20240123-西牛证券-赤子城科技-09911.HK-Potential_delivery_of_a_solid_outlook_7页_269kb

报告摘要

Company Overview

Newborn Town (09911.HK) is assigned a "BUY" stock rating with a target price of HK$3.78 per share, based on its financial performance and growth prospects. The company announced 2023 operating data showing strong revenue growth expectations and margin improvements.

Key Business Updates

Social Networking Business: Revenue is expected to rise by 15.4% to 19.3% year-on-year to RMB 2,950mn–3,050mn, benefiting from streamer replacements and the performance of SUGO and TopTop. Profit margins strengthened after operational changes but top-line growth was affected.
Innovative Business: Revenue is projected to grow by 32.2% to 48.8% year-on-year to RMB 320mn–360mn. The company launched two games in 2023 and plans to release approximately two more next year, with Alice's Dream expected to potentially become profitable this year.
New Platform: HeeSay, an LGBTQ+ community platform, was launched in early 2024, focusing on broader thematics like belonging, to target overseas users.

Financial Highlights

Revenue Growth: Projected to increase from RMB 2,799.7mn in 2022A to RMB 3,280mn in 2023E, with continued expansion in subsequent years.
Profit Margins: Gross margins are expected to improve to 50.2% in 2023E, offsetting slower top-line growth due to BlueCity consolidation. Net profit margin may decline due to one-off factors, but this is not indicative of ongoing issues.
Key Metrics: P/E ratio at 5.7x in 2023E, with relative outperformance against the HSI index. Peer comparison shows competitiveness in gaming and social networking sectors, though risks like ARPPU drops and overseas expansion challenges persist.

Risks and Concerns

Potential issues include a possible drop in payment ratios, slow overseas expansion of BlueCity, and delays in breakeven for innovative business or social networking apps.
Analyst concerns center on achieving financial breakeven for new ventures, with risks if new games or platforms underperform expectations or incur higher costs.

Analyst Recommendation

West Bull Securities maintains "BUY," emphasizing the company's solid outlook despite margin pressures and growth uncertainties, focusing on long-term breakeven potential for innovative segments.

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