The “boom” of artificial intelligence continues to boom in the secondary market.

On November 12, Nobicam Artificial Intelligence Technology (Chengdu) Co., Ltd. (“Nobicam” for short) officially submitted a prospectus to the Hong Kong Stock Exchange to be listed on the main board, with CICC acting as the sole sponsor.

According to reports, Nobicam was founded in 2015 and mainly focuses on advanced technologies such as artificial intelligence technology and digital twins. It mainly focuses on industrial applications in the fields of AI+ transportation, AI+ energy, and AI+ urban governance, that is, by providing integrated software and hardware solutions based on the AI industry model, it deeply empowers customers in the fields of transportation, energy, and urban governance with intelligent monitoring, inspection, operation and maintenance.

According to Insight Consulting, in terms of revenue in 2023, Nobicam is the second-largest AI+ power supply system inspection and monitoring solution provider in China and the seventh-largest AI+ rail transit inspection and monitoring solution provider in China.

It is worth mentioning that according to LiveReport big data, as of July 15, 2024, a total of 13 artificial intelligence companies have submitted listing applications to the Hong Kong Stock Exchange and have not been listed. Among them, there is no shortage of popular companies such as Black Sesame Intelligence and Brain Action Aurora Mobile that have already gone public.

Now, when the “wind” of listing hits Nobicam, what is the real strength of the company?

The business is on the fast track, but the amount of debt has risen sharply

Judging from the business structure and distribution of business lines, Nobicam's business context has clearly begun to take shape, driving the company's overall steady upward trend.

The Zhitong Finance App observed that Nobikan's business structure mainly includes three layers: the NBK-INTARI platform, the AI industry model, and AI solutions. The NBK-INTARI platform is the company's underlying technology platform. Based on this company, various AI industry models have been generated; the AI industry model is an algorithm model built for each business scenario, which is used to solve business problems in a single dimension or scenario through continuous training with business scenario data and industry knowledge; different AI industry models are combined and interconnected to form an AI solution integrating software and hardware to solve more comprehensive and complex business problems.

Nobicam's business areas mainly cover the three major directions of AI+ urban transportation, AI+ airports, and AI+ chemicals. The details are as follows:

AI+ transportation includes AI+ rail transit, AI+ urban transit, and AI+ airports. As of November 8, 2024, Nobicam has provided contact network suspension defect recognition solutions to more than 80% of China's railway administrations. In addition to AI+ rail transit, as of November 8, 2024, Nobicam's AI+ urban transportation and AI+ airport are also in the commercial trial operation phase, respectively.

AI+ energy includes AI+ electricity and AI+ chemicals. As of June 30, 2024, Nobicam's AI+ Energy has participated in the deployment of more than 100 distributed energy storage centers for power grid companies, and its AI+ solutions have also assisted customers in intelligent image recognition and data analysis of more than 20,000 kilometers of transmission and distribution lines. As of November 8, 2024, in addition to AI+ power, Nobicam has also begun the commercialization process for the AI+ chemical business.

AI+ urban governance includes application scenarios such as parks, smart campuses, emergency and community management — in terms of urban governance, Nobicam strives to provide intelligent, digital, and visual AI+ solutions for comprehensive and diverse application scenarios. Such AI+ solutions aim to achieve intelligent and automated inspection and management of the urban environment.

In recent years, along with the growing application of AI as an emerging technology in smart cities and intelligent transportation, Nobicam's revenue and net profit seem to have entered the fast track, growing significantly.

According to the prospectus, from 2021 to 2023, Nobicam achieved revenue of 0.101 billion yuan, 0.253 billion yuan, and 364 million yuan respectively, with a compound annual growth rate of 89.8%; as of the first half of 2024, Nobicam achieved revenue of 0.186 billion yuan, an increase of 5.68% over the previous year.

Net profit also showed a steady growth trend. From 2021 to 2023, Nobicam's net profit was 0.026 billion yuan, 0.063 billion yuan, and 89 million yuan, respectively, with a compound annual growth rate of 85.5%; in the first half of this year, Nobicam's net profit was 0.051 billion yuan, compared to 0.046 billion yuan for the same period in 2023.

In addition, the company's gross margin also maintained a high level. During the reporting period, Nobicom's gross margins were 54.5%, 55.6%, 58.1%, and 57.9%, respectively, which meant that the company's ability to attract money was not poor.

However, although Nobicam's profitability remains at a high level, the company's financial pressure is still visible to the naked eye.

As of December 31, 2021, 2022, 2023, and June 30, 2024, the company's net liabilities were 0.331 billion yuan, 0.392 billion yuan, 40.6 million yuan, and 77.9 million yuan, respectively; net current liabilities were 68.7 million yuan, 0.388 billion yuan, 47.5 million yuan, and 87.4 million yuan, respectively, and the size of debt remained high. Among them, the company's net liabilities and net current liabilities increased on June 30, 2024, mainly due to an increase in short-term loans to support business expansion.

At the same time, combined with factors that reduced the company's cash flow during the period — as of the first half of 2024, the company's cash and cash equivalents at the end of the period was 46.113 million yuan, down 19.7% from the same period in 2023. Therefore, it seems impossible to understand the intention of going public to “make up blood” even if the company's business enters the fast track.

The industry's “Chaoyang temperament” is evident, yet it suffers from “addiction” from big customers

In recent decades, artificial intelligence has moved from a simple theoretical concept to practical applications in real life, and is playing an increasingly important role in many industries. The concept of “AI+”, as an extension of the professional application of artificial intelligence into different industries, has also become a catalyst for new technologies, new models and new ecosystems, and a key factor driving economic growth and innovation, thus bringing broader market opportunities to the industry.

Take Nobikan's three major market segments: AI+ Transportation, China's AI+ Energy, and AI+ Cities. These industries all have considerable room for development.

According to Insight Consulting, the market size of China's AI+ transportation solutions industry will reach 238.4 billion yuan in 2023, and is expected to grow to 518.2 billion yuan by 2028, with a compound annual growth rate of 16.8%; the market size of China's AI+ energy solutions industry is 0.5 trillion yuan in 2023, and is expected to grow to 1.1 trillion yuan by 2028, with a compound annual growth rate of 18.6%; and the market size of China's AI+ urban governance solutions industry It reached 0.6 trillion yuan in 2023, and is expected to grow to 1.2 trillion yuan by 2028, with a compound annual growth rate of 14.0%.

In such a development circuit full of rising temperament, Nobikan has a certain competitive advantage, but there is no shortage of development risks lurking around.

The advantage is that the company is a pioneer in the application of artificial intelligence technology and has achieved industry leadership in the segment. Furthermore, Nobicam has now deeply integrated artificial intelligence technology with application scenarios to promote rapid revenue growth and continue to achieve profits. For companies on such an emerging circuit, the rapid increase in revenue and the ability to achieve continuous profits is certainly a big plus.

However, looking further, Nobicam also has obvious development risks in its development circuit.

On the one hand, competitive pressure is increasing. Once a company fails to compete effectively, the company's business, financial situation and operating performance may be adversely affected to a certain extent.

Specifically, Nobicam is in a highly competitive and fragmented industry. The company mainly competes with other companies focused on AI+ technology development and commercialization. As far as the various industry verticals it has already entered, the company also competes with existing players in these industry verticals that do not have specific AI capabilities, as they may develop and improve their own AI algorithms for their comprehensive product suite. Additionally, Nobicam's competitors may have a longer operating history of the company, or have or will receive more financial resources, more advanced technical capabilities, and a wider customer base and relationships than us. However, once competition intensifies, it may cause the company's sales to decline, prices to fall, profits to decrease, or lose market share, which will have a certain adverse impact on the company's business.

On the other hand, Nobicam's customers are concentrated, and they have obvious “addiction” to large customers, which may add uncertainty to the company's overall performance.

For the year ended December 31, 2021, 2022, and 2023, and for the six months ended June 30, 2024, the company's largest customers accounted for 23.7%, 27.8%, 30.5% and 61.0% of revenue, respectively. The percentages of revenue due to the top five customers were 85.7%, 61.1%, 85.9% and 91.5%, respectively. They were mainly AI+ transportation dealers and direct customers and system integrators in AI+ energy and AI+ urban governance businesses. Under such a high level of customer concentration, once the above customers default or delay payment or settlement of trade receivables, the company's liquidity, financial status and business performance may be adversely affected.

In summary, it can be seen that Nobikan, which is in the “AI+” industry, which has a certain positive temperament, has many advantages in terms of rapid revenue growth, continuous profit, and high gross margin, but if you look at it from the inside, the company actually still has a lot of “weak” characteristics, while disadvantages such as high debt, tight liquidity, and addiction to major customers persist, the company actually still has a lot of “weak” characteristics, which may discourage investors' interest.