Tianfeng: NEWBORNTOWN (09911) AI+ Innovation to Drive Growth Rated as "Hold"

Tianfeng released a research report stating that considering the diversified product matrix of NEWBORNTOWN (09911) and the significant driving effect of AI technology on the business, continuously deepening its social entertainment business and solidifying the second growth curve, the company's performance is expected to continue to achieve growth. The bank has adjusted the company's revenue forecast for FY2025-FY2027 from 6.71/7.75/8.95 billion yuan to 6.91/8.55/10.25 billion yuan; the net profit attributable to the parent company forecast from 1.018/1.161/1.351 billion yuan has been adjusted to 1.018/1.291/1.551 billion yuan, and the rating has been adjusted to "hold". Tianfeng's main points are as follows: Diversified product portfolio promotes growth, AI's deep empowerment value highlighted According to the company's 2025 interim performance announcement, the company's 2025H1 operating income reached 3.181 billion yuan, up 40.0% year-on-year. The income from social business (mainly including the pan-people social business including MICO, YoHo, TopTop, and SUGO, and the diversified population social business including HeeSay, Blued, and Finka) is about 2.834 billion yuan, up 37.0% year-on-year. The SUGO continued to tap into user demand, enrich product features and monetization scenarios, and combined with regional characteristics to increase the supply of quality content, with revenue increasing by over 100% year-on-year and profits by over 150%. The TopTop community ecosystem has further enriched, with its leading position in the Middle East and North Africa continuously consolidated, actively exploring new markets, with revenue increasing by over 100% year-on-year and profits by over 100%. MICO and YoHo, two products, stably contributed to the company's revenue and profits; innovative business revenue was about 347 million yuan, up 70.5% year-on-year, mainly due to the steady development of the company's traffic monetization, social e-commerce business, and the revenue contributed by the company's boutique games. Since contributing revenue for the first time last year, the boutique game business has officially entered the profit recovery period, with the flagship game "Alice's Dream: MergeGames" entering the long-term operation phase. The new product release has progressed smoothly, and the social e-commerce business has maintained rapid development. In the first half of 2025, Hazel Health's profits increased by over 100% year-on-year, further consolidating its leading position in the health services sub-track. The company's adjusted EBITDA in 25H1 reached 650 million yuan, up 44.0% year-on-year. The bank believes that in the first half of 2025, the company's subsequent products contributed greater value to the business composition, while the early products continued to develop steadily. Through diversified product portfolios, deep localization operation, and AI technology empowerment, the company has achieved strategic foresight and risk resistance; at the same time, under the continued advancement of the "product duplication + national duplication" strategy, the company's core business has solid internal driving force for stable growth. Accelerating the layout of innovative products, deepening penetration into local markets According to the company's 2025 interim report, the company actively laid out innovative products and explored new opportunities in social entertainment. In the first half of 2025, the company's active investment in short drama business has begun to bear fruit; at the same time, the company also launched the AI creative content community Aippy, with leading AI generation capabilities, allowing users to generate websites, mini-games, and other interactive creative content using natural language, entering the AIAgent and AI content community track. At the same time, the company has long been cultivating the global social entertainment track, and in the first half of 2025, the business scale of the company's core products in the Middle East and North Africa market increased by over 60% year-on-year. While continuing to consolidate its market position in advantageous markets such as the Middle East and North Africa and Southeast Asia, the company is also actively expanding into new markets, improving its global social entertainment layout. In 2024, the company established its regional headquarters in Riyadh, Saudi Arabia, further strengthening its connection with the Middle East market. In the first half of 2025, the company established its global headquarters in Hong Kong, China, marking a new stage in the company's globalization strategy. The bank believes that with the rapid breakthrough of AI technology and the further growth of global users' demand for social entertainment, the company continues to deepen the integration of AI with business scenarios, continuously invest in market development expansion, and is expected to further penetrate the Middle East and North Africa markets, achieving further growth in performance.