Behind Aili Home's 10-Day Limit-Up Frenzy: A Pricey Memory-Testing Bet That Carries Big Risks

The Deal That Sparked a Ten-Day Trading Spree

Shares of Shanghai-listed Aili Home—once known as a PVC elastic flooring manufacturer—soared for ten consecutive sessions after it revealed plans to buy control of Wuhan Okano Electronic Technology Co., a storage-testing equipment and services firm. The stock leapt from RMB 9.56 to RMB 24.79 between late July and early August, adding more than RMB 3.6 billion in market value and pushing the price-to-earnings ratio to an extreme 349.6 times, against a sector average of just 27.9 times.

The buying mania persisted even as the company fired off seven risk-warning notices in three weeks, cautioning that no formal agreement had been signed and that Okano's testing business was not yet generating any revenue for Aili. The warnings escalated from gentle prompts to stark alerts, and on 3 August Aili even requested a voluntary trading halt for internal checks. When trading resumed, the stock quickly hit another limit-up, before surging again on 10 August on turnover of 48.2% of the free float—sparking a second halt.

Under the letter of intent, Aili Home intends to acquire at least 77.08% of Okano for an overall valuation of no more than RMB 650 million, implying a minimum cash outlay of RMB 501 million. Okano, which was listed on the National Equities Exchange and Quotations (NEEQ) until 2021, develops system-level testing solutions for SSDs, DDR modules, memory chips and embedded storage. Its revenue had stagnated and the company was loss-making in 2023 and 2024. An abrupt turnaround in 2025 and the first half of 2026—with half-year net profit hitting RMB 37.2 million—has given the acquisition a veneer of promise, but the underlying numbers raise serious questions.

Why the Numbers Behind the Takeover Look Troubling

A valuation that already prices in perfection

Aili's offer of RMB 650 million values Okano at roughly 106 times the target's 2025 net profit of RMB 6.1 million. Comparable listed peers trade at about 60 times earnings, and Okano's last funding round—just seven months earlier from Wuhan government-backed funds—placed its worth at RMB 467 million. The 39% markup in such a short period assumes the blistering growth of the first half of 2026 can be sustained, but that growth was delivered on the back of an extraordinary reliance on one customer.

Customer concentration that threatens everything

In 2025 and the first six months of 2026, Okano's top five clients accounted for 96.2% and 93.5% of revenue, respectively, with the largest single customer contributing 37.0% and then an alarming 84.1%. As of late July, more than 70% of the company's RMB 142 million order book came from that same client. While deep ties are common in the semiconductor test sector because of long certification cycles, such lopsided dependence means that the loss of a single contract could wipe out most of the company's income and sink the four-year profit guarantee of RMB 230 million that has been written into the deal. Any shortfall would trigger large goodwill impairments, directly hitting Aili's already thin bottom line.

Aili's legacy business is deteriorating fast

The acquirer's core flooring operation is struggling. Revenue fell 13.9% in 2025 to RMB 1.13 billion, and net profit after non-recurring items plunged 91.4% to just RMB 12.2 million. The company relies on contract manufacturing for overseas brands, with over 95% of sales coming from abroad and 76.6% from the US alone. Its dominant client, VERTEX, provides more than 85% of revenue, eroding pricing power and compressing margins. A new factory in Mexico has been loss-making, adding fixed-cost pressure. In the first quarter of 2026, Aili's revenue shrank another 9.2% and the firm swung to an operating loss of RMB 15.3 million; management expects the operating loss for the first half to widen to between RMB 34.8 million and RMB 40.8 million.

The money simply isn't there

At the end of March 2026, Aili Home held just RMB 259 million in cash, half the level a year earlier and already less than the RMB 501 million needed for the acquisition—while simultaneously carrying RMB 256 million in short-term borrowings and RMB 21.3 million in current non-current liabilities. To bridge the gap, the controlling shareholder plans to sell a combined 20% stake to Okano's founder and an affiliate vehicle for RMB 454 million, with additional funds coming from asset disposals and loans. The transaction structure thus dilutes existing shareholders and still leaves a potential funding shortfall that must be filled by further borrowing.

What Should Concern Aili Home's Shareholders Right Now

The rally has been fuelled by retail speculation, not by any visible improvement in Aili Home's underlying business. For shareholders and anyone considering the stock, the immediate focus should be on concrete, verifiable developments:

• Formal acquisition agreement: The letter of intent is non-binding. The final price, payment structure, performance guarantees and integration plan need to be signed and disclosed. Any breakdown in talks would remove the narrative driving the share price.
• Okano's second-half 2026 revenue and customer diversification: The target's 2026 profit surge was driven overwhelmingly by one client. Watch for evidence that Okano is adding new customers and can convert its broader order book into recurring revenue, because without that the lofty valuation is indefensible.
• Aili's own operational turnaround: The legacy flooring business is loss-making and bleeding cash. Any sign that US housing demand is stabilising or that the Mexican plant is reaching break-even would be a material positive—but until those appear, the core business is a drain, not a support.
• Funding milestones: Asset sales of RMB 200–300 million and the shareholder stake transfer must close. Investors should track whether the company actually secures the announced bank and shareholder loans, as a failure to fund the deal would trigger a disorderly unwind of the stock price.
• Regulatory scrutiny: The Shanghai Stock Exchange has already sent a detailed inquiry. Additional requests, or a delay in the deal's clearance, would heighten the risk that the acquisition is restructured or abandoned.