Company Overview - Yonyou Network Technology Co., Ltd. is a leading provider of enterprise software and intelligent services, focusing on the development and innovation of digital intelligence software and services based on AI, big data, and cloud computing [3] - The company has evolved from accounting-centric systems to comprehensive enterprise systems, and now to a digital intelligence platform, with its core products transitioning from financial management software to ERP software and the Yonyou Business Innovation Platform (Yonyou BIP) [3] Product and Service Offering - Yonyou BIP serves as the core platform for the company's cloud services, providing comprehensive tools and resources for digital transformation and intelligent operations [4] - The company offers a wide range of enterprise software and intelligent service products, including cloud services and software products, with a customer base covering 76% of the Fortune China 500 companies for 2024 [4] Financial Performance - The company reported revenues of approximately RMB 8.89 billion, RMB 9.44 billion, RMB 8.82 billion, and RMB 3.43 billion for the fiscal years 2022, 2023, 2024, and the six months ending June 30, 2025, respectively [6] - Gross profit for the same periods was approximately RMB 4.89 billion, RMB 4.65 billion, RMB 4.06 billion, and RMB 1.60 billion, with corresponding gross margins of 55.0%, 49.3%, 46.0%, and 46.7% [7] - The company recorded net profits of approximately RMB 225 million, a loss of RMB 933 million, a loss of RMB 2.07 billion, and a loss of RMB 981 million for the same periods [8] Market Position - Yonyou Network is the largest market participant in China's enterprise software and services market, with a market share of 4.1% based on 2024 revenue [1] - The global enterprise software and services market is projected to grow from USD 258.4 billion in 2020 to USD 381.3 billion in 2024, with a compound annual growth rate (CAGR) of 10.2% [10] - China's enterprise software and services market is expected to grow from RMB 140 billion in 2020 to RMB 211.9 billion in 2024, with a CAGR of 10.9% [12] Cost Structure - The primary cost components for companies in the Chinese enterprise software and services market include salaries and benefits for employees, with average annual salaries expected to increase from RMB 101,300 in 2020 to RMB 123,200 in 2024 [14] Board of Directors - The board of directors consists of eight members, including five executive directors and three independent non-executive directors, with terms lasting three years [16] Shareholding Structure - The major shareholder, Mr. Wang Wenjing, holds a combined 41.59% stake through various entities, with additional shareholders holding smaller percentages [18]

YONYOU NETWORK TECHNOLOGY CO., LTD. 用友網絡科技股份有限公司 (the "Company") (A joint stock company incorporated in the People's Republic of China with limited liability) WARNING The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the conte ...

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Core Viewpoint - Yonyou Network, the largest enterprise software and service provider in China by 2024 revenue, has submitted a listing application to the Hong Kong Stock Exchange, while facing significant competition and declining financial performance [2][3][10]. Company Background - Yonyou Network was established in 1988 and launched its first ERP product in 1998, listing on the Shanghai Stock Exchange in 2001. The company has expanded internationally since 2003, with 12 overseas branches and over 1,300 clients across more than 40 countries [3][4]. - The company offers a comprehensive range of enterprise software and intelligent services, including cloud services and software products, to support digital transformation for various business sizes [3][4]. Financial Performance - Yonyou Network's market capitalization is approximately 438 billion RMB, with a year-to-date increase of 19.57%. In contrast, its competitor Kingdee International has a market cap of about 477 billion RMB and a year-to-date increase of 72.57% [2]. - In 2024, Yonyou's revenue decreased by 6.62% to 8.817 billion RMB, while Kingdee's revenue increased by 10.15% to 6.256 billion RMB [11]. - Yonyou's gross margin fell from 55.03% in 2022 to 46.01% in 2024, while Kingdee's gross margin improved to 65.07% [10][11]. Competitive Landscape - Yonyou faces intense competition from international giants like SAP and Oracle in the high-end ERP market, as well as from major tech companies like Alibaba, Tencent, and ByteDance, which leverage their technological advantages and ecosystems [6][7]. - Kingdee International, while primarily targeting small and medium-sized enterprises, has made inroads into the large enterprise market, posing a direct challenge to Yonyou [8][10]. Future Plans - Yonyou plans to raise funds through its Hong Kong listing to attract top clients, enhance product maturity, invest in R&D, and cover operational costs [13][14]. - The company aims to leverage market opportunities, innovate with AI-driven products, and strengthen its ecosystem collaboration to improve its financial performance [13][14].

Core Viewpoint - Yonyou Network is facing significant financial challenges, with a 21% revenue decline in Q1 2025 and a net loss that has expanded over 60%, raising concerns about its ability to successfully transform in the AI era and regain investor confidence [1][5][11]. Financial Performance - In 2024, Yonyou Network reported revenues of 9.153 billion yuan, a 6.6% decrease year-on-year, and an adjusted net loss of 1.991 billion yuan, which is a 123% increase compared to the previous year [1][3]. - The company's Q1 2025 revenue was 1.378 billion yuan, down 21.22% year-on-year, with a net loss of 736 million yuan, marking a 62.5% increase in losses [4][5]. Revenue Trends - Yonyou Network's revenue fluctuated over three years, with figures of 8.89 billion yuan in 2022, 9.443 billion yuan in 2023, and 8.817 billion yuan in 2024, indicating a downward trend [3][4]. - The company has seen a decline in revenue from large and medium-sized clients, with large clients contributing 633 million yuan less in 2024 compared to 2023 [9]. Cost Structure - Sales costs increased from 3.998 billion yuan in 2022 to 4.76 billion yuan in 2024, with the ratio of sales costs to revenue rising from 45% to 54% [6]. - R&D and sales & marketing expenses are significant, with sales & marketing expenses being the largest component among these costs [7]. Cloud Services - Cloud services accounted for over 70% of Yonyou Network's revenue, increasing from 71% in 2022 to 77.2% in 2024, although the gross margin for cloud services decreased from 54.8% in 2022 to 45% in 2024 [8]. - The company is focusing on top-tier clients for its cloud services, which has led to increased complexity and delivery challenges [8][9]. Management Changes - The company has experienced significant management turnover, with the CEO position changing multiple times within a year, which may raise concerns about strategic continuity and governance stability [10][11]. - The return of founder Wang Wenjing as CEO may indicate internal disagreements or resistance to transformation efforts [11]. Cash Position - As of December 31, 2024, Yonyou Network held cash and cash equivalents of 5.657 billion yuan, a decrease of 1.094 billion yuan from 2023 [12].

Group 1 - The report emphasizes that the main investment opportunities in the computer sector for the first half of 2025 are focused on three key themes: AI, financial technology innovation, and automation, with a notable preference for small-cap companies [1][18][21] - The performance of the computer sector is highlighted, with the Shenwan Computer Index showing a growth of 7.85% from January 1 to June 25, 2025, and a maximum increase of 41.33% during the same period [14][21] - The report identifies specific companies that have shown significant stock performance, such as Luqiao Information with a 271.26% increase and Huijin Co. with a 212.21% increase [15][29] Group 2 - The report discusses the rapid development of AI applications, particularly in the consumer sector, where active users of AI-native apps reached 270 million by March 2025, reflecting a year-on-year growth of 536.8% [32][33] - It notes that the integration of AI technology has significantly boosted the performance of companies like Meitu, which achieved a revenue of 3.34 billion yuan in 2024, a 23.9% increase year-on-year, largely due to AI-enhanced products [38][40] - The report highlights the importance of financial technology innovations, particularly stablecoins, which have seen a market capitalization of $251.1 billion as of June 25, 2025, with USDT and USDC being the leading stablecoins [6][28] Group 3 - The report outlines the commercialization of automation applications, such as Tesla's Robotaxi, which began operations in Austin, Texas, charging $4.2 per ride, indicating a significant step towards the realization of autonomous logistics [30][31] - It emphasizes the potential of companies like Jiu Shi and New Stone, which are leading the commercialization of unmanned logistics vehicles, showcasing the rapid development of this sector [30][31] - The report also discusses the legislative advancements in stablecoins and RWA (Real World Assets), which are expected to bridge traditional finance and Web3, enhancing the financial ecosystem [28][29]

Core Insights - The article discusses China's resilience in the ongoing trade war with the U.S., highlighting its ability to maintain growth in high-end manufacturing despite tariffs and restrictions [1][6] - China's manufacturing sector has transformed from being a "world factory" to a "global intelligent manufacturing center," leveraging its complete industrial chain and digital transformation [1][8] Group 1: Trade War Context - The U.S.-China trade war began in 2018 with tariffs on $34 billion worth of Chinese goods, and by 2025, it has evolved into a technology blockade involving AI chips and renewable energy [1] - Despite the imposition of tariffs, China's manufacturing value-added share of global output increased from 26% in 2017 to 32% in 2024 [1][6] Group 2: Industrial Chain Advantage - China is the only country with all industrial categories recognized by the United Nations, which provides a significant advantage against sanctions [1] - The Yangtze River Delta region contributes 60% of global photovoltaic components and 40% of industrial robot production, showcasing China's comprehensive industrial capabilities [1] Group 3: Digital Transformation - Chinese manufacturers are adopting digital transformation to enhance efficiency, with a reported average production efficiency increase of 45% and a 30% reduction in operational costs [2][6] - Companies like Jiangsu Wanheng Casting have significantly reduced product development cycles and improved delivery rates through smart factory systems [2] Group 4: Collaborative Innovation - The shift from "machine replacement" to "ecosystem reconstruction" in manufacturing emphasizes the importance of collaborative innovation across the entire industrial chain [3] - Cross-border collaboration platforms, such as those developed by KuSi Furniture, have improved responsiveness to overseas orders by 70% [3] Group 5: Cost Management - Traditional manufacturers often struggle with cost transparency, but systems like U9 cloud enable detailed cost accounting, leading to significant savings [5] - A renewable energy company improved equipment utilization from 65% to 89% through smart scheduling systems, effectively creating additional production capacity [5] Group 6: Future Outlook - The article suggests that the trade war's outcome is predetermined, with China's manufacturing sector poised to thrive despite U.S. tariffs, which can reach as high as 245% on certain goods [6][7] - The U9 cloud platform has become integral to nearly 10,000 manufacturing enterprises, facilitating their digital transformation and enhancing global competitiveness [6][7]