I've been predicting that NBS may not generate any meaningful revenue from China this FY for a few months now (see my old posts). So far this prediction has proved correct.
I think Morely asked a great question as to why NBS's market cap is so high given that NBS (1) seems to have stopped generating any revenue and, (2) has decided not to offer any explanation to the market as to why China revenue has suddenly completely dried up.
The best answer I can think of to Morely's question is that the company has put out some reasonably strong signals that it expects to win the Vietnam drivers license contract in the near future. This contract win, if it eventuates, should provide a compelling short term trading opportunity. So it is possible that traders feel like placing a bet at 15 or 16c in the expectation that Vietnam will come off very soon.
My personal view is that NBS has a 50% chance of winning this contract, however I'm not the slightest bit tempted to have a punt because of the company's problematic track record and because Malaysia and China have certainly fallen far short of expectations.
Furthermore, if NBS do not win the Vietnam drivers license contract (a 50% possibility), then it is hard to see what is left to support the sp at current levels. From memory, cash backing is around 4.5c per share. If the market came to believe that NBS had not secured the Vietnam contract, then I think a 5-6c sp is a realistic possibility.
For the record, I've never shorted NBS, and I only continue to post on this company (1) as public service (so new investors are aware of the risks; that's partly what HC is all about), and (2) because I'm interested to see how everything plays out.
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