New stock news | Yonyou Network Technology (600588.SH) submits a second application to the Hong Kong Stock Exchange, making it the largest market participant in China's enterprise software and services market.

According to the disclosure by the Hong Kong Stock Exchange on December 29th, Yonyou Network Technology Co., Ltd. (referred to as Yonyou Network Technology, 600588.SH) has submitted an application for listing on the main board of the Hong Kong Stock Exchange, with CICC and CITIC SEC as its joint sponsors. This is the company's second submission to the Hong Kong Stock Exchange this year, as it previously submitted an application for listing on June 27th. According to Frost & Sullivan data, based on 2024 revenue, the company is the largest market participant in the Chinese enterprise software and services market, with a market share of 4.1%, and based on overseas revenue in 2024, the company is also the largest domestic enterprise software company in China. Company Introduction The prospectus shows that Yonyou Network Technology is a leading provider of enterprise software and intelligent services, dedicated to the research and development, sales, and service of enterprise digital software and intelligent services using core technologies such as AI, big data, and cloud computing. Since its establishment, Yonyou Network Technology has evolved from accounting-centric systems to comprehensive enterprise systems, and now to a digital platform. In response to this trend, the company's core products have transitioned from financial management software to enterprise resource planning (ERP) software, and to the Yonyou Business Innovation Platform (Yonyou BIP). In the accounting-centric phase (1.0 phase), the company became a well-known financial software brand in China. In the comprehensive enterprise management phase (2.0 phase), the company became a prominent ERP software supplier in the Asia-Pacific region. In the new era, the company has launched a new generation of business innovation platform: Yonyou BIP (3.0 phase), to help enterprises achieve comprehensive digital capabilities for online business, data-driven operations, and intelligent operations. Yonyou Network Technology offers a wide range of enterprise software and intelligent service products, including cloud services and software products. The company's cloud services mainly include the Yonyou BIP series of products, U9 cloud services, products provided by CHANJET, and the company's industry-specific solutions. Yonyou BIP is the core platform for the company's cloud services, designed to provide comprehensive tools, capabilities, and resources support for enterprise digital transformation and intelligent operations. The company's Yonyou BIP product series includes YonBIP for large enterprises and YonSuite for medium-sized enterprises. Yonyou BIP effectively addresses the challenges of traditional enterprise software, such as application silos, data fragmentation, independent AI models detached from actual enterprise workflows, and accurately matches the advanced needs of enterprise digital transformation. The company has maintained a strong track record of providing end-to-end services to large enterprises, enabling the company to develop a set of products and services and extend its market coverage to medium-sized enterprises and small and micro-enterprises. The company covered 76% of the Fortune China 500 companies in 2024. From 2022 to 2024, the company's cloud service customers increased by 31.5%, and from the six months ended June 30, 2024, to the six months ended June 30, 2025, the increase was 4.7%. The company provides cloud services and software products through subscription and/or licensing fee models. The company also provides implementation, product support, and maintenance services to complement its offerings, providing full support throughout the customer lifecycle from initial deployment to deployment optimization, ensuring a seamless experience. Since 2003, Yonyou Network Technology's strong brand influence in the Chinese and broader Asia-Pacific markets has supported its overseas expansion, making the company a global partner in enterprise digital transformation for global businesses. As of June 30, 2025, the company has built an experienced team overseas, with 12 branches, serving over 1,400 overseas customers, of which 60% are local overseas customers and 40% are Chinese companies expanding overseas. The company's customers are spread across more than 40 countries and regions, making it the most globally business-diverse Chinese enterprise software vendor and the largest Chinese enterprise software vendor in terms of overseas business revenue. Financial Information Revenue For the fiscal years 2022, 2023, 2024, and the six months ended June 30, 2025, the company achieved revenues of approximately RMB 8.89 billion, RMB 9.443 billion, RMB 8.817 billion, and RMB 3.434 billion, respectively. The fluctuation in revenue is mainly due to longer customer acquisition and delivery cycles related to complex requirements from top customers, as well as the company's transition to promoting new-generation cloud services (especially the Yonyou BIP product series). Gross Profit and Gross Profit Margin For the fiscal years 2022, 2023, 2024, and the six months ended June 30, 2025, the company recorded gross profits of approximately RMB 4.892 billion, RMB 4.651 billion, RMB 4.057 billion, and RMB 1.603 billion, respectively, with corresponding gross profit margins of 55.0%, 49.3%, 46.0%, and 46.7%. Net Profit For the fiscal years 2022, 2023, 2024, and the six months ended June 30, 2025, the company recorded net profits of approximately RMB 225 million, -RMB 933 million, -RMB 2.07 billion, and -RMB 981 million, respectively. Industry Overview The global enterprise software and services market has grown from USD 258.4 billion in 2020 to USD 381.3 billion in 2024, with a compound annual growth rate (CAGR) of 10.2% during the period 2020-2024. Looking ahead, the global enterprise software and services market is expected to reach USD 671.7 billion in revenue by 2029, with a CAGR of 12.0% during the period 2024-2029. Although there are significant differences between the Chinese and American markets in terms of business complexity, the ratio of IT budgets to revenue, progress in cloud transformation, and acceptance of subscription fee models, China has developed into the second-largest global enterprise software and services market after the United States, with significant room for growth in the future. In terms of revenue, the market size of the Chinese enterprise software and services market has increased from RMB 140 billion in 2020 to RMB 211.9 billion in 2024, with a CAGR of 10.9% from 2020 to 2024. Looking ahead, the market size of the Chinese enterprise software and services market is expected to reach RMB 381.6 billion by 2029, with a CAGR of 12.5% from 2024 to 2029. The main cost components of companies in the Chinese enterprise software and services market (or the broader technology services industry) are primarily salary and benefits paid to employees. The average annual salary for private employees in the Chinese information transmission, software, and IT services industry in urban areas increased from RMB 101,300 in 2020 to RMB 123,200 in 2024, reflecting a CAGR of 5.0% from 2020 to 2024. The growth rate of average wages has been slowing down in recent years, and it is expected to continue to grow, but at a more moderate pace compared to historical trends, with a projected CAGR of 3.2% from 2024 to 2029. The stable growth of costs for enterprise software and service providers is seen as a normal phenomenon and not expected to have a significant adverse impact on their operations. Board Information The company's board of directors will consist of eight directors, including five executive directors and three independent non-executive directors. According to the Articles of Association, directors are elected and appointed by shareholders for a term of three years, with the possibility of re-election upon the expiry of the term. According to relevant Chinese laws and regulations, the term of office for independent non-executive directors shall not exceed six years. Equity Structure Mr. Wang Wenjing holds a total of 41.59% of the company's shares through Beijing Yonyou Technology, Shanghai Yonyou Technology, and Yonyou Research Institute, with stakes of 26.96%, 11.47%, and 3.16%, respectively. Shanghai Yibei holds 3.75% of the shares, and Gongqingcheng Youfu holds 2.35%. Other A-share shareholders collectively hold 52.31%. As of the last practicable date, (i) Beijing Yonyou Technology (a company owned 100% by Mr. Wang) holds 921,161,630 shares; (ii) Shanghai Yonyou Technology (a company owned directly and indirectly by Mr. Wang with 85.15% ownership) holds 392,069,275 shares; and (iii) Yonyou Research Institute (a company owned 79.64% by Mr. Wang) holds 107,848,606 shares. Therefore, under the Securities and Futures Ordinance, Mr. Wang, Beijing Yonyou Technology, Shanghai Yonyou Technology, and Yonyou Research Institute are considered to have equity holdings in A-shares held by Beijing Yonyou Technology, Shanghai Yonyou Technology, and Yonyou Research Institute. To finance personal needs, the company's controlling shareholder occasionally pledges certain A-shares to several Chinese financial institutions as collateral. As of the last practicable date, the company's controlling shareholder has pledged 421,630,000 A-shares, accounting for approximately 12.34% of the company's total issued share capital, as collateral to several Chinese financial institutions supervised by the China Banking and Insurance Regulatory Commission and/or the China Securities Regulatory Commission. These pledged shares will remain valid after the listing on the Hong Kong Stock Exchange. Intermediary Team Joint Sponsors: CMB International Capital Corporation, CITIC SEC (Hong Kong) Limited. Company legal counsel: Kirkland & Ellis LLP for Hong Kong and U.S. law, and Jingtian & Gongcheng LLP for Chinese law. Joint sponsors' legal counsel: Sullivan & Cromwell LLP for Hong Kong and U.S. law, and Tian Yuan Law Firm for Chinese law. Reporting accountants and independent auditors: Ernst & Young LLP. Industry advisor: Frost & Sullivan Consulting (Beijing) Co., Ltd., Shanghai Branch. Compliance advisor: FIRST SHANGHAI Financial Limited.