DLK Advisory Limited
Newborn Town Sees Profits Doubling YoY for First Half 2023

Newborn Town Sees Profits Doubling YoY for First Half 2023

Newborn Town Inc. (“Newborn Town”; 9911. HK), the tech company focused on the global social networking market, released its positive profit alert for the half year ended 30 June 2023 on 11 August. According to the announcement, Newborn Town has seen a dramatic increase in its major profit indicators due to the company’s rapid breakthrough in advantageous markets like the Middle East and North Africa (“MENA”), as well as the effective adjustment of the content ecosystem of its social networking products.

Net profit for the first half of 2023 is expected to be approximately RMB 280 million to RMB 320 million, representing a YoY increase of 81.8% to 107.8%. Profit attributable to the owners of Newborn Town will also see a rise of 92.8% to 141.0% as it’s expected to be approximately RMB 160 million to RMB 200 million. The adjusted EBITDA will be around RMB 330 million to RMB 360 million, representing an increase of around 57.1% to 71.4% compared to the corresponding period in 2022.

Newborn Town has been eyeing MENA. Since early this year, it has enforced investment in the region and boosted the performance of its major products remarkably.

MICO, YoHo and SUGO, as the flagship apps owned by the company, entered the newly-released list of the top 30 Chinese non-game publishers in terms of overseas revenue for June by data.ai. And Newborn Town, therefore, became the social entertainment company having the most apps on the list.

Meanwhile, Newborn Town has also been seeking new space for growth by actively digging deep into the gaming realm. “Mergeland-Alice’s Adventure”, the self-developed niche merge mobile game, officially launched its iOS version this February. And this game’s monthly revenue has exceeded US$2 million, benefiting from the continuous optimization of the growth model.

Earlier this month, Newborn Town announced the completion of its consolidation of BlueCity, the leading LGBTQ+ online platform, and the latter’s performance will be incorporated into Newborn Town’s consolidated financial statement, which is expected to contribute to Newborn Town’s annual performance.

Since then, BlueCity has officially become a subsidiary of Newborn Town, and its products, including Blued became part of Newborn Town’s global portfolio of social networking apps. Significantly, Newborn Town has helped BlueCity achieve profitability from August to December last year by refining the operations.

It’s estimated that Newborn Town will further unlock its space for quality growth through the continuous influence wielded by the more diversified product portfolio, more exquisite operations, the fast-growing innovative business, and the synergy created from the acquisition of BlueCity.