Finance and Economics APP learned that Tianfeng Securities released a research report stating that it maintains a 'shareholding' rating for Newborntown (09911). After the acquisition is completed, it is predicted that the company's revenue for FY2025-FY2026 will reach 7.35/9.37 billion RMB; the company's net income attributable to shareholders for FY2025-FY2026 will reach 0.81/0.91 billion RMB. The company is given a 12 times PE ratio for 2024, corresponding to a market cap of 4.86 billion yuan, with a target price of 4.08 Hong Kong dollars. The bank believes that the acquisition of a minority stake in NBT may incur certain costs, but after the completion of the acquisition, NBT will become a wholly-owned subsidiary of Newborntown, and its financial performance will be consolidated into the company's financial statements.

Tianfeng Securities' main points are as follows:

Outstanding performance in the first 24 hours, with impressive data for each product.

In the first half of 2024, the company's total revenue reached 2.272 billion yuan, a year-on-year increase of approximately 65%, with a net income of 0.388 billion yuan, a year-on-year increase of 28%; adjusted EBITDA reached 0.448 billion yuan, a year-on-year increase of 29%. Among them, the total revenue of the company's social business is expected to be approximately 2.07 billion yuan, up 67% year-on-year; at the same time, the innovative business is also progressing well, with first-half revenue reaching 0.202 billion yuan, a 54% increase year-on-year. The bank believes that the outstanding performance is mainly due to the company's continuous growth in the Middle East, North Africa, and other markets.

Looking at the products, in the field of social business, in the first half of 2024, the latecomer product SUGO continued to achieve rapid breakthroughs, with revenue growing over 250% year-on-year, and monthly revenue exceeding tens of millions of US dollars; TopTop also achieved good performance growth, with revenue in the first half of 2024 increasing by over 100% year-on-year. In the innovation business sector, Alice’s Dream: Mrege Games successively entered the Sensor Tower China mobile game overseas income TOP30 list in May and June. The bank believes that the strong growth of the company's various products is expected to continue to generate revenue for the company and drive performance growth.

Acquiring minority shareholdings is expected to increase net income attributable to shareholders.

On June 27, 2024, the company (as the buyer) entered into a stock purchase agreement with BGFG, JJQJ, and JZZT (jointly as the sellers), as well as the target company NBTSocial Networking. According to the agreement, the target company will issue 10 million shares to JJQJ, and newborntown will acquire 77.83 million shares of sales shares held by the sellers, with a total consideration of approximately HKD 1.98 billion, including cash consideration and issuance of shares. After the transaction is completed, the target company will become a wholly-owned subsidiary of newborntown, and its financial performance will be consolidated into the company's financial statements. NBTSocialNetworking is dedicated to meeting the diverse social needs of global users and has launched multiple social entertainment products such as MICO and YoHo, serving nearly 0.1 billion users in over 150 countries and regions globally. The bank believes that after acquiring a minority stake in NBT, it is expected to increase the company's net income attributable to the parent and drive performance growth.

The company is included in the FTSE index, and its influence is expected to increase.

Recently, newborntown has been included in the FTSE Global Small Cap Index (FTSE Global Small Cap) and the FTSE All Market Index (FTSE All-World LC). The bank believes that this will further enhance the company's visibility and influence in the international capital markets, while the company will receive fund allocations from global investors tracking this index worldwide.