Summary of Newborn Town (9911.HK) Conference Call Company Overview - Company: Newborn Town (9911.HK) - Industry: Social Networking and Live Streaming - Market Cap: HK$15,627 million (US$2,012 million) - Current Price: HK$11.06 - Target Price: HK$16.00 - Recommendation: Buy/High Risk Key Points Industry Position - Newborn Town is the 6 Chinese internet player by overseas revenue and 3 in social networking, following ByteDance and Joyy as of August 2025 [1][2][3] Growth Drivers 1. Product Development Success: The company has seen replicable success in product development, particularly with Sugo, amidst increasing competition [1][3] 2. Global Presence: Strong foothold in MENA and pan-SEA regions, with effective localization strategies [1][3][43] 3. Emerging Growth Areas: Anticipated growth in games, social e-commerce, and short dramas [1][3] 4. Strategic Investments: Proven track record of strategic investments fueling growth [1][3] 5. AI Adoption: Implementation of AI to enhance operational efficiency and growth [1][3] Financial Performance - Revenue Forecasts: Expected revenue growth of +54% in 2024, +35% in 2025, +20% in 2026, and +16% in 2027 [3][4] - Net Profit: Projected net profit of Rmb1,125 million in 2025, with a diluted EPS of Rmb0.860 [6][11] - Margins: Adjusted net margins expected to be 12.2% in 2024, improving to 15.4% by 2027 [3][4] Product Portfolio - Pan-Audience Products: Includes Mico, YoHo, TopTop, and Sugo, with significant user engagement and revenue contributions [13][14][15] - Diverse-Audience Products: Acquired BlueCity, enhancing offerings in the diverse-audience segment with platforms like Blued and HeeSay [26][28] - User Metrics: As of 1H25, average MAU reached 33.9 million, with cumulative downloads of 870 million [14][19] Valuation - Target price set at HK$16, based on a 16x FY26E adjusted EPS of HK$1.01, aligning with global peers [4][11] Risks 1. Product Lifecycle: Aging products and low new product hit rates could impact growth [5][30] 2. Competition: Intensifying competition in the global social entertainment space [5][30] 3. Traffic Acquisition: ROI fluctuations in traffic acquisition strategies [5][30] 4. Regulatory Changes: Evolving regulations across different markets may pose challenges [5][30] Market Opportunities - Sector Outlook: Strong potential in the global social networking and casual gaming markets, particularly in MENA and SEA [1][16][18] - Upcoming Developments: Potential inclusion in HK Stock Connect by March next year, which could enhance visibility and liquidity [2][12] Strategic Initiatives - Global Headquarters: Established in Hong Kong, with regional headquarters in Riyadh and Singapore to support global operations [47][48] - AI and Middle Platform: Focus on enhancing AI capabilities to streamline operations and improve product development efficiency [40][41] Conclusion - Newborn Town is positioned for robust growth with a diversified product portfolio and strong global presence. The company is leveraging strategic investments and AI to enhance operational efficiency, while navigating potential risks associated with competition and product lifecycle management. The current market correction presents a buying opportunity for investors looking to capitalize on its growth trajectory.
赤子城科技- 全球创造情感价值；首次给予买入评级，目标价 16 港元