With the collective arrival of former Huobi executives, can Nova Technology (01611) replicate the capital myth of Galaxy Digital?

In the hot August summer of Hong Kong, the original Huobi executive team decided to ignite a "new fire" of digital currency in this oriental pearl. "New Fire Technology (01611) is one of the earliest listed concept stocks related to encryption in Hong Kong stocks, but in the past few years, due to changes in management team and business diversification, it has failed to form a strategic synergy," confessed Weng Xiaoqi. He was invited by Li Lin (founder of Huobi, the largest shareholder of New Fire Technology) to reshape New Fire Technology with an entrepreneurial mindset, with the core goal of building a "Goldman Sachs Group, Inc. of the encryption industry." Weng Xiaoqi is a rare leader in the encryption industry with a technical background, compliance experience, and strategic vision. In 2018, he served as Huobi Global CEO, experiencing the entire cycle of the cryptocurrency market from 2018 to 2021; in 2023, he joined HashKey Exchange as CEO, responsible for the establishment and operation of the exchange. On August 27th, at the "Hong Kong Blockchain Summit and New Fire Technology Strategy Conference", Weng Xiaoqi officially appeared as the CEO of New Fire Technology and delivered a keynote speech; joining him at New Fire were original Huobi CTO Guo Wenbin, CFO Zhang Li, and other core executives, along with several key and technical staff members of the original Huobi, making it a "full lineup" return. Beyond Huobi Appearing in this manner has been interpreted by the market as "the Huobi group taking over New Fire Technology", and it inevitably connects New Fire Technology with the once world's largest cryptocurrency exchange, Huobi. The release of the strategy of "Asia's largest private banking-level digital asset steward" by New Fire Technology has sparked heated discussions on whether it can continue the glory of Huobi. Regarding the interpretation of this executive return as "New Fire reconnecting with the Huobi ecosystem", Weng Xiaoqi emphasized: "We are not trying to replicate Huobi, but to surpass Huobi. Huobi was once one of the largest cryptocurrency exchanges in the world, but today, there are dozens of mature exchanges globally, and the number 7 license (Hong Kong virtual asset exchange platform license) is no longer scarce." He further explained that the industry has entered the stage of "compliance mainstreaming", and the exchange business is evolving from "heavy assets" to "lightweight carriers" (such as ETF, DAT model). "New Fire will not replicate the exchange model of Huobi, but will focus on high-net-worth clients, providing a full range of private banking services, which differentiates it from Huobi's C-end exchange business." In this context, if New Fire were to build a "full-stack" exchange, it would lack differentiation and struggle to break through. Instead, it will adopt a "lightweight, high-touch, full-service" model - a private banking-level digital asset steward. Its target customers are clear: high-net-worth individuals with assets exceeding HK$10 million, family offices, and traditional Financial Institutions, Inc. "These clients' needs are not about 'trading coins', but 'asset allocation, ownership, income, and inheritance'," explained Weng Xiaoqi. "They need someone to help them open accounts, deposit funds, buy coins, custody, wealth management, even set up family trusts. We offer a 'personal steward' service, not just a cold website or app." For example, in the account opening process, New Fire Technology can provide personalized, on-site steward services, promising account activation within 7 days when all documents are complete; in the trading process, a dedicated service group is set up to answer questions 24/7, clients can communicate trading intentions through human interaction, and the company will place orders through multiple exchanges via intelligent routing to achieve the best trading completion method; in the holding process, assets can be custody in trust accounts or designated compliant exchanges, or customize MPC wallets; in addition, New Fire Technology has also pioneered trust schemes based on virtual assets such as bitcoin, solving the problem of inheritance of virtual assets. "This move targets a market gap - traditional private banking lacks the capability to custody encryption assets, and leading players in the digital asset private banking field like Coinbase Custody, BitGo, have not covered the deep needs of high-net-worth clients in Asia," stressed Weng Xiaoqi. New Fire Technology's core competitive advantage lies in its innovative service model, licensed Financial Institutions, Inc., and the endorsement of a listed company, while major offshore exchanges globally may already be mature, they lack high-touch and customized services for high-net-worth clients. At the forum that day, New Fire Technology signed strategic cooperation agreements with institutions such as OSL GROUP (high-net-worth OTC services), Bosh Fund (International) (interconnected private banking services), BOYAA (DAT business cooperation), etc., to build an "asset management + custody + trading" ecological loop. $500 million for DAT What is worth noting is that New Fire Technology's new strategy is not only reflected in the service model but also achieves breakthroughs in the business model. The most notable of these is its strategic layout for the DAT (Digital Asset Treasury) model. DAT refers to enterprises allocating part of their cash reserves to digital assets such as bitcoin, a practice followed by companies like MicroStrategy, Metaplanet, BOYAA, known as the "treasury model." Weng Xiaoqi believes that DAT is "the lightest way for traditional investors to enter the encryption world." "There are billions of stock investors globally, but not many buy ETFs. Buying stocks is the most familiar way to them," he pointed out, "DAT essentially allows companies to allocate encryption assets like they buy stocks, with lower barriers and wider distribution channels." To this end, New Fire Technology announced the establishment of a $5 billion DAT special fund, planning to strategically participate or even lead DAT projects in markets such as US stocks and Hong Kong stocks. It has already been in talks with several top US funds and Asian institutions, focusing on mainstream assets like ETH, SOL. "We are not just serving DAT companies, but also promoting the DAT ecosystem," revealed Weng Xiaoqi, "in the future, we may jointly issue new DAT shell companies or provide a one-stop solution for Asian companies seeking US stock listings + DAT allocation." However, in the areas of digital asset custody and asset management, there are already European and American giants such as Coinbase Custody, BitGo, Anchorage. How will New Fire Technology break through? "European and American institutions excel in technology and compliance, but there is still a gap in serving high-net-worth clients in Asia," Weng Xiaoqi believes that New Fire Technology's advantages lie in three areas: the team comes from Huobi and HashKey, with practical experience and compliance capabilities; adopting a "high-touch" service model to truly provide private banking-level assistance; possessing trust structure capabilities to address the ultimate pain point of "inheritance." More importantly, New Fire Technology is backed by the Li Lin capital ecosystem, forming potential synergy with Huobi Japan (BitTrade), HashKey, etc. For example, in the future, they may provide cross-border services under a Hong Kong license for Japanese ultra-high-net-worth clients or achieve linkage at the asset management level. Catching up with Galaxy in three years From a valuation perspective, New Fire Technology's price-to-sales ratio (PS) is currently only 0.5 times, far below Galaxy Digital (GLXY.US) which is currently at about 3 times. Although New Fire is not profitable yet, its mid-2024 revenue is expected to grow by a significant 427% year-on-year, demonstrating strong growth momentum. Weng Xiaoqi stated that New Fire Technology will not blindly copy other models, but will achieve rapid development based on market demand, with the smallest investment and rapid growth by intensively incorporating past business and client resources, such as he prefers to use "pareto optimization" strategy - integrating existing resources (such as OTC, asset management business) with the minimum investment, quickly activating existing customers and avoiding heavy asset investments. In terms of valuation, New Fire Technology places more emphasis on user asset size (AUM), and does not rule out new financing plans in the next 12 months. As a benchmark, Galaxy is the first comprehensive Financial Institutions, Inc. in the field of cryptocurrencies to parallel Goldman Sachs Group, Inc., with business covering asset management, investment banking, trading, and mining, managing assets exceeding $5 billion. Weng Xiaoqi bluntly said, "Galaxy took five years to get to where it is today, and we plan to catch up in three years." As a benchmark for catching up, Galaxy is a pioneer in the compliance of the cryptocurrency field, and New Fire Technology is also following suit: it holds the Hong Kong Securities and Futures Commission's Type 1, 4, 9 licenses and TCSP trust licenses, and US-Canada MSB licenses, has established a complete compliance licensing barrier; the raised HK$93.6 million will be used for the application of the Hong Kong VATP license; license applications in Singapore, UAE, Europe and others are also planned; the company has completed the acquisition of the Japan-compliant exchange BitTrade. Weng Xiaoqi asserts, "Compliance is the only way for encrypted finance." In his view, whether New Fire Technology can replicate Galaxy's capital myth depends on whether it can prove in the next 12 months: the lightweight model of high-net-worth service can break through the dilemma of "increasing revenue without increasing profit" and make the DAT fund a version of MicroStrategy in Asia.