Newborn Town (SEHK:9911) - Share price, News & Analysis

Q: What is the Fair Price of 9911 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

9911 (HK$2.37) is trading below our estimate of [[fair value]] (HK$12.63)

9911 fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	6/6
Past Performance	0/6
Financial Health	5/6
Dividends	0/6

9911 Stock Overview

Newborn Town Inc., an investment holding company, operates as a mobile applications developer and mobile advertising platform services provider worldwide.

Rewards

Trading at 81.2% below our estimate of its fair value

Earnings are forecast to grow 74.19% per year

Risk Analysis

Shareholders have been diluted in the past year

Newborn Town Competitors

China Youzan

SEHK:8083

HK$2.9b

Vobile Group

SEHK:3738

HK$8.7b

OneConnect Financial Technology

SEHK:6638

HK$4.2b

Xuan Wu Cloud Technology Holdings

SEHK:2392

HK$3.6b

Price History & Performance

Summary of all time highs, changes and price drops for Newborn Town
Historical stock prices
Current Share Price	HK$2.37
52 Week High	HK$5.64
52 Week Low	HK$2.03
Beta	0.0089
1 Month Change	-10.90%
3 Month Change	-18.56%
1 Year Change	-49.79%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	-27.08%

Shareholder Returns

	9911	HK Software	HK Market
7D	3.0%	-1.7%	-0.7%
1Y	-49.8%	-49.6%	-20.5%

Return vs Industry: 9911 matched the Hong Kong Software industry which returned -49.6% over the past year.

Return vs Market: 9911 underperformed the Hong Kong Market which returned -20.5% over the past year.

Price Volatility

Is 9911's price volatile compared to industry and market?
9911 volatility
9911 Average Weekly Movement	7.1%
Software Industry Average Movement	7.8%
Market Average Movement	6.6%
10% most volatile stocks in HK Market	12.9%
10% least volatile stocks in HK Market	3.1%

Stable Share Price: 9911 is not significantly more volatile than the rest of Hong Kong stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: 9911's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2009	554	Ping Li	https://www.newborntown.com

Newborn Town Inc., an investment holding company, operates as a mobile applications developer and mobile advertising platform services provider worldwide. The company provides live streaming services through social networking platform; and mobile marketing and advertising services through various mobile applications, as well as support services. It also offers Solo X product matrix; Solo Math, a programmatic mobile advertising platform; and Solo Aware, an artificial intelligence (AI) engine.

Newborn Town Fundamentals Summary

How do Newborn Town's earnings and revenue compare to its market cap?
9911 fundamental statistics
Market Cap	CN¥2.43b
Earnings (TTM)	-CN¥286.28m
Revenue (TTM)	CN¥2.36b

1.0x

P/S Ratio

-8.5x

P/E Ratio

Is 9911 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
9911 income statement (TTM)
Revenue	CN¥2.36b
Cost of Revenue	CN¥1.36b
Gross Profit	CN¥1.00b
Other Expenses	CN¥1.29b
Earnings	-CN¥286.28m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	-0.24
Gross Margin	42.52%
Net Profit Margin	-12.13%
Debt/Equity Ratio	0.002%

How did 9911 perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is 9911 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 9911?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 9911. This is calculated by dividing 9911's market cap by their current preferred multiple.
What is 9911's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥2.43b

9911 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.8x
Enterprise Value/EBITDA	-5.7x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

How does 9911's PS Ratio compare to its peers?

9911 PS Ratio vs Peers

The above table shows the PS ratio for 9911 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PS	Estimated Growth	Market Cap
Peer Average	4.6x
8083 China Youzan	1.7x	23.2%	HK$2.9b
3738 Vobile Group	12.6x	38.3%	HK$8.7b
6638 OneConnect Financial Technology	0.8x	19.2%	HK$4.2b
2392 Xuan Wu Cloud Technology Holdings	3.1x	n/a	HK$3.6b
9911 Newborn Town	1x	30.3%	HK$2.8b

Price-To-Sales vs Peers: 9911 is good value based on its Price-To-Sales Ratio (1x) compared to the peer average (4.6x).

Price to Earnings Ratio vs Industry

How does 9911's PE Ratio compare vs other companies in the HK Software Industry?

Price-To-Sales vs Industry: 9911 is good value based on its Price-To-Sales Ratio (1x) compared to the Hong Kong Software industry average (1.3x)

Price to Sales Ratio vs Fair Ratio

What is 9911's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

9911 PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	1x
Fair PS Ratio	3x

Price-To-Sales vs Fair Ratio: 9911 is good value based on its Price-To-Sales Ratio (1x) compared to the estimated Fair Price-To-Sales Ratio (3x).

Share Price vs Fair Value

What is the Fair Price of 9911 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 9911 (HK$2.37) is trading below our estimate of fair value (HK$12.63)

Significantly Below Fair Value: 9911 is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but there are not enough analysts covering the stock to determine statistical confidence in agreement.

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Future Growth

How is Newborn Town forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

Future Growth Score

6/6

Future Growth Score 6/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

74.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 9911 is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.6%).

Earnings vs Market: 9911 is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: 9911 is expected to become profitable in the next 3 years.

Revenue vs Market: 9911's revenue (30.3% per year) is forecast to grow faster than the Hong Kong market (10.1% per year).

High Growth Revenue: 9911's revenue (30.3% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 9911's Return on Equity is forecast to be high in 3 years time (31.8%)

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Past Performance

How has Newborn Town performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-40.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 9911 is currently unprofitable.

Growing Profit Margin: 9911 is currently unprofitable.

Past Earnings Growth Analysis

Earnings Trend: 9911 is unprofitable, and losses have increased over the past 5 years at a rate of 40.5% per year.

Accelerating Growth: Unable to compare 9911's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: 9911 is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (-13.9%).

Return on Equity

High ROE: 9911 has a negative Return on Equity (-46.08%), as it is currently unprofitable.

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Financial Health

How is Newborn Town's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 9911's short term assets (CN¥1.1B) exceed its short term liabilities (CN¥727.3M).

Long Term Liabilities: 9911's short term assets (CN¥1.1B) exceed its long term liabilities (CN¥55.0M).

Debt to Equity History and Analysis

Debt Level: 9911 has more cash than its total debt.

Reducing Debt: 9911's debt to equity ratio has reduced from 0.06% to 0% over the past 5 years.

Debt Coverage: 9911's debt is well covered by operating cash flow (1230781.3%).

Interest Coverage: Insufficient data to determine if 9911's interest payments on its debt are well covered by EBIT.

Balance Sheet

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Dividend

What is Newborn Town current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate 9911's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate 9911's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 9911's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 9911's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as 9911 has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

2.3yrs

Average management tenure

CEO

Ping Li (33 yo)

Tenure

CN¥5,083,000

Compensation

Mr. Ping Li has been the Chief Executive Officer of Newborn Town Inc. since August 26, 2021. He has been an Executive Director at Newborn Town Inc. since June 22, 2019 and had been the Chief Operating Offi...

CEO Compensation Analysis

Compensation vs Market: Ping's total compensation ($USD751.72K) is above average for companies of similar size in the Hong Kong market ($USD417.59K).

Compensation vs Earnings: Ping's compensation has increased whilst the company is unprofitable.

Leadership Team

Experienced Management: 9911's management team is considered experienced (2.3 years average tenure).

Board Members

Experienced Board: 9911's board of directors are not considered experienced ( 1.3 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: 9911 insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 19.3%.

Data	Last Updated (UTC time)
Company Analysis	2022/08/06 00:00
End of Day Share Price	2022/08/05 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31