【行业研究报告】赤子城科技-Ready for Take-off, rating "BUY"

NewbornTown|09911.HK
NewbornTown|09911.HK
ReadyforTake-off,rating"BUY"
STOCKRATING
BUY
TARGETPRICE
HK$4.48
NewbornTown(09911.HK)achievedRMB2.5bn-RMB2.6bnandRMB230mn-RMB260mn
revenuefromthesocialnetworkingbusinessandinnovativebusinessrespectively,accordingtothe
latestannouncement,leadingtoanapproximatelyYoY20%growthinthetopline.
Horizontalexpansiontodifferentregions:TheMiddleEastaswellastheS.E.Asiaarethecore
marketsofNewbornTown(09911.HK),the22ndWorldCupheldinQatar,thus,broughtcertain
impactstothesocialnetworkingproductsoftheGroup,leadingtoaQoQ3.1%decreaseonthe
MAUtoabout22.8mnin2022Q4and22.9mnin2022FY.Thankstoi)theendoftheworldcup,
ii)theexplorationofnewmarketregionsbyMicoandYoHo,webelievethattheGroupmaybe
abletoreplicatetheexperienceandstrengthenitsglobalfootprint.
ParticipationintheprivatizationofBlueCity:NewbornTown(09911.HK)participatedinthe
privatizationofBlueCityin2022,andBlueCityprimarilyparticipatesintheLGTBQverticalwitha
numberofproductslikeBlued,翻咔and荷爾健康.AlthoughBlueCityisoneoftheleadingplayers
intheLGTBQmarketacrosstheworld,thepenetrationrateintheoverseasmarketremainslow.
However,ontheotherhand,NewbornTown(09911.HK)isstrongintheoverseasmarketand
experiencedinthelocalizationofsocialnetworkingproducts,Mico,theprimarycontributor,even
recordeddouble-digitgrowthforconsecutiveyears.AsacompanyexploringtheMiddleEast,S.E.
AsiamarketsaswellasthedevelopedregionsliketheUS,Europe,KoreaandJapan,webelieve
thattherewillbesynergybetweenNewbornTown(09911.HK)andBlueCity,enhancingthebusiness
sustainabilityfromtheprivatization.
Hugegrowthpotentialfortheinnovativebusiness:Innovativebusinessaddsanotherlegofgrowth
toNewbornTown(09911.HK),anditlaunchedseveralgameslikeMergeland–Alice’sAdventurein
thepastyear.ItisexpectedthattheGroupwillinputandhencegrowfurtherbylaunchingmore
games,therebyenhancingtheGroup'smarginprofileinthefuture.
Moregrowingopportunitiesarecoming,rating"BUY":Thehorizontalexpansionmaycontinueto
bringasteadygrowthofMAUaswellasthenumberofpayingusersforNewbornTown(09911.HK),
andMicoremainstheprimarycontributortotheGroup.TheGroupmayalsoenjoyeconomiesof
scaleontheinnovativebusinesswhichwillbringabetterprofitmargintotheGroup.Inadditionto
thepotentialbreakthroughofBlueCity,wegivearating"BUY"andaTPofHKD4.48/sharetothe
Group,implying45.6x/15.8x/12.7xforwardPEin2022/2023/2024.