The low level of revenue and profit has passed, and a recovery can be expected, driven by structural improvements and new businesses. In 2024, Yonyou Network achieved revenue of 9.153 billion yuan, a year-on-year decrease of 6.57%, and net profit to mother of -2.061 billion yuan. Despite pressure on overall performance, structurally, the core product BIP3 achieved revenue of 3.14 billion yuan, an increase of 2.4 percentage points year over year; subscription revenue increased 26.0% year over year. Continued improvement in revenue quality and the starting point for new AI businesses, 2025 is expected to be the starting point for recovery.
AI breaks the bottleneck of enterprise SaaS efficiency and reconstructs the incremental logic of ERP demand. Enterprise resource planning “turns complexity into simplicity”. At the financial level, Agent opens up a massive efficiency alternative market. At the financial level, AI can effectively meet a large number of high-load and low-value-added financial tasks in the daily work of enterprises, promote intelligent transformation of financial decisions, daily business processes, financial statement preparation, and financial risk management; at the supply chain management level, AI empowers supply chain reshaping from data analysis, operation and processing; at the human resources management level, AI innovates the whole process from recruitment to retirement, improving talent management, enriching the employee experience, and closely linking it to the enterprise's business goals. Plan formulation, recruitment, job matching, employee data management, career development planning, and continuous optimization of various aspects of employment.
Cloud and debt indicators are steady, and the quality of operations is gradually reflected. 1) According to customer groups, on the large enterprise side: the number of contracts has increased, and many large central and state-owned enterprises have been successfully signed to promote business growth. Mid-sized enterprise side: Subscription revenue increased 65.8% year over year. YonSuite products continued to iterate around all scenarios of growing businesses, and the renewal rate increased to 95.0%. Small and micro enterprise side: Cloud subscription revenue increased by 34.1% year on year, 0.143 million new paid enterprise users were added, and the cumulative number of paid enterprise users reached 0.775 million. 2) Contract liabilities: Cloud business-related contract liabilities of 2.78 billion yuan and subscription related contract liabilities of 2.31 billion yuan, up 13.0% and 25.9% respectively from the end of 2023, indicating a stable basis for future revenue growth. The financial effects of personnel optimization will be reflected in 2025, and the number of employees will be reduced by 3,666 in 2024. Along with active control of the size of personnel and optimization of the structure, human efficiency and operating performance are expected to continue to improve. 3) Net profit pressure gradually came to an end: negative factors such as increased amortization of R&D investment capitalized intangible assets, increased employee termination compensation, increased impairment losses on long-term equity investments, increased impairment losses on goodwill, and fair value measured investment losses gradually cleared up, and the low net profit gradually emerged.
Strategically invest in AI to fully embrace the blue ocean of B-side AI transformation needs. The company released YongPt2.0, a large model for enterprise services, which effectively connects the gap between “complex enterprise requirements” and the “general big model” through a large model platform, 2 application frameworks (Agent and RAG), and a closed loop of data in the application; based on application frameworks such as Agent (agent), HCI (human-computer interaction), and RAG (integrating search technology with generative AI), it released general products such as intelligent assistants, digital intelligence, and smart think tanks, and more than 100 scenario-based enterprise intelligence services, covering finance, manpower, Enterprise service fields such as supply chains, and in collaboration with ecological partners, we have successfully created and released professional models for public resource transactions, industrial equipment, and transportation construction industries. It was the first to achieve successful application in leading customers such as China Merchants Group (HR Digital Intelligence Employees), China Minmetals (Financial Digital Intelligence Employees), and Yuandong Digital Intelligence (YongPT generates procurement tender documents), bringing significant efficiency improvements and cost reductions to customers.
Profit forecast and investment advice: The company's total revenue is expected to be 10.172/11.323/12.45 billion yuan, respectively, from 2025 to 2027, corresponding growth rate of 11.14%/11.31%/9.96%; net profit to mother -1.39/+4.63/+1.032 billion yuan, up 93.24%/432.20%/122.92% year-on-year. The corresponding EPS is -0.04/0.14/0.30 yuan. The comparable company selected Kingdee International, the core ERP manufacturer. The leading domestic SaaS manufacturers in various segments, Guanglianda, Jinshan Office, and Zhongwang Software. The average PS of the comparable company in 2025-2027 was 10.52/8.84/8.03 times. The current price of the 2025-2027 PS is 5.04/4.52/4.11 times, giving it a “recommended” rating.
Risk warning: risk of collection of accounts receivable, risk of technological innovation and new product development, risk of macroeconomic demand falling short of expectations, risk of loss of core personnel, and increased risk of industry competition.
