良好环境和强劲增长潜力带来的重估

Newborn Town | 09911.HK COMPANY UPDATE A revaluation brought by favourable environment and robustgrowth potential H F NGO, Brian, CFA SENIOR ANALYSTbrianngo@westbullsec.com.hk+8523896 29652701–2703,27/F, Infinitus Plaza, 199 Des Voeux RdCentral, Sheung Wan, HK STOCK RATING BUY Lustroussocial networking business:In Q1 2025, Newborn Town(09911.HK)reported a YoYrevenueincrease of 39.1% to 44.3% in its social networking segment. The growth trajectoryremainedstrong,driven by the application of AItechnology and enhancements in the socialrecommendation algorithm, which improved user engagement. Despite a temporary setbackdue to Eid al-Fitr in Mar and Apr the performance of the social networking APPs reboundedin May. Notably, Sugo, the flagship social networking product, achieved a monthly rechargeof approximately USD 24mn and a MAU of around 4mn. This positive trend continued intoJun,and theimpactbrought by thegeopolitical tensions in the Middle Eastwasminimal. Newborn Town(09911.HK) Stock Rating(Previous Rating)BUY(BUY)Target Price(Previous TP)HK$12.90(HK$ 5.73)CurrentPriceHK$9.3852-WeekRangeHK$2.30–11.50Market cap. (HKD, bn)HK$13.3 Innovativebusinessremained robust:The innovative business segmentremained promisingin Q1 2025,achieving YoY growth of 66.7% to 88.2%.The contributions from niche gamesand the social e-commerce platform fueled this growth. The success of Alice’s Dreamdelivered a positive signal in this business segment, given the convincing replicationcapability,the Group is expected toreach the break-even point more swiftly and achievesuperiorROIfor newly launched games. Establishmentof global headquarters in HK:The Group has established its globalheadquarters and an AI research center in Hong Kong, leveraging the city’sfavourableinternational business environment, mature capital markets, and access to top-tier talent.This strategic move aims to deepen the application of AI across its operations, positioningthe company at the forefront of technological advancements in the industry. Arevaluation brought by favourable environment and robust growth potential:NewbornTown (09911.HK)has exhibited solid growth in both revenue and net profit attributable toshareholders. Key products such as Sugo, TopTop, and Blued, alongside niche games, areexpected to sustain growth, providing shareholders with attractive returns. The company’ssubstantial cash reserves enable it to pursueacquisitions of high-potential businesses, suchas BlueCity.Recent positive trends in Chinese stocks and a peak in the risk-free rate areexpected to lead to a favourable revaluation, we believe that these macroeconomic factors,combined with the company's strong growth prospects,will enhance its valuation metrics.Thus, we have revised our target price to HKD12.90per share and maintainedour“BUY”recommendation. Peers comparison Risk Factors ◼The strong performance of Sugoand TopTop cannotbe sustained◼Asudden change in the macroenvironment in MENA due to the escalating international conflicts◼The marketing expenses cannot be well-controlled◼Unable toreplicate the performance of Alice’s Dreaminother niche games Financial Statement West Bull Securities is a dedicated small/mid cap stock brokerage house. Find our research on: Alphasense, FactSet, Capital IQ,Refinitiv, Wind, Choice, Hiborand同花順. Ratings of West Bull Securities: STRONGBUY:absoluteupside of >50% over the next 12 monthsBUY:absoluteupside of >10% over the next12monthsHOLD: absolute return of-10% to +10% over the next 12 monthsSELL: absolute downside of >10% overthe next 12 monthsSTRONGSELL: absolute downside of >50% over the next 12 months Investors should assume that West Bull Securities is seeking or will seek investment banking or other related businesses withthecompanies in this report. Analyst certification:The views expressed in this report accurately reflect the analyst’s personal views of the subject securities andthat the analyst has not received and will not receive direct or indirect compensation in exchange for expressing specificrecommendations or views in this report. Disclaimer: This research report is not an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The securities referredto in this report may not be eligible for sale in some jurisdictions. The information contained in this report has been compiled bythe Research Department of West Bull Securities Limited (‘West Bull Securities’) from sources that it believes to be reliablebut norepresentation, warranty or guarantee is made or given by WestBull Securities Securities or any other person as to its accuracy orcompleteness. All opinions and estimates expressed in this report are (unless otherwise indicated) entirely those of West BullSecurities as of the date of this report only and are subject to change without notice. Neither West Bull Securities nor any otherperson,accepts any liability whatsoever for any loss howsoever arising from any use of this report o