Fair-Value Report — Newlink Technology Inc. (9600.HK)

Insider Signal

Verified Snapshot

Financials reported in RMB. HKD figures converted at CNY/HKD 1.159 (June 2026 spot rate). Not investment advice. Author holds no position.

Business Description

Newlink Technology Inc. (9600.HK) is a Cayman-incorporated investment holding company. Its operating subsidiaries, headquartered in Beijing (Haidian District), provide IT solution services in the PRC. The group operates a single reporting segment: software development, technical/maintenance services, and standard software sales, primarily serving financial institutions, hospitals (healthcare/medical big data), and transportation & logistics enterprises.

Key product categories:

• Software development services (88.8% of H1 2025 revenue): Includes robotic process automation (RPA) solutions, medical & healthcare big data intelligent management platforms, and AI-driven analytics for finance (risk prevention, semantic analysis, knowledge graphs). Innovative solutions drove 58.5% of software development revenue in H1 2025.
• Technical & maintenance services (9.6%): Post-implementation support contracts.
• Standard software sales (1.6%): Medical quality-control and intelligent-healthcare platforms.

Customer concentration: Top-3 customers in H1 2025 contributed approximately RMB 50.3M of RMB 133.7M revenue (37.6%). No single customer exceeds 20%. The company counts major state-owned banks, healthcare networks, and logistics SOEs among clients.

Ownership: Mr. Zhai Shuchun (Chairman & Executive Director) controls the company through Nebula SC Holdings Limited (BVI, 31.05% direct holding). He is the principal founder and architect of the business since 2011. The company listed on HKEX Main Board on 6 January 2021.

Equity acquisition (potential catalyst): In August 2025, the company disclosed a memorandum of intent to acquire an equity interest in an unspecified target company. In May 2026, supplemental terms were announced: the target's shareholders committed to cumulative audited net profit of at least HKD 50M and cumulative net operating cash inflow of at least HKD 50M over a three-year performance guarantee period. A formal acquisition agreement was still being finalised as of May 2026. This acquisition is small relative to Newlink's operating losses (HKD 50M cumulative vs RMB 188M FY2025 loss alone) and should be treated as speculative optionality, not a turnaround catalyst.

Financial History

All figures in RMB thousands unless noted. FY2025 audited (approved at AGM June 2026; source: StockAnalysis.com). H1 2025 unaudited (HKEX interim report, filed 25 Aug 2025, signed by Board 25 Aug 2025). FY2024 balance sheet from H1 2025 interim report comparative column (audited). Revenue for FY2021–FY2024 from published annual reports.

* FY2025 balance sheet estimates derived as: FY2024 audited balance sheet minus FY2025 net loss (RMB 187.94M) and estimated OCI (approx. RMB 10M). FY2025 annual report balance sheet was not directly accessible; figures are analytical estimates. Cash estimate assumes H2 2025 operating cash outflow of approx. RMB 55M (similar to H1 2025's RMB 39M, plus financing repayments). The actual audited FY2025 balance sheet (published ~April 2026) should be consulted before any investment decision.

Key trends: Revenue has grown steadily (+50% since FY2021) but gross margin has collapsed from 36.3% (FY2021) to 14.1% (FY2025), driven by rising cost of implementation services. The company pivoted from profitable specialist software towards lower-margin project delivery. Operating losses have widened every year since FY2022. The FY2025 loss acceleration (+103% YoY) was driven by larger ECL provisions on trade receivables and contract assets, and mark-to-market losses on equity investments held in the PRC secondary market. The H1 2025 operating cash outflow was RMB 39.0M, confirming the losses are at least partly cash-based (not purely non-cash).

Valuation

Method: Asset-Based (P/B) with Scenario Optionality

Newlink is a loss-making IT services company with no forecastable positive free cash flow. A DCF is therefore inappropriate. The applicable framework (per sector guidance for loss-making companies) is: P/Book value + scenario optionality for a turnaround. Three scenarios are modelled around the estimated current book value.

Estimated book value per share:

• FY2024 audited equity: RMB 739,438k
• Less FY2025 net loss: RMB (187,940k)
• Less estimated FY2025 OCI (FX translation & other): RMB (~10,000k)
• Estimated FY2025 year-end equity: ~RMB 541,500k
• Plus Feb 2026 placement proceeds (60M shares × HKD 0.30 net = HKD 17.9M ÷ 1.159): ~RMB 15,445k
• Estimated equity, June 2026: ~RMB 557,000k
• Shares outstanding (post-placement): 997,864,480
• Estimated book value/share: RMB 0.558 = HKD 0.647 (at CNY/HKD 1.159)

Book quality assessment: Cash (RMB 279.5M at H1 2025; estimated ~RMB 215M at FY2025 year-end) is real but substantially all held inside PRC operating entities. A 10% withholding tax applies to any future dividends to the holding structure, and management has not indicated plans for distribution. Trade receivables (RMB 172.3M at H1 2025) carry rising ECL risk; the company has provisioned RMB 10.5M in H1 2025 alone. Equity investments in the PRC secondary market (RMB 33M gross at H1 2025) are declining in value. Goodwill (RMB 36.7M) is not impaired but relates to the Neusoft Yuetong acquisition. Intangibles (RMB 89.3M) are primarily deferred development costs. Overall, a discount to stated book is warranted.

Scenario Valuation Table

Weighted FV = 0.25 × 0.259 + 0.50 × 0.162 + 0.25 × 0.084 = HKD 0.167. Current price: HKD 0.145 (Jun 24, 2026). Upside to weighted FV: +15%. Event price (Jun 22): HKD 0.167 = weighted FV. Note: bear case risk/reward is asymmetric; a 42% downside from current vs 79% upside from current in the bull case.

Reverse Read

At HKD 0.145 (current price), the market applies a P/B multiple of 0.22x to estimated book of HKD 0.647/share. This implies the market effectively values Newlink's equity at 22 cents on the dollar. The discount is internally consistent with: (a) equity eroding at approximately 25–34% per year, (b) cash (the highest-quality asset) trapped inside PRC entities subject to 10% withholding, (c) no demonstrated path to profitability, and (d) receivables quality deteriorating. On a cash-only basis: estimated cash per share at FY2025 year-end ~RMB 0.215 = HKD 0.249/share, which after a 30% repatriation/risk discount implies ~HKD 0.174/share — slightly above the current price but insufficient as a standalone "Buy" argument given cash is still being consumed. The founder buying at HKD 0.167 is consistent with the view that the stock is around weighted fair value, not materially cheap.

Peer Context (Reference; Not Median-Anchored — Data Limitations)

Note: real-time verified peer multiples for HKEX-listed China enterprise IT companies are not available for this report. A peer median table will be incorporated when comparable data is verified. The following is a qualitative reference only.

Newlink operates in the Chinese enterprise software and IT services segment, alongside companies such as ChinaSoft International (354.HK) and CLPS Technology (3997.HK), as well as numerous smaller HKEX-listed Chinese technology companies. Sector-wide characteristics include: compressed gross margins in project-delivery models (10–20%), high R&D capitalisation, and strong customer concentration in financial institutions and SOEs. The sector has experienced significant re-rating downward since 2022 due to weak demand in financial-sector IT spending and credit impairments from delayed government/SOE payments. P/B ratios for loss-making peers in this segment typically range 0.15–0.40x, consistent with the scenario analysis above. The stock's current 0.22x P/B is within normal range for a company in Newlink's financial condition — not a screaming discount, not distressed pricing.

Conclusion

Rating: HOLD

The insider signal is genuine: Mr. Zhai Shuchun (Chairman, founder, ultimate beneficial owner) purchased approximately 7.2 million shares through Nebula SC Holdings at HKD 0.167 on June 22, 2026. However, the purchase is small in absolute size (HKD 1.2M, or roughly 0.5% of the company's estimated annual revenue in HKD terms) and represents incremental floor-setting rather than a high-conviction accumulation. Since the purchase, the share price has fallen a further 13% to HKD 0.145 in two trading days, suggesting the market does not yet share the founder's view.

The fundamental picture is challenging. Newlink has turned from profitable (FY2021–FY2022) to deeply loss-making (FY2023–FY2025), with FY2025 net losses of RMB 188M nearly doubling FY2024's. Revenue growth (+10.7% in FY2025) is real but insufficient to absorb a cost base that has structurally inflated. The gross margin collapse from 36% (FY2021) to 14% (FY2025) is the central narrative: Newlink has become a lower-margin project-delivery shop rather than a differentiated software platform.

The book value (estimated HKD 0.647/share) is real, with meaningful cash (estimated HKD 0.25/share gross), but the cash is being consumed and is trapped in China. The P/B of 0.22x reflects justified structural discounts. At HKD 0.145, the stock is modestly below the probability-weighted fair value of HKD 0.167 (~15% discount), making it a marginal HOLD rather than a clear Buy. Risk/reward is asymmetric to the downside in the bear case (HKD 0.084 = -42% from here) vs bull (HKD 0.259 = +79% from here). A position requires conviction that the acquisition catalyst or some operational improvement materialises — not currently visible in the data.

The signal is real. The price is roughly fair. No actionable edge beyond founder signalling at current entry.

Key Risks

• Cash burn: Operating cash outflow of RMB 39M in H1 2025 alone. At this pace, the estimated ~RMB 215M cash balance (FY2025 year-end) could be exhausted in under 3 years. Loss acceleration in H2 2025 (RMB 123M loss vs RMB 65M in H1) is a red flag.
• Receivables quality: Trade receivables of RMB 172M and contract assets of RMB 131M (June 2025) are subject to rising ECL allowances. Chinese SOE/financial-sector clients have delayed payment cycles; further impairments are likely.
• Equity investments (mark-to-market): The company holds PRC secondary-market equity investments (RMB 33M gross) that have produced unrealised losses in both FY2024 and FY2025. These are non-operational and add volatility to reported results.
• Dilution risk: The Feb 2026 placement at HKD 0.30 (now deep underwater) demonstrates the company's willingness and need to raise equity. Further placements at distressed prices cannot be excluded if operating losses persist.
• China jurisdiction risk: All operations are in the PRC. Cash repatriation is subject to 10% withholding tax and regulatory approval. Regulatory risk (cybersecurity, data sovereignty, tech sector policy) applies across all operating segments.
• Acquisition execution risk: The pending equity acquisition (details undisclosed) could be value-dilutive if the acquired business does not perform, or if consideration is paid in shares at the current depressed price.
• Going-concern trajectory: At the FY2025 loss rate, equity could fall below RMB 300M within approximately 18 months (end of FY2026), which may trigger additional disclosure obligations or auditor going-concern qualification.
• Micro-cap liquidity: Market cap of HKD 145M and low daily turnover create meaningful execution risk; spreads can be wide on small orders.

Sources

• Newlink Technology Inc. H1 2025 Interim Report (six months ended 30 June 2025), HKEX filing 2025091700290, signed 25 Aug 2025 — primary source for financials, balance sheet, and ownership structure
• HKEX Disclosure of Interests system — DI reason 1101 purchase by Nebula SC Holdings Limited, 22 Jun 2026, candidate data
• StockAnalysis.com (HKG:9600) — FY2025 audited income statement (verified against AGM approval in June 2026), share price as at 24 Jun 2026 11:10 HKT
• Investing.com / hkexnews.hk — balance sheet cross-references and annual reports
• TipRanks / TradingView / Futunn — share placement details (Feb 2026, 60M shares at HKD 0.30, Blossoming M Holdings, net proceeds HKD 17.9M)
• TipRanks — equity acquisition announcement (Aug 2025), supplemental performance guarantee (May 2026)
• ForeignExchange.org.uk / FreeCurrencyRates.com — CNY/HKD exchange rate June 2026: approximately 1.159
• MarketScreener — Nebula SC Holdings / Zhai Guanhua 3.43% stake acquisition in Jan 2023