Venture(US:VEMLY) Mei Ri Jing Ji Xin Wen·2025-12-03 08:28Core Viewpoint - Beijing DeepYuan Intelligent Technology Co., Ltd. (DeepYuan) has submitted an IPO application to the Hong Kong Stock Exchange, aiming to raise funds for AI product development, sales network expansion, strategic acquisitions, and general corporate purposes [1][2]. Financial Performance - DeepYuan's revenue and net profit have shown volatility during the reporting period, with a projected decline in both metrics for 2024 [1][5]. - The company reported revenues of RMB 5.43 billion, RMB 6.11 billion, RMB 5.38 billion, and RMB 2.77 billion for the years 2022, 2023, 2024, and the first half of 2025, respectively [5][7]. - Net profits for the same periods were RMB 593.62 million, RMB 606.58 million, RMB 215.2 million, and RMB 36.39 million [5][7]. - The gross margin for the reporting period was 30.9%, 31.2%, 27.3%, and 27.1%, with a notable decline in 2024 attributed to a decrease in revenue without a corresponding drop in costs [5][8]. Revenue Composition - Over 90% of DeepYuan's revenue comes from intelligent advertising, with revenue contributions from this segment increasing from 82.1% in 2022 to 93.3% in the first half of 2025 [2][3]. - The company serves approximately 530 end customers, including 89 Fortune Global 500 companies, with a significant concentration of revenue from a small number of clients [3][9]. Client Concentration and Risks - DeepYuan's revenue concentration is increasing, with less than 20% of its end customers contributing over 70% of its revenue in the first half of 2025 [9][10]. - The company has acknowledged issues with cash flow management, including a mismatch in payment terms, leading to extended cash conversion cycles [11][12]. Compliance and Governance Issues - DeepYuan has faced issues with underpayment of employee social insurance and housing funds, totaling approximately RMB 34 million over three and a half years, while distributing RMB 40 million in dividends last year [1][12]. - The company has committed to rectifying these compliance issues by December 31, 2026, in accordance with regulatory requirements [1][12].