,880.5 million in 2026, reflecting year-on-year growth rates of 26.7%, 8.4%, and 7.5% respectively [6][16]. - Gross margin has shown resilience, maintaining above 50%, with a reported gross margin of 52.1% for 2023, an increase of 14.3 percentage points from previous estimates [10][22]. - The net profit attributable to shareholders is projected to be RMB 449.5 million in 2024, RMB 472.1 million in 2025, and RMB 499.3 million in 2026, indicating a growth trajectory despite challenges [24][32]. Market Position and Competitors - Newborn Town's market capitalization is approximately HK$ 3.1 billion, with a current stock price of HK$ 1.85 [5][21]. - The company is positioned within a competitive landscape, with peers showing varied performance metrics, highlighting the challenges faced in replicating successful app performance [14][31].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company's social business revenue for 2023 grew by 16.2% year-on-year to RMB 2.97 billion, with a gross margin increase of 14.6 percentage points to 48.1%, driven by product upgrades and improved content quality [1] - The innovative business segment saw a revenue increase of 38.6% year-on-year to RMB 340 million, with a gross margin rise of 4.1 percentage points to 87.2%, attributed to the successful launch of new products like Sudoku games [1][2] - The company launched a hit game "Alice's Dream: Merge Island" in 2023, achieving high rankings in global charts and generating significant overseas revenue [2] - The social business strategy of "multiple products, multiple markets" has shown success, with several products entering top revenue rankings [12] Financial Summary - For 2023, the company reported total revenue of RMB 3.31 billion, an 18.1% increase year-on-year, with a net profit of RMB 512.85 million, reflecting a 294.2% year-on-year growth [11] - The forecast for net profit is adjusted to RMB 4.5 billion for 2024 and RMB 5.2 billion for 2025, with an expected net profit of RMB 6.0 billion in 2026 [13] - The current stock price corresponds to a price-to-earnings ratio (P/E) of 6 for 2024, 5 for 2025, and 4 for 2026, indicating strong growth potential [13]

Financial Performance - Revenue reached RMB 3.31 billion, representing an 18.1% year-over-year growth[3] - Adjusted EBITDA amounted to RMB 674.6 million, reflecting an 80.0% year-over-year increase[18] - The company reported a net profit of RMB 760.6 million for the year, compared to RMB 287.3 million in the previous year[14] - For the fiscal year ending December 31, 2023, total revenue was approximately RMB 3,307.8 million, an increase of about 18.1% compared to RMB 2,799.7 million for the fiscal year ending December 31, 2022[58] - Operating profit for the year ended December 31, 2023, was approximately RMB 551.1 million, an increase of about 104.6% from RMB 269.3 million in 2022[65] - Adjusted EBITDA for the year ended December 31, 2023, was RMB 674,638 thousand, compared to RMB 374,688 thousand in 2022[70] - The total comprehensive income for the year ended December 31, 2023, was RMB 734,551 thousand, compared to RMB 328,916 thousand in 2022, representing an increase of approximately 123%[136] - Basic earnings per share for the year ended December 31, 2023, were RMB 0.45, up from RMB 0.11 in 2022, indicating a significant growth of 309%[137] Revenue Breakdown - Social business revenue accounted for 89.8% of total revenue at RMB 2,971.9 million, up 16.2% from RMB 2,557.4 million in the previous year[40] - Innovative business revenue reached RMB 335.9 million, representing a growth of approximately 38.6% from RMB 242.3 million in the previous year[58] - The company's social business revenue for the year ended December 31, 2023, was approximately RMB 2,971.9 million, an increase of about 16.2% compared to RMB 2,557.4 million for the year ended December 31, 2022[133] - The company’s income from social business was RMB 2,854,467,000, up from RMB 2,535,943,000 in 2022, showing a growth of approximately 12.6%[175] Cost and Profitability - Gross profit for the fiscal year was approximately RMB 1,722.1 million, a significant increase of about 62.8% from RMB 1,057.9 million in the previous year[43] - Gross margin improved from approximately 37.8% in 2022 to approximately 52.1% in 2023, with social business gross margin increasing from approximately 33.5% to 48.1%[62] - Gross profit for the year was RMB 1,722,083,000, compared to RMB 1,429,096,000 in the previous year, indicating a gross profit margin improvement[173] Expenses and Investments - Research and development expenses increased by approximately 48.3% to RMB 314.5 million from RMB 212.1 million in the previous year[45] - General and administrative expenses increased to approximately RMB 172.0 million for the year ended December 31, 2023, from RMB 111.8 million in 2022, marking a 53.8% increase primarily due to higher employee benefits[89] - The company plans to pursue strategic investments or acquisitions to create synergies with its existing business, focusing on companies with competitive advantages in technology and data[48] Market Expansion and New Initiatives - The company completed the acquisition of Chizicheng Strategy Investment in August 2023, expanding its social business portfolio[24] - The new online community HeeSay targeting LGBTQ+ users is set to launch in early 2024[8] - The company plans to continue investing in the MENA market while expanding its presence in Southeast Asia, Japan, and North America[12] - The company aims to further explore the integration of gaming and social businesses to better meet user entertainment needs[38] - HeeSay aims to create a diverse and open online community, enhancing user interaction through various features like posts, live streaming, and voice rooms[82] Employee and Corporate Governance - As of December 31, 2023, the company had a total of 1,465 full-time employees, with approximately 50.24% in research and development[53] - The company has established an audit committee consisting of three independent non-executive directors to enhance corporate governance[109] - The company expressed gratitude to management and employees for their efforts during the year, highlighting the importance of their contributions to overall performance[192] Cash Flow and Financial Position - Operating cash flow increased to approximately RMB 738.8 million in 2023 from approximately RMB 311.7 million in 2022[75] - Cash and cash equivalents as of December 31, 2023, were approximately RMB 1,386.3 million, up from RMB 596.7 million as of December 31, 2022[98] - The net cash inflow from operating activities for the year ended December 31, 2023, was RMB 753,503 thousand, compared to RMB 312,645 thousand for the previous year[120] - The total assets as of December 31, 2023, reached RMB 2,790,856 thousand, compared to RMB 1,720,217 thousand in 2022, reflecting a growth of approximately 62.2%[113] Acquisitions and Strategic Moves - The company completed the acquisition of Blue City Holdings Limited on August 2, 2023, enhancing its operational capabilities in the social business sector[149] - The company is actively pursuing acquisition opportunities, as indicated by the agreement with Spriver for share acquisition[200] Risks and Future Outlook - The company acknowledges the risks and uncertainties associated with forward-looking statements regarding its business outlook and financial performance[193] - The company plans to continue expanding its market presence and investing in innovative technologies to drive future growth[148]

Financial Performance - Sales and marketing expenses for the six months ended June 30, 2023, were RMB 246.6 million, an increase of 24.0% compared to RMB 198.8 million for the same period in 2022[4]. - Operating cash income increased to RMB 181.9 million for the six months ended June 30, 2023, compared to RMB 80.9 million for the same period in 2022[12]. - Basic earnings per share for the six months ended June 30, 2023, were RMB 185,302,000, compared to RMB 82,705,000 for the same period in 2022, representing a significant increase of over 124%[193]. - The total expenses for the period amounted to RMB 1,134,234,000, a decrease from RMB 1,232,845,000 in the previous year, indicating a reduction of approximately 8%[191]. - The company reported a net cash outflow from financing activities of RMB 138,528,000, compared to RMB 130,055,000 in the previous year, showing a slight increase in cash outflow[176]. Assets and Liabilities - The total assets as of June 30, 2023, amounted to RMB 1,897,839,000, an increase from RMB 1,720,217,000 as of December 31, 2022, reflecting a growth of approximately 10.3%[112]. - Non-current assets totaled RMB 790,655,000 as of June 30, 2023, compared to RMB 743,600,000 as of December 31, 2022, indicating an increase of about 6.3%[112]. - Current assets reached RMB 1,107,184,000 as of June 30, 2023, up from RMB 976,617,000 as of December 31, 2022, representing a growth of approximately 13.3%[112]. - As of June 30, 2023, total liabilities amounted to RMB 431,103 thousand, a decrease of 10.6% from RMB 482,207 thousand as of December 31, 2022[145]. - Total equity increased to RMB 1,466,736 thousand, up from RMB 1,238,010 thousand, marking a growth of 18.5%[145]. Share-Based Compensation - The company confirmed share-based compensation expenses of RMB 4.26 million for the six months ended June 30, 2023, related to the employee restricted share unit plan[36]. - The company has not granted any restricted share units under the employee restricted share unit plan as of June 30, 2023[52]. - A total of 25,733,333 restricted share units were granted under the management restricted share unit plan, representing approximately HKD 44.9 million based on an average closing price of HKD 1.744 per share prior to the grant date[61]. - The total number of restricted share units granted remained at 25,733,333, accounting for about 2.16% of the company's issued share capital[84]. - The company has adopted a restricted share unit incentive plan to attract and retain skilled personnel, with the plan approved by the board on June 7, 2022[94]. Cash Flow and Investments - The company reported an increase in cash and cash equivalents to RMB 774,894,000 as of June 30, 2023, compared to RMB 596,729,000 as of December 31, 2022, reflecting a growth of approximately 29.8%[112]. - Net cash inflow from operating activities was RMB 176,881,000, significantly higher than RMB 80,856,000 for the same period in 2022, reflecting a growth of over 118%[176]. - The total cash and cash equivalents at the end of the period were RMB 774,834,000, compared to RMB 737,910,000 at the end of the previous period, marking an increase of approximately 5%[176]. - The company acquired property and equipment at a cost of RMB 6,209,000 during the period, compared to RMB 3,958,000 in the same period last year, reflecting an increase of about 57%[195]. Employee and Recruitment - The company has implemented a systematic recruitment process and offers competitive benefits and training opportunities to attract and retain skilled personnel[45]. - The company is committed to regularly reviewing employee compensation policies and overall remuneration based on performance evaluations[45]. - The company implemented an employee interest-free loan scheme to retain high-performing employees, enhancing workforce stability[167]. Corporate Governance and Compliance - The company has adopted the Corporate Governance Code as per the listing rules since its listing date[106]. - The company confirmed compliance with the standards set out in the Securities Trading Code during the relevant period[107]. Risks and Challenges - The company faces risks related to retaining existing advertisers and attracting new ones, which could negatively impact revenue and business[17]. - The company has engaged a trust service provider to assist in managing and vesting restricted share units under the employee plan[29].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示概不會就因本公告全部或任何部分內容而產生或因依 賴該等內容而引致的任何損失承擔任何責任。 截至2023年6月30日止六個月之中期業績公告 在本公告中，「我們」及「我們的」指本公司及本集團（視乎文義所指）。 1 附註： 於2021年8月30日，董事會向32名合資格人士授出合共80,000,000份購股權。授予包括授 予承授人的與績效掛鈎的購股權，一般歸屬期限在10年內。各承授人的購股權將分四期歸 屬，惟須待與本公司有關的若干績效目標獲達成後，方可作實。績效目標由董事會釐定。 就該等獎勵而言，評估於2022年6月30日進行，以評估達到績效目標的可能性。截至2022 年6月30日止六個月，以股份為基礎的報酬開支確認為人民幣17,524,000元。 於2021年8月30日，董事會向32名合資格人士授出合共80,000,000份購股權。授予包括授 予承授人的與績效掛鈎的購股權，一般歸屬期限在10年內。各承授人的購股權將分四期歸 屬，惟須待與本公司有關的若干績效目標獲達成後，方可作實。績效目標由董事會釐 ...

Revenue and Profit Growth - Revenue reached RMB 2.8 billion, a year-on-year increase of 18.6%[33] - Social business revenue reached RMB 2.56 billion, a year-on-year increase of 22.0%[33] - Profit attributable to the company's owners reached RMB 130 million, a year-on-year increase of 145.5%[33] - Customer contract revenue reached 2,799,698 thousand RMB in 2022, an increase of 18.6% compared to 2,359,816 thousand RMB in 2021[35] - Gross profit was 1,057,907 thousand RMB in 2022, up 5.4% from 1,003,320 thousand RMB in 2021[35] - Net profit for the year was 287,335 thousand RMB in 2022, a significant turnaround from a loss of 387,125 thousand RMB in 2021[35] - Adjusted EBITDA increased to 374,688 thousand RMB in 2022, up 4.9% from 357,067 thousand RMB in 2021[35] - Total revenue for 2022 reached RMB 2,799.7 million, a year-on-year increase of 18.6%[76] - Social business revenue increased by 22.0% to RMB 2,557.4 million in 2022, driven by a diversified product matrix and localized operations[76] - The company's net profit for 2022 was RMB 287.3 million, a year-on-year increase of 174.2%[64] - Gross profit increased by 5.4% to RMB 1,057.9 million in 2022, with social business gross profit rising to RMB 856.6 million[96] - Operating profit for 2022 was RMB 269.3 million, a significant improvement from an operating loss of RMB 390.1 million in 2021, driven by reduced share-based compensation expenses and increased gross profit[120] User Growth and Engagement - Average monthly active users of social products reached 22.9 million, a year-on-year increase of 20.0%[22] - YoHo's paying users increased by 40% year-on-year[33] - Overseas users account for 40% of the total user base, with significant growth potential in overseas social business[9] - YoHo's paying users grew by 40% year-on-year, entering the top 10 social app charts in the US, France, and Italy[61] - Yumy achieved over 50 million downloads with a Google Play rating of 4.9, turning profitable monthly with improving gross margins[61] - TopTop, a new social gaming platform, saw a revenue increase of over 30% in Q4 2022 compared to Q3, with average daily user engagement of 60 minutes[61] - MICO entered the top 15 social app charts in the US and Japan, expanding its presence in developed markets[61] R&D and Innovation - The company has 522 R&D personnel, accounting for 62% of the total workforce, with a year-on-year increase of 55%[33] - R&D investment reached 210 million RMB in 2022, a 62.1% increase year-over-year[40] - R&D expenses increased by 62.1% to RMB 212.1 million in 2022, mainly due to higher employee benefit costs[97] - The company plans to explore innovative fields such as AIGC and the metaverse to diversify its business and meet varied social entertainment needs[74] - The company is paying attention to the needs of the Z generation and exploring new product forms to cater to this demographic[95] Social and Gaming Business Performance - The company's self-developed game "Mergeland-Alice's Adventure" achieved monthly revenue exceeding $1 million[11] - The company's social business achieved stable growth, with social products' commercial value continuously improving[40] - The company's game "Mergeland" series saw rapid growth in downloads and revenue, entering the top 10 puzzle game charts in 25 countries/regions on Google Play[51] - The company entered the global LGBTQ social entertainment market through its investment in BlueCity, a market expected to grow from 5 billion USD in 2020 to nearly 10 billion USD by 2025[47][54] - The company's synthetic puzzle games have accumulated nearly 1.5 billion USD in global revenue since 2017, with 400 million downloads by Q2 2022[44] - The company plans to focus on core social business and improve operational efficiency to achieve high-quality growth in 2023[57] - The company plans to explore the integration of gaming and social businesses to provide more diversified services and generate additional profit and cash flow[87] Financial and Operational Costs - Total assets amounted to RMB 1.72 billion, with non-current assets increasing to RMB 743.6 million[21] - Revenue cost for 2022 was RMB 1,741.8 million, a 28.4% increase from RMB 1,356.5 million in 2021[78] - Social business revenue cost increased by 28.9% to RMB 1,700.8 million in 2022, driven by higher host sharing, employee benefits, and payment processing fees[80] - Gross margin decreased from 42.5% in 2021 to 37.8% in 2022, with social business gross margin dropping from 37.0% to 33.5% due to increased host sharing costs[84] - Sales and marketing expenses decreased by 4.1% to RMB 484.1 million in 2022, primarily due to the iteration of the traffic monetization business[91] - General and administrative expenses decreased by 84.7% to RMB 111.8 million in 2022, largely due to a reduction in share-based compensation expenses[97] - Revenue from innovative business reached RMB 41.0 million in 2022, a 9.9% increase compared to RMB 37.3 million in 2021, primarily due to increased payment fees from premium game business[117] - Gross profit for social business was RMB 856.6 million, with a gross margin of 33.5%, representing a 10.3% year-on-year increase[118] - Gross profit for innovative business was RMB 201.3 million, with a gross margin of 83.1%, showing an 11.3% year-on-year decline[118] - Total gross profit for 2022 was RMB 1,057.9 million, with a gross margin of 37.8%, a 5.4% increase compared to 2021[118] Corporate Governance and Compliance - The company completed the registration process for equity pledges in accordance with Chinese laws and regulations[144] - The company applied for 22 trademarks in Hong Kong[145] - The company maintained a public float of at least 25% of its issued shares, complying with listing rules[150] - No significant legal proceedings were reported that could materially affect the company's business, financial condition, or operating results[147] - The board of directors consists of four executive directors and three independent non-executive directors, complying with regulatory requirements[161] - All directors attended all five board meetings held during the year, demonstrating full participation[170] - The company held two shareholder meetings in 2022: an extraordinary general meeting on March 31 and an annual general meeting on May 23[182] - The company maintains strict corporate governance policies, emphasizing transparency, accountability, and compliance with legal and regulatory requirements[176] - The board retains decision-making authority over major matters, including strategic planning, budget approval, and significant transactions[173] - The company provides comprehensive induction and ongoing professional development for directors, including training courses and access to relevant materials[164] - The company's corporate governance practices comply with the principles and code provisions of the Corporate Governance Code[177] - The Board of Directors held five meetings in 2022 to discuss and approve the company's overall strategy and policies, including the establishment of funds, share placements, share repurchases, and the approval of annual and interim reports[188] - All directors attended 2 out of 2 shareholder meetings in 2022, demonstrating full attendance[190] - The company has complied with the relevant corporate governance code provisions from the listing date to December 31, 2022[192] - The Audit Committee's main responsibilities include reviewing and supervising the financial reporting process, risk management, and internal control systems, and providing independent opinions on their effectiveness[195] - The Nomination Committee is responsible for reviewing the Board's structure, size, and composition, and recommending changes to align with the company's strategy[196] - The Nomination Committee evaluates the independence of independent non-executive directors and recommends candidates for director appointments and removals[199] - The company has complied with the requirement to appoint independent non-executive directors constituting at least one-third of the Board members[200] Budget Allocation and Utilization - The company allocated a total budget of HKD 347.1 million for business development, social business enhancement, and innovation monetization, with the entire amount utilized by December 31, 2022[160] - The company spent HKD 173.6 million on boosting social business and innovation monetization capabilities, fully utilizing the budget by December 31, 2022[160] - HKD 173.5 million was used for strategic alliances, investments, and acquisitions, with the budget fully utilized by December 31, 2022[160] Market Expansion and Strategic Focus - The company entered the top 3 of the social app bestseller list in the "Gulf Six Countries" with average daily usage time of active users reaching 60 minutes[33] - The company plans to increase investment in the Middle East and North Africa to consolidate its leading position in core markets[63] - The company will focus on developing new social products and expanding its global user base, particularly in LGBTQ and other niche markets[72] - The company will continue to strengthen brand building and focus on connecting resources globally to enhance its global brand influence[86] - The company monetized several Google Play and Apple App Store applications through mobile advertising and received payments from advertising agents[116]

Financial Performance - For the fiscal year ended December 31, 2022, customer contract revenue was RMB 2,799.7 million, an increase of 18.6% from RMB 2,359.8 million for the fiscal year ended December 31, 2021[6]. - Gross profit for the fiscal year ended December 31, 2022, was RMB 1,057.9 million, up 5.4% from RMB 1,003.3 million for the fiscal year ended December 31, 2021[6]. - The net profit for the fiscal year ended December 31, 2022, was RMB 287.3 million, a significant increase of 174.2% compared to a net loss of RMB 387.1 million for the fiscal year ended December 31, 2021[6]. - Adjusted EBITDA for the fiscal year ended December 31, 2022, was RMB 374.7 million, reflecting a 4.9% increase from RMB 357.1 million for the fiscal year ended December 31, 2021[6]. - The company recorded a total revenue of RMB 2.80 billion for the year ended December 31, 2022, an increase of 18.6% from RMB 2.36 billion in 2021[40]. - Operating profit increased by 169.0% to RMB 269.3 million for the year ended December 31, 2022, compared to an operating loss of RMB 390.1 million in 2021[47]. - The company’s net profit for the year ended December 31, 2022, was RMB 287.3 million, a 174.2% increase from a net loss of RMB 387.1 million in 2021[50]. - The company reported a total comprehensive income of RMB 328,916 thousand for the year, compared to a total comprehensive loss of RMB 398,115 thousand in 2021[165]. - The company reported a net profit of RMB 130,135,000 for the year ended December 31, 2022, compared to a net loss of RMB 286,284,000 for the previous year[183]. Revenue Breakdown - The total revenue for the fiscal year ended December 31, 2022, was RMB 2,799.7 million, with a breakdown showing that streamer salaries and shares accounted for 42.0% of total revenue[23]. - Revenue from social business reached RMB 2.56 billion, a year-on-year increase of 22.0%[29]. - For the fiscal year ended December 31, 2022, the company's social business revenue was RMB 2,557.4 million, an increase of 22.0% compared to RMB 2,095.5 million for the fiscal year ended December 31, 2021[67]. - Social business revenue increased to RMB 2,535,943,000 in 2022, up from RMB 2,073,908,000 in 2021, representing a growth of approximately 22.3%[181]. - The cost of revenue for the social business segment was RMB 1,700,755,000, leading to a gross profit of RMB 856,616,000 for the same period[200]. User Engagement - Average monthly active users for social products were approximately 22.9 million, representing a year-on-year growth of about 20.0%[29]. - The overseas user base accounts for 40% of BlueCity Brothers' social business, indicating substantial growth potential in international markets[20]. - The new product TopTop, a multiplayer game social platform, achieved over 30% revenue growth in Q4 2022 compared to Q3 2022[31]. Research and Development - Research and development expenses reached RMB 210 million, representing a year-on-year growth of 62.1%[11]. - The company plans to enhance R&D for new social products to meet diverse global user needs[38]. - Research and development expenses for the fiscal year ended December 31, 2022, were RMB 212.1 million, a 62.1% increase from RMB 130.9 million for the fiscal year ended December 31, 2021[71]. - As of December 31, 2022, the company had a total of 846 full-time employees, with 62% (522 employees) working in research and development[91]. Cost Management - The company reduced general and administrative expenses by 84.7% to RMB 111.8 million for the year ended December 31, 2022[47]. - The company’s sales and marketing expenses for the fiscal year ended December 31, 2022, were RMB 484.1 million, a decrease of 4.1% from RMB 504.9 million for the fiscal year ended December 31, 2021[70]. - The total operating expenses for the year were RMB 2,549,744,000, a decrease from RMB 2,722,361,000 in 2021, indicating a reduction of about 6.3%[182]. Investments and Acquisitions - The company plans to pursue strategic investments or acquisitions to create synergies with its existing business, focusing on companies with competitive advantages in technology and data[85]. - The company completed the privatization transaction of BlueCity Holdings on August 12, 2022[114]. - The company has committed a total cash contribution of $50 million to the Metaclass Management ELP fund, which aims to participate in the privatization of BlueCity Holdings Ltd[114]. - The fund's total fundraising target is $100 million, with contributions from Chizicheng Strategy Investment ($0.1 million), Spriver ($49.9 million), and the company itself ($50 million)[114]. Financial Position - The company's total assets increased from RMB 1,622.4 million as of December 31, 2021, to RMB 1,720.2 million as of December 31, 2022, while total liabilities decreased from RMB 782.3 million to RMB 482.2 million, resulting in a debt-to-asset ratio decline from 48.2% to 28.0%[53]. - Total liabilities amounted to RMB 482,207,000, while total equity reached RMB 1,238,010,000 as of December 31, 2022[170]. - Cash and cash equivalents decreased from RMB 724.6 million as of December 31, 2021, to RMB 596.7 million as of December 31, 2022[54]. - Cash and cash equivalents stood at RMB 596,729,000 as of December 31, 2022, compared to RMB 724,588,000 in the previous year[173]. Corporate Governance - The company has adopted corporate governance codes and has complied with the principles and provisions during the reporting period[94]. - The company’s independent auditor confirmed that the financial statements for the year ended December 31, 2022, align with the reported figures[131].

Financial Performance - Customer contract revenue for the six months ended June 30, 2022, was RMB 1,374.2 million, an increase of 32.3% compared to RMB 1,038.5 million for the same period in 2021[6]. - Gross profit for the six months ended June 30, 2022, was RMB 482.4 million, a decrease of 7.8% from RMB 523.0 million for the same period in 2021[6]. - Net profit for the six months ended June 30, 2022, was RMB 154.4 million, an increase of 11.6% compared to RMB 138.4 million for the same period in 2021[6]. - Profit attributable to owners of the company for the six months ended June 30, 2022, was RMB 82.7 million, a significant increase of 121.3% from RMB 37.4 million for the same period in 2021[6]. - Adjusted EBITDA for the six months ended June 30, 2022, was RMB 210.4 million, an increase of 19.5% compared to RMB 176.1 million for the same period in 2021[6]. - Total revenue for the first half of 2022 reached RMB 1.37 billion, a year-on-year increase of 32.3%[13]. - Total revenue for the six months ended June 30, 2022, was RMB 1,374.2 million, an increase of 32.3% compared to RMB 1,038.5 million for the same period in 2021[29]. - Total comprehensive income for the period was RMB 171,441 thousand, compared to RMB 133,950 thousand in the same period last year, reflecting a growth of 28.0%[127]. - The company reported a basic earnings per share of RMB 0.07 for the period, compared to RMB 0.04 in the same period last year[127]. Revenue Breakdown - Social business revenue reached RMB 1,270 million, a year-on-year increase of 52.4%[11]. - Revenue from social business amounted to RMB 1.27 billion, reflecting a 52.4% year-on-year increase[13]. - Revenue from innovative businesses, including premium games, reached RMB 110 million, a 91.7% increase compared to the second half of 2021[14]. - Revenue from social business for the six months ended June 30, 2022, was RMB 1,265,945 thousand, compared to RMB 830,625 thousand in the same period of 2021, representing an increase of approximately 52.5%[150]. User Engagement and Growth - The cumulative downloads of social applications reached 230.9 million, with average monthly active users significantly increasing[11]. - Cumulative downloads of social products reached 419 million, with average monthly active users exceeding 23.09 million in Q2 2022, a 27% year-on-year growth[13]. - The social business's average monthly active users grew approximately 30% year-on-year, with revenue growth of about 50%[16]. - The company launched two premium mobile games, achieving rapid growth in downloads and revenue, entering the top 30 in puzzle game sales in over 30 countries[23]. Market Expansion and Strategy - The company plans to expand its market presence globally, with MICO ranking in the top 15 of social applications in the US and Japan[12]. - The company is expanding its global market presence, particularly in developed markets like Japan, where it has established local teams and partnerships[21]. - The company aims to expand its global market presence, targeting a social media market projected to reach USD 300 billion by 2024, with video social media's share increasing from 33.48% in 2019 to 60.33%[25]. - The company plans to enhance its product ecosystem and localize operations to capture high-value users in developed markets like Europe and North America, as well as emerging markets in the Middle East and Southeast Asia[26]. Financial Health and Assets - Total assets slightly decreased from RMB 1,622.4 million as of December 31, 2021, to RMB 1,620.4 million as of June 30, 2022, while total liabilities decreased from RMB 782.3 million to RMB 307.9 million[49]. - The debt-to-asset ratio improved from 48.2% as of December 31, 2021, to 19.0% as of June 30, 2022[49]. - Cash and cash equivalents increased from RMB 724.6 million as of December 31, 2021, to RMB 737.9 million as of June 30, 2022[50]. - Operating cash flow decreased to RMB 80.9 million for the six months ended June 30, 2022, down from RMB 161.7 million for the same period in 2021[50]. Expenses and Costs - Cost of revenue for the six months ended June 30, 2022, was RMB 891.8 million, a 73.0% increase from RMB 515.5 million in the same period of 2021[32]. - Research and development expenses for the six months ended June 30, 2022, increased by 69.6% to RMB 91.1 million from RMB 53.7 million in the same period of 2021[39]. - Sales and marketing expenses for the six months ended June 30, 2022, decreased by 31.8% to RMB 198.8 million from RMB 291.7 million in the same period of 2021[37]. - General and administrative expenses for the six months ended June 30, 2022, increased by 43.6% to RMB 51.1 million from RMB 35.6 million in the same period of 2021[40]. Shareholder Information - Major shareholders include BGFG with 100,000,000 shares (8.39%) and Phoenix Auspicious FinTech Investment L.P. with 89,210,948 shares (7.49%) each[67]. - Liu Chunhe holds 238,706,646 shares (20.04%) and has a total interest of 341,828,420 shares (28.70%) through controlled entities[63]. - The total number of issued shares as of the last practicable date is 1,191,216,000[68]. Employee and Talent Management - The company has a total of 733 full-time employees as of June 30, 2022, with 440 employees (60%) engaged in research and development activities[61]. - The company has implemented a systematic recruitment process and offers competitive benefits to attract and retain talent[61]. - The company aims to enhance employee motivation through restricted share unit plans approved in December 2019[188]. Compliance and Governance - The company has adhered to the corporate governance code since its listing, ensuring compliance with applicable laws and regulations[111]. - The audit committee reviewed the unaudited interim condensed consolidated financial information for the reporting period, confirming compliance with applicable accounting standards[110]. Risks and Challenges - The company faces significant risks including competition in the rapidly evolving industry and potential inability to retain existing advertisers, which could negatively impact revenue[59]. - The company may face legal and financial risks if it fails to prevent security breaches or unauthorized access to user data[59]. - The company is subject to data protection laws, and non-compliance could lead to increased operational costs and loss of users[59].

Financial Performance - Revenue reached RMB 2.36 billion, a year-on-year increase of 99.7%[5] - Adjusted net profit amounted to RMB 308.98 million, reflecting a year-on-year growth of 99.5%[8] - Adjusted EBITDA reached RMB 357.07 million, with an increase of 80.1% year-on-year[6] - Gross profit was RMB 1.00 billion, compared to RMB 752.49 million in the previous year[8] - Customer contract revenue was RMB 2.36 billion, up from RMB 1.18 billion in 2020[8] - The company's revenue reached RMB 2.36 billion in 2021, a year-on-year increase of 99.7%, marking a historical high for annual revenue[11] - Adjusted net profit for the year was RMB 310 million, up 99.5% year-on-year, while adjusted EBITDA was RMB 360 million, reflecting an 80.1% increase[11] - The revenue from value-added services surged by 213.7% year-on-year to RMB 2.06 billion, accounting for 87.4% of total revenue[17] - The revenue from traffic monetization for the year ended December 31, 2021, was RMB 297.5 million, a decrease of 43.2% from RMB 524.1 million in 2020[28] - The cost of revenue for the year ended December 31, 2021, was RMB 1,356.5 million, an increase of 216.1% from RMB 429.1 million in 2020[29] - The operating loss for the year ended December 31, 2021, was RMB 390.1 million, compared to an operating profit of RMB 132.1 million in 2020[38] - The net loss for the year ended December 31, 2021, was RMB 387.1 million, compared to a net profit of RMB 114.3 million in 2020[42] User Engagement and Market Expansion - Cumulative downloads of social applications reached 344 million, with monthly active users in December 2021 approximately 21.79 million, nearly doubling compared to 2020[6] - The company launched the social product Yumy, which accumulated over 50 million global users within a year and entered the top 10 in social app downloads in several countries[14] - The company has successfully entered developed markets, with Yumy ranking in the top 20 social app downloads in the US, Canada, and the UK[16] - The company has made significant advancements in the audio and video social market, with the market size expected to grow substantially from 2019 to 2024[14] - The global open social market is expected to reach a scale of USD 100 billion in the next five years, indicating significant growth potential[22] Research and Development - R&D investment grew to RMB 130 million, a year-on-year increase of 123.6%[6] - The gaming development team is expanding, with continuous growth in R&D expenditure and significant improvements in development capabilities[25] - The company aims to optimize the Solar Creator intelligent game framework to enhance game development efficiency and quality[25] - The company has applied for multiple national technology patents to support its innovative game development efforts[8] Acquisitions and Investments - The company acquired approximately 11.50% equity in NBT Social Networking for a total consideration of HKD 727,580,000, consisting of HKD 281,580,000 in cash and the issuance of 100,000,000 shares[53] - After the acquisition, the company holds approximately 60.39% equity in NBT Social Networking[53] - The company plans to pursue strategic investments or acquisitions to create synergies with its existing business, focusing on companies with competitive advantages in technology and data[56] Financial Position - The total assets of the company as of December 31, 2021, were RMB 1.62 billion, an increase from RMB 1.27 billion in 2020[10] - The total liabilities increased to RMB 782 million in 2021 from RMB 481 million in 2020, reflecting the company's growth and expansion efforts[10] - Total assets increased from RMB 1,268.2 million as of December 31, 2020, to RMB 1,622.4 million as of December 31, 2021[49] - Total liabilities rose from RMB 481.2 million as of December 31, 2020, to RMB 782.3 million as of December 31, 2021, resulting in a debt-to-asset ratio increase from 37.9% to 48.2%[49] Corporate Governance - The company has established and implemented good corporate governance policies and measures to enhance transparency and accountability[174] - The board consists of four executive directors and three independent non-executive directors, ensuring a balanced and independent structure[179] - The company has established three board committees: Audit Committee, Remuneration Committee, and Nomination Committee to oversee specific areas[176] - The audit committee currently consists of three members, all of whom are independent non-executive directors, ensuring compliance with governance standards[189] - The company has adhered to relevant corporate governance codes from its listing date until December 31, 2021[187] Risks and Compliance - The company faces significant risks including competition in the rapidly evolving industry and potential user attrition due to privacy concerns[60] - The company is subject to ongoing uncertainties regarding the interpretation and implementation of the Foreign Investment Law and its impact on business operations[159] - There are significant risks associated with the contractual arrangements, including potential penalties if deemed non-compliant with applicable laws[159] Employee and Shareholder Information - The company employed a total of 554 full-time employees as of December 31, 2021, with 61% (337 employees) in R&D[61] - The company has not recommended a final dividend for the fiscal year ending December 31, 2021[77] - The top five customers accounted for approximately 11.27% of the total revenue for the year ended December 31, 2021, with the largest customer contributing 4.55%[84] - The top five suppliers represented about 40.82% of the total procurement volume, with the largest supplier accounting for 9.54% of total procurement[84] Environmental and Social Responsibility - The company has implemented environmental protection measures and has not encountered significant non-compliance with relevant laws and regulations[81] - The group made charitable donations and contributions amounting to RMB 0.2 million for the year ended December 31, 2021[166]

Financial Performance - Customer contract revenue for the six months ended June 30, 2021, was RMB 1,038.5 million, an increase of 590.8% compared to RMB 150.3 million for the same period in 2020[5] - Gross profit for the six months ended June 30, 2021, was RMB 523.0 million, up 348.3% from RMB 116.7 million for the same period in 2020[5] - Net profit for the six months ended June 30, 2021, reached RMB 138.4 million, a staggering increase of 3,950.2% compared to RMB 3.4 million for the same period in 2020[5] - Adjusted net profit for the six months ended June 30, 2021, was RMB 154.9 million, an increase of 729.2% from RMB 18.7 million for the same period in 2020[5] - Adjusted EBITDA for the six months ended June 30, 2021, was RMB 176.1 million, a rise of 753.2% compared to RMB 20.6 million for the same period in 2020[5] - Total revenue for the six months ended June 30, 2021, was RMB 1.04 billion, a significant increase of 590.8% year-on-year[9] - The company's profit for the period was RMB 140 million, showing a year-on-year increase of 3,950.2%[11] - The adjusted EBITDA for the first half of 2021 was RMB 176.1 million, reflecting a year-on-year growth of 753.2%[11] - The revenue from value-added services surged by 5,088.9% to RMB 820 million, accounting for 79.1% of total revenue[11] - The net profit attributable to the owners of the company for the six months ended June 30, 2021, was RMB 37,377 thousand, a substantial increase from RMB 3,416 thousand in 2020, indicating a growth of about 1,000%[130] User Engagement and Market Expansion - Cumulative downloads of social applications reached 254 million, with average monthly active users at approximately 17.41 million, reflecting a growth of about 38% compared to H2 2020[9] - The company launched new social products that achieved over 10 million downloads globally, breaking into the top 10 bestseller lists in several countries[9] - The company made significant breakthroughs in the U.S. market, with its social applications ranking in the top 20 of the best-selling apps[9] - The average monthly active users reached approximately 17.41 million, an increase of about 38% compared to the second half of 2020[11] - The social product Yumy quickly accumulated over 10 million global users and ranked in the top 10 of social app downloads in 27 countries and regions[13] - The game products achieved a cumulative download of 209 million by June 30, 2021, with stable monthly active growth[15] - The company plans to enhance its overseas localization capabilities and expand market coverage in Europe, Japan, and South Korea[18] - The company aims to explore emerging technologies and product models targeting Generation Z and other young user groups[16] - The company plans to expand its market presence in Southeast Asia, targeting a 20% market share within the next two years[176] Expenses and Cost Management - Cost of revenue for the six months ended June 30, 2021, was RMB 515.5 million, a significant increase of 1,430.7% from RMB 33.7 million in the same period of 2020[23] - Sales and marketing expenses for the six months ended June 30, 2021, were RMB 291.7 million, up 208.0% from RMB 94.7 million in the previous year, reflecting increased marketing efforts globally[31] - R&D expenses for the six months ended June 30, 2021, were RMB 53.7 million, a 378.5% increase from RMB 11.2 million in the same period of 2020, mainly due to higher employee benefits[32] - General and administrative expenses for the six months ended June 30, 2021, were RMB 35.6 million, an increase of 99.3% compared to RMB 17.9 million for the same period in 2020[33] - The total expenses for the six months ended June 30, 2021, amounted to RMB 896,463 thousand, compared to RMB 157,456 thousand in 2020, representing an increase of approximately 469%[124] Assets and Liabilities - Total assets increased from RMB 1,268.2 million as of December 31, 2020, to RMB 1,396.4 million as of June 30, 2021, while total liabilities decreased from RMB 481.2 million to RMB 458.9 million[43] - Cash and cash equivalents as of June 30, 2021, were RMB 607.6 million, up from RMB 431.0 million as of December 31, 2020, with operating cash flow increasing to RMB 161.7 million from RMB 63.5 million for the same period in 2020[44] - The total liabilities amounted to RMB 458,897 thousand, a decrease of 4.6% from RMB 481,156 thousand as of December 31, 2020[100] - Non-current liabilities totaled RMB 55,926 thousand, down 21.9% from RMB 71,669 thousand at the end of 2020[100] - The total equity increased to RMB 937,476 thousand, representing a growth of 19.1% from RMB 787,008 thousand at the end of 2020[100] Shareholder Information and Equity - The total number of issued shares as of the mid-term report date is 998,850,000[59] - Major shareholders hold a total of 89,210,948 shares, representing 8.92% of the company's equity[62] - The company has granted stock options to key executives, including 24 million options to Liu Chunhe and 6 million options to Li Ping, subject to shareholder approval[61] - The employee restricted share unit plan allows for a maximum of 32,540,356 shares, approximately 3.25% of the company's issued share capital[69] - As of June 30, 2021, a total of 30,451,573 restricted share units have been granted, accounting for about 3.05% of the company's issued share capital[70] Future Outlook and Strategic Initiatives - The company has outlined a future outlook projecting a revenue growth of 40% for the next fiscal year, driven by new product launches and market expansion strategies[174] - A strategic acquisition of a local tech firm is expected to be finalized by Q3 2023, which will enhance the company's technological capabilities[175] - The company has introduced a new product line that is anticipated to contribute an additional $10 million in revenue by the end of the fiscal year[174] - The management has set a performance guidance of $70 million in revenue for the next quarter, reflecting a 40% increase from the previous quarter[175] - The company has established a new partnership with a leading tech provider to enhance its service offerings, expected to launch in Q4 2023[176]