Last year's new stock king plunged dramatically today as Nobykan's share price fell despite positive news

Nobykan, once crowned as the king of new stocks, recently announced favorable developments one after another, yet the market did not respond positively, and the share price continued to fall deeper.

Key points:

* After securing a 500 million yuan order, the stock price fell more than 30% instead of rising.

* The company's current P/E ratio is still as high as 130 times.

Author of this article: Liu Zhiheng

The king of new stocks last year was neither CATL, Hengrui Pharma, nor Haitian. When it comes to new stocks that soared on their first day of listing, surprisingly, it was a relatively unknown company $NUOBIKAN (02635.HK)$ , which surged 364% on its first day of listing, shocking many investors with its sharp increase.

The rapid rise after listing was not a flash in the pan; on the contrary, the upward trend continued. In March, the company executed a 1-for-10 stock split, and even after the split, the share price kept climbing steadily. It was also included in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect lists. On April 20, when it was officially added to the Hong Kong Stock Connect, the share price once hit 83.2 Hong Kong dollars. Calculating based on pre-split levels, this translates to 832 Hong Kong dollars per share. In other words, from its listing at the end of last year to the April peak, it rose 10-fold in just four months.

Just as investors were becoming euphoric, the stock price suddenly reversed, plunging 18% from its peak. The following day, the company announced a partnership with Smart City signed by InspurStrategic Cooperation Framework Agreement, focusing on AI intelligent cooperation in the fields of smart cities, urban security, and urban digital infrastructure, with an expected scale of approximately 5 billion yuan.

Evaporated 14.3 billion Hong Kong dollars in one day

Unexpectedly, after the good news was announced, the company's share price did not rise but fell instead, plummeting 34% cliff-like on the same day, closing at 45.42 Hong Kong dollars, evaporating 14.3 billion Hong Kong dollars compared to the previous day's high.

Despite the sharp drop from its peak, the share price is still nearly five times higher than its IPO price, with a price-earnings ratio as high as 130 times. What kind of company is this to command such a lofty valuation?

Founded in 2015, the company has only 11 years of history. The founder, Liao Yu, does not have an impressive resume. According to the prospectus, Liao Yu graduated in 2008 with a master’s degree in software engineering from Sichuan University. From 2007 to 2016, Liao Yu served as a technical staff member at Chengdu Rui Zhi Lion Technology and Chengdu Blue Vision Technology.

The company mainly develops and sells monitoring and detection products for railway and power grid companies, as well as related solutions, while also providing urban governance solutions. Its business is divided into three main categories: First, transportation solutions, covering rail transit, airports, and urban transport; second, energy solutions, including electricity and chemical industries; third, urban governance solutions, covering parks, campuses, emergency response, and community management applications.

Although the company repeatedly emphasizes its application of AI, it is entirely different from the AI large model or chip companies that the market is enthusiastic about. The company merely provides integrated hardware and software solutions for industry-specific AI models, not a conceptually attractive AI enterprise. In simple terms, there is insufficient room for imagination to support such a high valuation.

Earnings cannot justify high valuation

In fact, the company’s revenue and profit performance over the past few years have already clearly told the market that it is not a high-growth enterprise. Revenue for 2022 to 2024 was 253 million yuan, 364 million yuan, and 403 million yuan, with profits of 63.16 million yuan, 88.57 million yuan, and 115 million yuan respectively.

By last year,Company revenuerevenue increased by 23.7% year-over-year to RMB 498 million, but net profit only rose by 2.1% year-over-year to RMB 118 million. Administrative expenses climbed by 16.4% to RMB 41.67 million, while R&D expenses surged by 39.3% to RMB 82.95 million.

Judging from the performance, despite revenue growth of over 20%, the increase in profitability was negligible, making it far from ideal and, strictly speaking, showing signs of a slowdown.

At its peak, Norbikhan's stock price had a P/E ratio exceeding 260 times. Even after a significant pullback today, the P/E ratio is still around 100 times. Assuming the company doubles its profits this year, the P/E ratio would still be as high as 50 times, which is not cheap. Moreover, considering the company's current earnings trend, achieving full-year profit doubling seems highly unlikely.

Without high growth, how can there be high valuation? Without a solid fundamental base to support it, a stock price correction is undoubtedly just a matter of time.

Persistently high accounts receivable

Looking further into the company’s financials, accounts receivable have been consistently rising over the past few years: RMB 176 million, RMB 303 million, and RMB 474 million for 2022, 2023, and 2024 respectively. Bad debt provisions also increased simultaneously: RMB 21.76 million, RMB 49.86 million, and RMB 65.17 million during the same period. Meanwhile, days sales outstanding (DSO) jumped from 192 days to 352 days.

Although the 2025 financial report does not show bad debt or DSO figures, accounts receivable continued to rise to RMB 540 million, up 14% year-over-year. The persistent high level of accounts receivable suggests that the company may have very low bargaining power in this area. Perhaps, one reason for the business expansion could be tied to extended payment terms as a trade-off.

Current AI leaders listed in Hong Kong, such as $SENSETIME-W (00020.HK)$and$PHANCY (06682.HK)$, did not make a profit last year, but their scale is much larger than Norbikhan’s. Revenue for 2025 is projected at RMB 5 billion and RMB 7.1 billion, with price-to-sales ratios of 16.2x and 2.9x respectively. On the other hand, Norbikhan generates less than RMB 500 million annually, yet its price-to-sales ratio is a lofty 35x. By comparison, Norbikhan's valuation remains excessively high, and the likelihood of further stock price adjustments is not low.

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