"Aiyong Software's Receivables Surpass Revenues Amid 10x Surge in 20 Days"

Tied to the concept of Huawei's HarmonyOS, the stock price of Airong Software (830799.BJ) has skyrocketed. From September 24th to October 23rd, the stock has accumulated an increase of over 810%, with the maximum interval increase exceeding tenfold, becoming the "cream of the crop" in the entire market.

Behind the violent rise, there are signs of speculative capital entering the market for "hot speculation." Post-market dragon and tiger list data show that during the rapid rise from October 18th to 21st, the top three brokerage seats that bought the stock all had the presence of the "retail investor stronghold" known as the "Lhasa Group" from East Fortune Securities.

However, as the stock price soared, Airong Software's performance seemed somewhat unsustainable. In the first half of 2024, the company's operating income was about 275 million yuan, a decrease of 7.81% year-on-year, and the net profit was about 20.84 million yuan, a decline of 11.62% year-on-year. In addition, the company's accounts receivable have been increasing year by year, and hidden dangers such as concentrated credit risks have begun to gradually emerge.

The maximum increase in violent lifting exceeded tenfold.

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On October 22nd, after reaching a historical high (107 yuan), the stock price of Airong Software quickly fell back, with a fluctuation of nearly 40% during the trading day, and it closed down by 20.7%, failing to achieve eight consecutive daily increases. On the 23rd, after a slight dip, it once again experienced a wide range of fluctuations, with the maximum increase during the trading day once exceeding 20%. As of the closing of that day, the latest stock price was 85.52 yuan, with an increase of 10.65%.

Airong Software is the first stock to increase tenfold in this round of the market. On September 24th, the opening price of Airong Software was 9.27 yuan, and on October 22nd, during the trading day, the stock price of Airong Software once touched 107 yuan, with the maximum cumulative increase exceeding 1054%. Although there was a decline on October 22nd, as of the closing on the 23rd, the stock's cumulative increase in the past month was still around 818%.

The violent lifting was the result of speculative capital entering the market for "hot speculation" under the surface catalysis of the market and concepts.

From September 24th to October 22nd, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index increased by 19.53%, 30.63%, and 44.85%, respectively, and the STAR 50 Index increased by 53.31%. The Beijing Stock Exchange 50 Index was far ahead, with an interval increase of up to 93.39%.

In addition to market promotion, cooperation with Huawei is a more important "booster" for the stock's rise. In April of this year, Airong Software announced that it had obtained the qualification certification of Huawei Developer Alliance Ecological Market Service Provider and the "HarmonyOS Development Service Provider" certificate from Huawei. The company also stated in a recently disclosed investor relations activity record form that, based on its experience and capabilities in the financial field, as well as its R&D capabilities for the scenario needs of financial systems, the company's cooperation with Huawei covers many aspects, including hardware, databases, Euler operating systems, HarmonyOS operating systems, and HarmonyOS ecosystems.

With Huawei's recent official release of the native HarmonyOS NEXT, the stock price of Airong Software also rose accordingly.According to post-market Long-Hu Bang data, the main force behind the speculation is the floating capital. For instance, from October 18th to October 21st, over three trading days, the cumulative deviation of the rise and fall of Airong Software reached 40.77%, with a transaction volume of 54.3031 million shares and a transaction amount of 4.07 billion yuan. The top three purchasing brokerage firms were all "retail investor strongholds" of the Tibet region of East Money Securities. The first and second brokerage firms on Tuanjie Road, and the second brokerage firm on Donghuan Road, purchased amounts of 67.779 million yuan, 50.3047 million yuan, and 48.316 million yuan, respectively.

Major shareholders sold at a low position, and the receiving party violated regulations by reducing holdings.

As the stock price soared, major shareholders were significantly reducing their holdings. According to the semi-annual report, as of June 30th, Zhang Yan and Wu Zhen, husband and wife, directly and indirectly controlled 50.2946% of the company's shares; Meng Qingyou held 25.682 million shares of the company, accounting for 12.21%.

After that, the company's shareholder Meng Qingyou reduced his holdings multiple times. Disclosure data shows that from September 11th to September 20th, Meng Qingyou reduced holdings of 2.92 million shares through block trades, calculating at an average price of 9.29 yuan per share during the period, the cashed-out amount exceeded 27 million yuan. On September 30th and October 8th, Meng Qingyou again reduced holdings of 2.1 million shares through block trades, calculating at an average price of 19.41 yuan per share, cashing out about 40 million yuan. In just over 20 days, Meng Qingyou cashed out approximately 670 million yuan.

Relative to the subsequent trend, Meng Qingyou still sold at the lowest point. According to the average price of reduction, the highest price of Airong Software on the 22nd was already equivalent to more than 11 times his first reduction and about 5.5 times the second reduction.

However, the receiving party, who seemed to have accumulated shares at a low price, due to eagerness to get rid of them, also triggered a violation of regulations by reducing holdings and did not profit from it.

Public disclosure shows that Meng Qingyou transferred 800,000 shares and 1.3 million shares he held to natural persons Sun Xiaowen and Wang Xiaoqing, respectively. However, after the two took over, they did not comply with the regulation that they could not reduce holdings within six months after receiving. Among them, Sun Xiaowen bought 800,000 shares on October 8th for 14.78 million yuan and then sold all of them the next day for 17.554 million yuan; Wang Xiaoqing bought 1.3 million shares for 22.224 million yuan and also sold all of them in a short time for 32.961 million yuan. The "return on investment" for the two was as high as 18% and 48%, respectively.

Afterwards, due to the above violations, Sun Xiaowen and Wang Xiaoqing received self-regulatory measures from the Beijing Stock Exchange, were required to repurchase the reduced shares in violation of regulations, and paid the price difference to the listed company.

Accounts receivable exceeded revenue in the first half of the year.

Behind the soaring stock price and high valuation, how is the performance of Airong Software?Public information indicates that Airong Software was established in July 2009, primarily providing innovative solutions based on artificial intelligence and virtual reality technologies to financial industry clients, with large banks as the main representatives. In June 2014, Airong Software became the first financial technology software company in the industry to be listed on the New Third Board.

From a fundamental perspective, the company's performance has been relatively stable over the past three years, but it has deviated from the current stock price. According to financial reports, from 2021 to 2023, Airong Software's operating income was 421 million yuan, 606 million yuan, and 606 million yuan, respectively. The net profits were 50.67 million yuan, 52.77 million yuan, and 76.82 million yuan, respectively. In the first half of 2024, the company's operating income was approximately 275 million yuan, a decrease of 7.81% year-on-year, and the net profit was about 20.84 million yuan, a decline of 11.62% year-on-year.

Data from the website of China Securities Index Co., Ltd. shows that as of October 21, 2024, the latest rolling price-to-earnings ratio of this stock is 301.94 times; the latest rolling price-to-earnings ratio for the "software and information technology service industry" to which the company belongs is 60.49 times. Airong Software has also repeatedly warned of risks recently.

In addition, Airong Software's accounts receivable have been increasing year by year, with the risk of asset impairment looming. From the end of 2021 to the end of 2023, Airong Software's accounts receivable were 131 million yuan, 180 million yuan, and 200 million yuan, respectively. By the end of June 2024, the company's accounts receivable surged to 337 million yuan, accounting for one-third of the total assets during the same period and exceeding the operating income during the same period.

At the same time, Airong Software has a high degree of dependence on major clients. According to the financial report for 2023, as of the end of December 2023, 67.18% of the company's accounts receivable and contract assets came from the top five clients with the highest balances. In the 606 million yuan of operating income in 2023, 79.58% came from the top five clients. The sales amount from the largest single client alone was as high as 294 million yuan, accounting for 48.53%.