9911 — Newborn Town Inc.

Newborn Town Inc. (9911.HK) — deep-value analysis

Analysis date: August 24, 2026 · Reference price: HKD … (close 08/21/2026) · Exchange: HKEX Main Board Reporting currency: RMB (CNY) through FY2025; USD starting with H1 2026 interim · Trading currency: HKD FX used: … = 0.8574 RMB (spot 08/23/2026) · … = 6.7118 RMB Market cap: 1,400,338,391 shares × HKD … = HKD 11,329 mil. = RMB 9,713 mil. Primary sources: the issuer’s HKEXnews filings (Annual Report 2025 from 04/23/2026, Annual Results 03/26/2026, Interim Results 08/28/2025, Interim Report 2025, quarterly operational data announcements, share buyback and cancellation announcements, Monthly Return July 2026), supplemented with yfinance for price and historical series.

Calendar warning, to be read before anything else. The board meets Tuesday, August 25, 2026 to approve the H1 2026 half-year results and to consider paying an interim dividend — the first in the company’s history. Publication is expected on August 28. This report is written 1–4 days before that event, so it’s based on the latest audited figures (FY2025) plus unaudited operational revenue data for H1 2026. Any position sizing must account for the fact that the figure base changes within days.

Executive summary

What the company is. Newborn Town (赤子城科技) is a Chinese developer of social networking apps that sells nothing in China: revenue comes from the Middle East and North Africa (MENA), Southeast Asia, and, accelerating since 2025, Latin America, Japan, Korea and Europe. The portfolio has two segments: (1) social networking — MICO (live-streaming, launched 2015), YoHo (audio social), TopTop (game-based social), SUGO (companion social), plus the “diverse-audience” segment HeeSay/Blued (LGBTQ+); (2) innovative business — niche games (Alice’s Dream), short dramas, social e-commerce (Heer Health), traffic. In FY2025: revenue RMB 6,889.0 mil. (…), of which social RMB 6,142.3 mil. (89.2%) and innovative RMB 746.7 mil. (10.8%).

The thesis, in three sentences. On audited figures, the company generates an owner-earnings yield of 11.3% of market cap and 14.4% of enterprise value, with real net cash of RMB 2.09 bn (21.5% of market cap), founders holding over 24%, and, since April 2026, the first genuine buy-and-cancel buyback program in the firm’s history. Against: growth no longer comes from users — the social segment’s average MAU was 35.895 mil. in Q1 2026 and 35.833 mil. in the H1 2026 average, i.e. a sequentially declining Q2 for the first time — but exclusively from ARPU, bought with a marketing budget that rose from 21.2% of revenue (H1 2024) to 34.1% (H2 2025). The result: H2 2025 operating margin was …%, the weakest half in the last two years, despite half-year revenue being 16.5% higher than H1.

Estimated value. Five triangulated models give a brutally wide range: from HKD 6.64 (harvest DCF, no growth) and HKD 6.76 (Greenwald EPV on reported operating profit) to HKD 22.74 (DCF on consensus assumptions). The models’ median is HKD 9.23 (… versus price). The Monte Carlo simulation on my central assumptions gives a median intrinsic value of HKD … and a …% probability the stock is undervalued — but that …% is conditional on RMB … mil. of owner earnings being sustainable, and that’s exactly the open question.

The distance between EPV (…) and the base-case DCF (…) is the thesis. At HKD …, the market pays somewhat more than the value of a business that froze in place and never grew again. In other words: the current price contains no significant growth premium, but it also offers no margin of safety if the business declines. It’s not a cheap stock because assets are below cost; it’s cheap because the market doesn’t believe in the durability of a short-life-cycle social-app portfolio, in a geography with regulatory risk, held in a dual VIE structure with related-party transactions.

Verdict: SPECULATIVE BUY, SMALL POSITION (2… of portfolio), AWAITING HALF-YEAR RESULTS. The positive argument is economic (11… flow yield, net cash, aligned insiders, real buybacks started at … after a 42% drop from the peak). The waiting argument is about calendar and content: on August 25–28 the H1 2026 operating margin gets published and the first dividend gets decided. If H1 2026 operating margin stays above 13% and the dividend is declared, the thesis is confirmed and the position deserves doubling. If margin falls below 11% (continuing the H2 2025 trend) and the dividend is deferred again, then the HKD 6.76 EPV becomes the correct anchor, not the floor.

What surprised me most while digging. The … growth in “profit attributable to shareholders” for 2025, the headline repeated by every release, is mostly mechanical, not operational: consolidated group profit grew by only 22.3% (RMB 787.8 → 963.7 mil.), and the difference comes from the collapse of the minority-interest share from RMB 307.5 mil. to RMB 29.2 mil., after the company bought out the rest of NBT Social Networking Inc. for HKD 1,983 mil. in December 2024. No one is lying — but anyone reading only the headline believes profit doubled, when actually a pocket just changed.