CMS Initiated a "Buy" Rating on Newborn Town, the Company Incorporating Blued into its Social Apps Portfolio this August

HONG KONG, Oct. 26, 2023 /PRNewswire/ -- China Merchants Securities ("CMS") initiated a 'Buy' rating on tech company Newborn Town Inc. ("Newborn Town";9911. HK), with the target price at HKD 4.4. This broker remained optimistic about the company's outlook as it completed the consolidation of BlueCity and achieved remarkable profitability.

According to the report, Newborn Town has achieved a substantial increase in revenue and profit due to its rapid growth in the social networking business. This HK-listed company has formed a differentiated product portfolio with multiple social apps like MICO, YoHo, TopTop and SUGO going viral worldwide.

Besides, Newborn Town has also completed the consolidation of BlueCity, which owns one of the most popular LGBTQ+ social apps named Blued. BlueCity's performance has been incorporated into Newborn Town's financial statement since this August.

For the pan-audience social networking business, Newborn Town has completed the adjustment of its content ecosystem in the first half. Therefore, the content quality, stickiness in the online community, and users' interactive experience have all been upgraded.

Moreover, the strategy of 'product replication' has been proven again following the increasing commercial contributions from new products to the businesses.

SUGO, the companion-based social app launched last year, has also achieved progress in the world's major markets. Through the optimization of matching and recommendation efficiencies and improvement of the refined operations, the revenue of SUGO in the first half increased by over five times year-on-year, making it remarkable among overseas competitors.

Regarding the company's latest social networking business for LGBTQ+ community, Newborn Town has seen a further improvement in its product portfolio as the company completed the consolidation of BlueCity this August. 

According to Newborn Town's interim result, BlueCity has achieved profitability since August last year and Newborn Town would help BlueCity's major social app, Blued, upgrade the overseas operations capabilities through continuous optimization in customer acquisition, monetization scenes, and localized operations. 

Apart from continued growth in the social networking business, Newborn Town is also developing the game-centric innovative business, which is recognized as its second growth curve.

'Mergeland-Alice's Adventure', the mobile merge game developed by Newborn Town, has demonstrated solid growth since 2023. For the first time, it entered the two lists released by the mobile data analysis platform Sensor Tower, ranking 17th place in terms of revenue and 30th place in terms of downloads of all the Chinese mobile games in overseas markets for August.

The previous data also revealed that the monthly revenue of this game has achieved over US$2 million since April 2023.

CMS highlighted that Newborn Town had several games in its pipeline for release in the future. With the continuous upsurge in the innovative business segment, Newborn Town was expected to usher in the synergetic development between social networking and gaming businesses.

In addition, Newborn Town has initially built a differentiated product portfolio following the dual-growth strategy of developing social networking and entertainment businesses. According to CMS, the company was expected to set foot on the track of mid-core games and gradually achieve diversification.