Newborn Town (9911.HK) Announced Profit Alert: Revenue and Adjusted Net Income Doubled in 2021

HONG KONG,March 8,2022 --Newborn Town (9911.HK),the largest Chinese social networking enterprise going global,released a profit alert on March 8th. The Company expected its revenue and adjusted net profit doubled,while adjusted EBITDA expected to increase significantly.

I. Revenue and adjusted net profit doubled

Newborn Town is thelargest Chinese social networking enterprise going global,which launched a number of audio and video social products such as Yumy,MICO and YoHo to meet the different social needs of global users,covering the markets in Middle East,Southeast Asia,South Asia,Europe,North America,Japan and Korea.

In recent years,Newborn Town has achieved excellent financial results. In 2021,the Company's total revenue is expected to be RMB 2,300 to 2,400 million,representing a year-on-year increase of approximately 100%. Adjusted net profit is expected to be approximately RMB 300 to 320 million,a year-on-year increase of nearly 100%. Adjusted EBITDA is expected to grow substantially by over 75% year-on-year,reaching approximately RMB 350 to 375 million.

According to the announcement,the expected significant growth in revenue was mainly due to the rapid expansion of social business. The Company expanded the user base,enhanced the user value and successfully explored mature markets in the past year. The expected growth in adjusted net profit was mainly attributed to the continued rapid growth of net profit in social business.

According to its announced operating data of 2021,the accumulated downloads of the Company's social products reached 344 million by the end of 2021. The monthly active users (MAUs) of the social products reached approximately 21.79 million in December 2021,nearly doubling the average MAUs of 2020. Benefited from the rapid development of the social business,the Company's value-added service revenue increased significantly in 2021,up nearly 200% year-on-year.

2.Deepening global localization operation to strengthen the competitiveness of the Company

With ten years of operation experience in overseas,Newborn Town has accumulated abundant localization experience and continued to sharpen its competitive edge. In overseas market,the Company has set up more than ten operation centers to carry out the localization strategies on its products. It also increased investment in building a large-scale of localization teams to accelerate the expansion in overseas markets.

The Company has recently held various forms of online and offline activities in different markets to enrich user experience and expand brand and product influence. In Thailand,MICO has released the theme song,"TUK KRUB" in Thai,which was composed and sung by a famous local band,with a Thai idol as the female lead in the music video. The song quickly accumulated over 1.1 million plays on YouTube upon its release.

In the U.S.,MICO held its "2021 Annual Gala". The winners of the event were featured in MICO's promotional videos which were played in loop on the screens of various landmarks,such as the Times Square in New York City,the Chinese Theater on LA's Avenue of the Stars,and the Georgia Aquarium in Atlanta. In Japan,MICO partnered with SoftBank Group,where the winners of the event were invited as SoftBank's models to be featured on the cover of physical publicity materials,and become the protagonists of the publicity films produced by MICO and SoftBank.

In the Middle East market,MICO held a large-scale offline annual event last month in Cairo,the Capital of Egypt,presenting annual prizes to the platform's top content creators and partner organizations. Multiple famous local artists and singers were invited to deliver spectacular performances,with all proceeds from the event's live broadcast going to local charities. Last year,the Egyptian government issued the first license in online social networking aspect to the Company,which is the only license issued by the local government so far,indicating that Newborn Town has been gaining goodwill from overseas governments.

3.Planning of the social metaverse to expand business boundaries

Newborn Town is actively planning to explore the social metaverse,expanding business boundaries and seeking multiple sources of growth.

Last November,the Company announced to have a test of integrating Meta Town,a metaverse module into the video social application Yumy,so as to continuously enrich the virtual scenes and metaverse elements in the product. Yumy may become the world's first video social product to incorporate metaverse scenes.

Earlier this year,Newborn Town announced the formation of a metaverse social AI strategic alliance with Digital Dream Vally,a subsidiary of Digital Domain Holdings Limited. The two parties will work together to generate virtual characters in social products,build virtual 3D social scenes,and create social products that incorporate metaverse elements,which are expected to accelerate the deep integration of the Company's social products with the metaverse.

China Securities believes that Newborn Town is a pioneer and active promoter of social metaverse in the overseas markets. Analysts point out that the social products of Newborn Town are instantaneous,rich-in-content and immersive,which share similarities with the metaverse. The addition of metaverse elements will help expand its user base,enhance user stickiness,and boost value-added service revenue,etc.

Conclusion

With a focus on social business,Newborn Town is actively exploring diversified development,continuously expanding its business coverage through localization capabilities and extending to high-consumption regions. It is expected to build a strong global business ecology and tirelessly improve performance to accelerate growth into a force to be reckoned with.

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