Tianfeng Securities released a research report stating that it maintains a "shareholding" rating for Newborntown (09911), with predicted FY2024-FY2026 revenues of RMB 4.12/4.81/5.53 billion and net income of RMB 510/520/530 million attributable to equity holders. If the acquisition is completed successfully, the net income attributable to equity holders is expected to reach RMB 510/550/600 million from 2024 to 2026, with a target price of HKD 5.09. Based on the company's diversified product matrix and excellent operating capabilities, this acquisition further enhances the product lineup, consolidates its leadership position in the social entertainment field, and lays a solid foundation for the company's international expansion.
The main points of the report are as follows:
Strategic acquisition to consolidate full ownership position.
On June 27, 2024, the company announced that it had signed a share purchase agreement with BGFG, JJQJ, and JZZT to acquire 77,832,740 shares of NBTSocialNetworking for approximately HKD 1.983 billion. After the issuance and distribution of the target company's shares, the company will hold 61.08% of the target company's shares. After the completion of the acquisition, the company's ownership will be increased to 100% and the target company will become a wholly-owned subsidiary of the company. The financial performance of the target company will be fully consolidated into the company's financial statements, further consolidating the company's market leadership position in the social entertainment field. At the same time, the company announced that it plans to issue 220 million shares of stocks at a price of HKD 4.5 per share, raising a total of HKD 989 million.
Efficient integration of resources to help increase performance.
The target company is the overseas correspondents reorganized by Beijing Mikozukuri, focusing on providing online social entertainment services, and is committed to meeting the diverse social needs of users around the world. It has launched multiple social entertainment products such as MICO and YoHo, serving nearly 100 million users in over 150 countries and regions worldwide. With the company's further acquisition, the company's multiple pan-population social products such as MICO, YoHo, TopTop, and SUGO cover different scenarios such as open, voice, and games, improving the product matrix. Based on its rich experience in going global and localized operation mode, the company continuously explores overseas markets. In 2023, the company has become a leading social platform in emerging markets such as the Middle East, North Africa, and Southeast Asia. SUGO and YoHo have even ranked fifth and tenth on the Google Play social media charts in the UAE region. The bank believes that full control will help the Group realize efficient integration of resources, deepen strategic synergy effects, and help the expansion and growth of the company's products, further increasing the company's performance growth.