Manycore Tech(US:KOOL) Xin Lang Zheng Quan·2025-05-08 08:42Core Viewpoint - The article discusses the emergence of six influential companies in the new technology sector in Hangzhou, known as the "Hangzhou Six Little Dragons," with a focus on Qunhe Technology, which is the first to apply for an IPO among them. The company faces challenges regarding its innovation capabilities, customer structure, and financial performance, particularly in light of its heavy reliance on the real estate industry [1][6]. Financial Performance - Qunhe Technology has shown a high asset turnover with total assets of 880 million RMB in 2022, 766 million RMB in 2023, and 564 million RMB in Q3 2024, with half of these assets being cash and cash equivalents. However, the company has reported continuous losses, with a total net profit loss of 1.29 billion RMB in Q3 2024, accumulating to 1.772 billion RMB over the past two years and three quarters [2][3]. - The company has maintained a high gross margin, with comprehensive gross margins of 72.68%, 76.76%, and 80.41% during the reporting period, despite ongoing losses [2]. Expense Management - Qunhe Technology has been actively controlling its expenses, leading to a gradual reduction in losses. R&D expenses decreased from 438 million RMB in 2022 to 263 million RMB in Q3 2024, with corresponding R&D expense ratios dropping from 72.9% to 47.6%. In contrast, sales and marketing expenses remained high, accounting for over 50% of revenue [3][4]. Customer Structure - The company derives over 80% of its revenue from enterprise clients, primarily in the real estate industry, which makes it vulnerable to fluctuations in this sector. The subscription revenue from enterprise clients has shown a decline, with average revenue per enterprise client dropping from 14,800 RMB to 13,600 RMB [6][8]. Market Conditions - The real estate industry in China has been experiencing a downturn, with new home sales in 2024 dropping by 17.1% year-on-year to 96,750 billion RMB. This decline has negatively impacted Qunhe Technology's client retention rates and subscription revenue [8]. Financing and Liabilities - Qunhe Technology has completed eight rounds of financing since 2013, with a valuation exceeding 2 billion USD after a strategic financing round in 2021. However, the company has seen an increase in redemption liabilities, which rose from 2.886 billion RMB in 2022 to 3.540 billion RMB in 2024 [4][5].