The capital market is sluggish, but the cryptocurrency market has a different picture, with Bitcoin rising 165% since 2023, from 1$60,000 to $430,000 US dollars, Ethereum and OKB and other mainstream cryptocurrencies have also risen by more than 1 times, but as the purest target of Hong Kong stocks, New Huo T Technology (01611) has not benefited.
Zhitong Financial APP learned that New Huo Tech was renamed from Huobi Technology, which was once one of the world's three major exchanges, and its stock price doubled in two years after buying a shell listing in 2019, and in 2021, the policy forced the exchange to withdraw from the Chinese market, and then faded out of the field of vision of investors, and the stock price continued to fall sharply. In April 2021, the company's share price reached a maximum of HK$29, and now it is only 2HK$13, down 93%.
New Huo Tech's core income is crypto Huobi assets, Bitcoin has been trending in recent years, but it has not made any money, and its performance has been very poor, since its listing four years (2020-2023 fiscal year), only 2021 fiscal year has achieved profitability, and the cumulative loss in the remaining four years is 5HK$200 million. Notably, the company's revenue fluctuates wildly, with revenue of $28 in fiscal year 2023HK$3.4 billion, down 68 percent year-on-year71%。
However, the company's stock price has fluctuated greatly due to the recent impact of Bitcoin**, so is it worth paying attention to the purebred cryptocurrency target of this Hong Kong stock?
The performance fluctuates sharply, and the batch of ** assets is subordinate.
Zhitong Financial APP learned that New Huo Tech provides virtual asset trading and technical solution services, of which virtual asset trading includes providing customers with virtual asset lending asset management and providing an over-the-counter trading platform, and the over-the-counter trading platform generates income according to the customer's transaction difference, which is the most important income. Revenue from over-the-counter transactions and revenue from loan management services in fiscal 2023 was 28HK$1.1 billion, accounting for 99 percent of total revenue19%。
OTC trading depends on the number of users and trading volume, Huobi lost the most core user market after withdrawing from China, and the overall cryptocurrency in 2023 is still good, because most users mainly trade mainstream currencies led by Bitcoin and Ethereum, and most of the mainstream currencies have good premiums during the period. At the heart of the company's decline was the high dependence and instability of its largest customers, which contributed 80 percent of revenue in fiscal 202243%, not in FY2023, and another large customer contributed 6753%, and the difference between the two customers contributing revenue is 74%.
In fact, in the face of domestic and foreign regulation of cryptocurrency trading, New Huo Tech has actively transformed and provided technology solution services, but the revenue contribution is low and the performance is also highly volatile, such as the custody services and asset management services provided, the revenue in fiscal 2023 decreased by 96% and 52%, respectively, and the overall solution service business fell by 80%. Due to the sluggish business, the company frequently sold its assets.
In FY2023, the company was listed with Win Techno Inc, Animoca Brands Corporation Limited, Pintop Solid, Pinde International, Pinjie and APPEI, as well as New Huo Solutions Limited, HBTPOWER Limited and HBTPOWER Inc. According to the financial report, the company's non-current assets, the mainland, Japan and the United States have been cleared, and Hong Kong is only 0HK$7.7 billion.
In addition to business reasons, the batch ** may also have a greater relationship with debt, as of September 2023, the company's interest-bearing debt has 46.7 billion yuan, accounting for 62 percent of total assets and net assets respectively3% and 2192%, net cash (cash net of interest-bearing liabilities) perennial net outflow of more than 1HK$400 million, more than 65% of net assets. With shrinking business scale and financial constraints, the company will face operational difficulties.
Focusing on the Hong Kong market, the FTX thunderstorm damaged nearly 90 million.
New Huoo Technology returned to its business origins, and ultimately focused on the virtual asset ecology, that is, providing asset management and over-the-counter trading platforms, although Chinese mainland policies prohibit it, but many regions have begun to legalize, especially Hong Kong, mainland users or through Hong Kong legal participation in cryptocurrency investment.
The Hong Kong Securities and Futures Commission introduced a licensing regime for virtual asset trading platforms in 2018, and on 1 June 2023, the guidelines for virtual asset trading platform operators in Hong Kong came into effect. On January 31, 2024, Bybit submitted its application for a virtual asset trading platform license (VATP) to the Hong Kong Securities and Futures Commission, bringing the total number of applications received by the Hong Kong Securities and Futures Commission to 14.
It is understood that New Huo Tech has a number of virtual asset licenses, including an asset management license issued by the Hong Kong Securities and Futures Commission, a Hong Kong trust license, and a money services license issued by the U.S. Financial Crimes Enforcement Bureau. After the company clears its assets in other regions, the market is likely to focus on Hong Kong.
Hong Kong's cryptocurrency policy is relatively clear, in order to better serve the Hong Kong market, the company has also carried out a series of actions, such as the MPC self-custody business has established strategic partnerships with dozens of companies in the industry such as Hong Kong's licensed retail virtual asset exchange Hashkey Exchange, mining machine manufacturer Canaan Technology, Web3 security agency Certik, etc., and has served more than 50 customers. In May and October 2023, the company launched virtual asset investment** with LD Capital US and Alpha Blockchain Capital, respectively, and also entered into a strategic partnership with Stephen Chow's Bigao Group.
According to the financial report, New Huo Tech has two ** products accounting for more than 5% of the total assets, namely New World Pioneer Mining** and NH Investment SPC, with a face value of HK $57.8 million and 1.0% respectively as of 2023HK$6.9 billion, accounting for 22 of the total assets03%。The company holds more than 70 million Hong Kong dollars in cryptocurrency, but it does not guarantee the safety of assets, after all, there are "lessons from the past".
FTX used to be the world's leading cryptocurrency exchange, and it was in the limelight just a few years after its establishment, but in 2022, there was a thunderstorm, which caused users to suffer huge losses, and New Huo Tech was one of the victims. According to the disclosure of New Huo Tech, the company has deposited $18.1 million equivalent of cryptocurrencies on the FTX platform, and has been unable to withdraw cryptocurrency assets from FTX, resulting in an impairment loss provision of 0HK$8.6 billion.
It is difficult to make profits, and it is difficult to talk about value in the long run.
Due to the revenue recognition rules, the revenue recognized by OTC transactions is basically not business creation, so there is basically no profit, and the technology solutions provided by the business fluctuate greatly and cannot generate continuous cash flow, resulting in perennial losses for the company. In fiscal 2023, the company's gross profit was just 0100 million Hong Kong dollars, but the administrative costs alone are as much as 1HK$8.7 billion.
In FY2023, the Company incurred approximately 0.0 percent of employee severance payments and one-time incurred expenses as a result of the Company's human resources restructuring and cost management plansHK$1.5 billion, based on the business strategy, it is expected that there will still be a large personnel restructuring and optimization in 2024. After the Hong Kong cryptocurrency operating license comes into effect, it will become a "gateway" for domestic market entry, but the competition of cryptocurrency exchanges is fierce, and domestic and foreign users may prefer international head exchanges, and Huobi is facing greater pressure.
In the better period of cryptocurrency, the trading volume of major platforms is rising, and the decline in the trading volume of Xinhuo Technology may mean that the scale of users is declining, the competitiveness is declining, and its heavy reliance on a single customer also brings a high degree of instability in performance. The company has sold off many of its assets, raising questions from investors, and uncertainty over its performance and large interest-bearing debt have made it more difficult to make profits, and its future development may be difficult.
New Huo Tech's ** holds cryptocurrency assets, and the fluctuation of Bitcoin ** has a certain impact on it, which affects investment sentiment in the short term, but it is difficult to say the value in the long term.