20230925-西牛证券-赤子城科技-09911.HK-Better_return_on_investment_after_adjustments_5页_198kb

Newborn Town (09911.HK) saw improvements in financial performance for 2023 H1, with revenue nearly flat at RMB 1,374.6 million, but gross margin surged to 51.4% and net margin improved to 22.0%, driven by strategic focus on profitability. Key measures included adjusting product mix for MICO, replacing streamers for higher margins, and switching payment gateways to reduce Google and Apple fees.

The company acquired BlueCity, which achieved strong user metrics and overseas expansion targets, alongside innovations like new game launches showing 21.1% YoY growth in innovative business. However, social networking results remained mixed due to stagnation, though some platforms showed promising growth.

Financial projections indicate steady revenue and profit growth through 2025, with upscaled forecasts and an upgraded "BUY" rating, raising target price to HK$3.73 per share. Risk factors involve potential declines in paying ratios, slow overseas expansion, and ongoing low profitability outside MICO.

Overall, Newborn Town's business adjustments suggest sustainable margin improvements and growth potential, supported by strategic initiatives, but vulnerability exists from scaling challenges.