Last year's king of new listings has announced a steady series of positive developments since its December IPO, but investors don't seem to care



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<h4>Key Takeaways:</h4>



<ul>
<li>Shares of Nuobikan counterintuitively fell more than 30% last week after it announced a new contract worth 500 million yuan</li>



<li>Even after the big decline, the AI intelligent collaboration company's stock still trades at an inflated price-to-earnings ratio of around 100 times</li>
</ul>



The star performer for new listings in Hong Kong last year wasn't battery giant CATL, which made the biggest IPO, nor was it industry leaders like Hengrui Pharmaceuticals or Haitian Flavouring. Surprisingly, that distinction went to the relatively unknown Nuobikan Artificial Intelligence Technology (Chengdu) Co. Ltd. (2635.HK), which soared 364% on its trading debut last December — a staggering increase that left many investors scratching their heads.



Investors were further confounded to discover the strong debut wasn't just a one-day affair, as the stock continued to rise. The company knocked the share price back to earth with a 10-for-1 split in March, but even then, it continued to climb. On April 20 the ticker was included in the Stock Connect program, which makes the shares available to Mainland China-based traders, sending it surging again to as much as HK$83.20. On a pre-split basis, that equated to HK$832 per share, or more than 10 times its HK$80 IPO price just four months earlier.



But just as investors were getting caught up in the euphoria, the stock price suddenly reversed after the company announced its signing of a strategic cooperation framework agreement with Inspur Smart City, a leading operator of smart city systems, last Monday. The deal will see the two sides collaborate on AI-driven intelligence in the fields of smart cities, urban security, and urban digital infrastructure, with an estimated value of approximately 500 million yuan ($73 million).



<h4>Stock tanks</h4>



While the announcement was positive, Nuobikan's shares defied normal logic and fell instead the next day. Its stock plunged 34% the day after the announcement to close at HK$45.42, wiping out roughly HK$14.3 billion ($1.82 billion) in market value. Since then it has continued to fall, closing at just over HK$31 on Tuesday.



Despite the plunge from its highs, the stock remains around four times higher than its IPO price, with a price-to-earnings (P/E) ratio of around 100 times. That raises the question of what kind of company can command such an exorbitant valuation?



Founded in 2015, Nuobikan has a mere 11 years of history. Its founder, Liao Yu, doesn't boast an especially impressive resume. According to its prospectus, he graduated in 2008 with a master's degree in software engineering from Sichuan University. From 2007 to 2016, he worked as a technical staff at Chengdu Ruizhishi Technology and Chengdu Bulusi Video Technology.



Nuobikan develops, and sells monitoring and inspection products, along with related solutions, for railway and power grid companies. It also provides solutions for urban management. Its business is divided into three major categories: transportation solutions covering rail transit, airports, and urban traffic; energy solutions, including power and chemical industries; and urban management solutions, covering application scenarios such as industrial parks, campuses, emergency response and community management.



While the company consistently emphasizes its use of AI, it's quite a different animal from the large AI model or semiconductor companies favored lately by investors. Nuobikan merely provides integrated hardware-software solutions based on AI industry models developed by others, making it less appealing. Put more bluntly, its business hardly seems to support such a lofty valuation.



<h4>Tepid profits</h4>



In fact, Nuobikan's revenue and profits from the past few years clearly show this is not a high-growth company. Its revenue rose from 253 million yuan in 2022 to 364 million yuan in 2023, and further still 403 million yuan in 2024. Meanwhile, its profits over that period rose from 63.16 million yuan to 88.57 million yuan, and then to 115 million yuan in 2024.



Last year, the company's revenue increased 23.7% to 498 million yuan, but its profit rose a mere 2.1% to 118 million yuan. The profits were dragged down by rising administrative expenses, which climbed 16.4% to 41.67 million yuan, and especially by R&amp;D expenses, which jumped 39.3% to 82.95 million yuan.



While last year's revenue growth exceeded 20% and looks relatively strong, the minimal profit increase was hardly impressive.



At its peak, Nuobikan's P/E was once even more astronomical at 260 times. Even if the company's profit doubles this year, which doesn't seem likely given its recent trajectory, the P/E ratio would still remain high at more than 50 times — hardly cheap. That seems to suggest a further price correction for its stock is inevitable.



<h4>High accounts receivable</h4>



A deeper dive into the company's financials shows its accounts receivable have been rising steadily over the past few years, climbing from 176 million yuan in 2022 to 474 million yuan in 2024. Its bad debt expenses rose concurrently over that time from 21.76 million yuan to 65.17 million yuan, as average turnover days for its trade receivables also increased from 192 days to 352 days.



While the company's 2025 financial report did not disclose its bad debt expenses or trade receivables turnover days last year, its accounts receivable continued to climb to 540 million yuan, up 14% year-over-year. The persistently high receivables level suggests the company has relatively weak bargaining power when trying to get delinquent customers to pay their bills.



AI leaders currently listed in Hong Kong, such as SenseTime (0020.HK) and Phancy Group (6682.HK), though still unprofitable last year, are significantly larger than Nuobikan in scale. Their 2025 revenues were 5 billion yuan and 7.1 billion yuan, respectively, with price-to-sales (P/S) ratios of 16.2 and 2.9. By comparison, Nuobikan, with annual revenue under 500 million yuan, commands a P/S ratio of about 22 times. That seems to show Nuobikan's valuation remains excessively high, suggesting the stock could face additional downward pressure.



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Nuobikan Artificial Intelligence Technologyhas seen a dramatic decline in its stock price, falling over 30% after announcing a 500 million yuan contract. Despite a strong debut with a 364% increase at its IPO, the company's inflated price-to-earnings ratio of around 100 times raises concerns. Founded in 2015, Nuobikan's revenue growth has been modest, with profits hindered by rising expenses. The stock's recent plunge suggests a potential correction, as its valuation appears unsustainable given its financial performance.

Nuobikan Back To Earth After Spectacular Debut