20260901-西牛证券-赤子城科技-09911.HK-Steady_Global_Expansion,_Improving_Earnings_Mix_5页_172kb

Newborn Town (09911.HK) 2026 Interim Results Summary

Core Content

Newborn Town Inc. (09911.HK) has reported strong performance in the first half of 2026, with revenue reaching US$607 million, a 37.0% YoY increase, and profit attributable to shareholders rising by 45.8%. The company's social networking business generated US$539 million (+36.5% YoY), while its innovative business contributed US$68.17 million (+41.2% YoY). The blended gross margin improved to 57.8% (+2.0ppt YoY), with the social networking segment achieving a record 57.2% (+3.6ppt YoY).

Main Points

• Global Expansion: Newborn Town continues to expand globally using its "product replication + country replication" strategy.

  • SUGO has achieved non-MENA revenue contribution of nearly 50%, with Latin America showing strong potential due to its large population and cultural homogeneity.
  • TopTop is maturing in high-ARPU markets like Japan, North America, and Europe, contributing to revenue and margin growth that supports new-market investments.

• Earnings Mix Improvement:

  • The gross margin increase is attributed to a product mix shift, with TopTop and SUGO driving significant growth (around 30%+ and 60%+ YoY, respectively).
  • Selling, General, and Administrative (S&M) expenses increased in line with user-acquisition costs for overseas expansion, but management noted that the S&M ratio has declined from its Q1 peak, indicating cost control.

• AI Integration:

  • AI is being used to enhance social networking operations, including Boomix for social-matching precision, Siyu AI platform for data analysis and reporting, and KIVI design platform for content enrichment.
  • Short drama is a new growth driver, with AI-assisted launch efficiency improving by over 60%, and AI-produced short dramas now accounting for over 50% of total capacity.
  • Content genres are broadening, and AI is playing a critical role in product development and monetization.

• Investment Thesis:

  • The company's core strategy remains "Global replication + AI-driven efficiency".
  • It continues to develop a pipeline of games and social products, maintaining its growth trajectory.

Key Financial Highlights

Revenue and Profit Growth

Gross Margin

• Blended gross margin rose to 57.8% (+2.0ppt YoY).
• Social networking business reached a record 57.2% (+3.6ppt YoY).

Operating and Net Profit Margins

• Operating margin increased to 14.3%.
• Net profit margin rose to 14.7%.
• Adjusted EBITDA profit margin improved to 18.6%.

Financial Ratios

Stock Rating and Target Price

• Stock Rating: BUY (unchanged from previous rating).
• Target Price: HK$11.30 (unchanged from previous target).
• Current Price: HK$8.835.
• 52-Week Range: HK$6.940 – 14.090.
• Market Cap (HKD, bn): HK$12.4.

Risk Factors

• Regulatory tightening in MENA and emerging markets.
• Deceleration in social-segment MAU growth.
• Volatility in global user-acquisition costs.
• Uncertainty around the AI short-drama monetization model.
• Changes in app-store revenue-sharing policies.
• Geopolitical risks affecting Middle East operations.

Company Update

• The stock rating remains BUY.
• The target price is HK$11.30.
• The company continues to develop a pipeline of games and social products.
• The "product replication + country replication" model is central to its global expansion strategy.

Conclusion

Newborn Town is leveraging global expansion and AI integration to drive revenue growth and earnings mix improvement. While regulatory and market risks remain, the company is on track to maintain its "Buy" rating and target price of HK$11.30. Its product mix shift, AI-driven efficiency, and strategic market entry are key factors supporting its long-term growth prospects.