CICC: Maintains NEWBORNTOWN (09911) "Outperform" rating, target price HK$14.5

CICC released a research report stating that on September 10, it was invited to participate in NEWBORNTOWN's (09911) first Investor Day, where company management and heads of various products summarized and outlined the overall strategy and core businesses. The bank maintains its Non-IFRS earnings forecasts for 2026 and 2027, maintains its "Outperform" rating and HK$14.5 target price, corresponding to 12x 2026 Non-IFRS P/E, implying 55% upside from the current price; the stock currently trades at 8x/7x 2025/2026 Non-IFRS P/E. CICC's main takeaways are as follows: Product Strategy and Organizational Middle-Platformization: Matrix Replication, Middle-Platform Accumulation The company expects its social business monthly revenue scale to continue rapid growth over the next 3-5 years. The company has established over ten product lines, with mature products stabilizing profits, growth products SUGO and TopTop driving growth, and new products in the incubation stage showing promising momentum, among which one product has monthly revenue exceeding US$10 million, and two products each have monthly revenue exceeding US$3 million. The company plans to launch and test 3-5 new products annually. In 2025, the company adjusted its organizational structure to "Project + Platform," promoting the accumulation of business experience and talent functions into the organizational middle platform. The bank suggests paying attention to reuse efficiency, unit customer acquisition and operating costs, as well as the marginal contribution of AI tools to profit margins. SUGO and TopTop Enter Global Scale-Up Growth Phase The bank believes that middle-platform support, localized operations, and a strengthened user acquisition growth engine are expected to further enhance the efficiency of cross-regional replication of mature products. Currently, the company has more than 20 global operations centers. SUGO is the most important growth engine at present, with balanced global development and a balance between growth and profit, monthly revenue exceeding US$40 million, and MAU approaching 10 million. As the company further expands into Spanish-speaking populations and Europe, and continues to refine its SOP, the company targets doubling this product's performance over the next 2-3 years. TopTop's MAU exceeds 4 million, with revenue from markets outside the Middle East and North Africa accounting for 40%. The product's short-term profit is affected by newly opened regions, and the bank suggests paying attention to payback and steady-state profit after regional expansion. AI Application and Vertical Scenario Integration Accelerate Playlet uses AI to enhance short drama production capacity, and casual games use AI to reduce demo and trial-and-error costs. Independent product Aippy is positioned as an AI-native interactive content platform. Since launching growth in November 2025, MAU has approached 2 million. Large-scale monetization has not yet begun, but the team is relatively lean, with only over 20 employees, paired with multiple AI Agents, keeping trial-and-error costs manageable. The bank suggests paying attention to the implementation and monetization milestones of AI in social, interactive content, gaming, short dramas, and other areas.