New stock forecast | Increasing revenue without increasing profits highlights systemic dilemma, industry leader Goraylee is at a "crossroads"

With the wave of smart manufacturing sweeping through all industries, intelligent manufacturing software solutions have become the core support for driving the transformation and upgrading of the manufacturing industry, and building sustainable competitive advantage for enterprises. This is because intelligent manufacturing software solutions deeply integrate artificial intelligence, big data, and automation technologies, driving the production process towards automation, intelligence, and efficiency, achieving digital and intelligent transformation of the entire manufacturing process. By real-time collection and analysis of production data, intelligent manufacturing software solutions can support intelligent decision-making, optimize process execution, significantly improve production efficiency, ensure product consistency, and enhance the overall competitiveness of enterprises. During the flourishing development of the industry, industry leaders have initiated a new journey to list in Hong Kong. It was learned that on February 15th, Shanghai Gorly Software Co., Ltd. (Gorly) submitted an application for listing on the Main Board of the Hong Kong Stock Exchange, with GUOTAI JUNAN I and CMBC CAPITAL as its joint sponsors. According to Frost & Sullivan reports, Gorly is the first Chinese company that has achieved full coverage of software solutions for various links in the semiconductor industry value chain, providing end-to-end solutions from materials, processing, components, assembly, to downstream applications, covering all sectors of the semiconductor industry. At the same time, Gorly ranks first among domestic providers of intelligent manufacturing software solutions in the semiconductor industry. However, looking at its performance, Gorly has not yet overcome its loss situation. From 2022 to 2024, Gorly's adjusted net losses were 85.57 million, 126 million, and 102 million, respectively. By the first four months of 2025, its adjusted net loss had increased to 32.43 million, meaning Gorly had accumulated nearly 350 million in losses in less than four years. On one hand, Gorly has significant highlights of full value chain coverage and leading market share. On the other hand, the continuous losses have not shown signs of improvement. Against this backdrop, what kind of valuation should the secondary market give to Gorly? This is undoubtedly a key issue worth further exploration. After the D round of investment, the post-investment valuation was 3.5 billion, with state-owned shareholders gathering Since its establishment in 2007, Gorly has been continuously committed to the field of intelligent manufacturing solutions, and its development history clearly shows how a local industrial software enterprise, through nearly twenty years of continuous focus and technological accumulation, has gradually grown into a key force driving the intelligent upgrade of high-end manufacturing in China. Behind this lies the three-step development path of Gorly's "from specialization to generalization, from point to surface, and tackling the high-end". In the early days of its establishment, Gorly started with semiconductor manufacturing as its core starting point, successfully delivering the first batch of semiconductor front-end and back-end manufacturing execution systems domestically, and in 2013, it entered the field of display panels, becoming an important participant in the indigenization process of the industry, laying a solid foundation in technology and industry. With accumulated capabilities, Gorly began systematic expansion in 2016, extending its business to fields such as photovoltaics, printed circuit boards, and took on a total package project as the general contractor for a CIM system for the entire plant, marking a leap from single-point software to a comprehensive solution provider. During this period, the company started international business layout, gradually building a cross-industry, cross-regional business system. Since 2022, Gorly has entered the stage of high-end breakthrough and leadership. In 2022, it ventured into the forefront of Micro LED, breaking through the 8-inch semiconductor front-end CIM system. In mid-2023, it completed the localization of the 12-inch semiconductor front-end CIM system, capturing a key high ground in the industry and achieving a milestone breakthrough. Subsequently, Gorly continued to make breakthroughs in cutting-edge areas such as 12-inch semiconductor production factory CIM, high-end lithography process simulation, high-end PCB full factory CIM, and Micro LED automated production factory CIM, and promoted the LOFA AI and equipment control integration project, leading the industry's intelligent upgrade. Up to now, Gorly can provide customized full-stack intelligent manufacturing software solutions for customers in the semiconductor, display panel, PCB, and photovoltaic industries. The company's integrated platform covers the entire value chain, from production data collection, process management, to advanced data analysis, AI applications, and more. By relying on five interconnected solution platforms - production and operation platform, integrated automation platform, intelligent control digital platform, intelligent big data engine platform, and digital equipment platform, Gorly has built a new generation of digital production pattern. According to the prospectus, with more than 17 years of deep industry experience, Gorly has established long-term cooperation relationships with Semiconductor Manufacturing International Corporation and Tianma Microelectronics, among other advanced manufacturing enterprises. Since 2022, the company has established business relationships with over 290 clients in the semiconductor industry, of which around 160 are semiconductor industry clients. In terms of market position, Gorly has steadily climbed to the top of domestic manufacturers. Data shows that in 2024, Gorly held an approximately 11.7% market share in China with an income of around 249 million, ranking first among domestic providers of intelligent manufacturing software solutions in the semiconductor industry. Behind Gorly's growth as an industry leader lies strong support from various capital sources in the primary market. According to the prospectus, Gorly completed a total of 5 rounds of financing before its IPO. After the D round of financing in October 2023, its post-investment valuation rose to 3.5 billion. It is worth noting that Gorly's shareholder lineup exhibits a distinct "national team + industrial capital" feature. The National Development Investment Group's National Investment Major Special Fund holds 6.96%; the National Manufacturing Transformation and Upgrading Fund led by the National Development Fund holds 5.65%; Shenzhen Qichang, under China Merchants Group, holds 4.14%; Shenzhen Chenxin, under the state-owned capital risk venture fund, holds 4.14%; Shenzhen Touxin, under Shenzhen State-owned Assets, holds 2.07%; and the Zhongxin Haihe Fund jointly funded by Semiconductor Manufacturing International Corporation and Tianjin State-owned Assets holds 1.62%. Thus, Gorly has not only received strong support from national strategic capital but also introduced deep integration with core industry players (Semiconductor Manufacturing International Corporation), laying a solid foundation for long-term development through the synergy of capital and industry. Systemic challenges behind "increased revenue but no profit" As a leading domestic company in the field of intelligent manufacturing software solutions for the semiconductor industry, Gorly's commercial capabilities have continued to strengthen in recent years, with steady growth in its revenue being the most direct evidence. According to the prospectus, from 2022 to 2023, Gorly's revenue was approximately 110 million, 165 million, and 249 million, with a compound annual growth rate of over 50%. By the first four months of 2025, Gorly's revenue was $81.05 million, with a year-on-year growth of 4.23%, showing a continuing upward trend. The continuous growth in revenue is mainly attributed to the double drive of CIM software solutions and intelligent control digital platforms in the intelligent manufacturing software solutions business. From 2022 to 2024, as the company expanded into other sectors of the semiconductor industry, the revenue of CIM software solutions was 75.51 million, 137 million, and 195 million, showing strong growth. While the revenue of the intelligent control digital platform fluctuated, it showed an overall upward trend and also contributed to the revenue growth. In the first four months of 2025, Gorly's overall revenue growth slowed down, mainly due to a decline in revenue from its core business - CIM software solutions. During this period, this business segment generated revenue of approximately 63.78 million, a decrease of 11.68% year-on-year. However, the intelligent control digital platform business showed outstanding performance, with revenue increasing significantly by 263.5%, reaching $15.605 million, effectively offsetting the temporary weakness in the CIM business. It is worth noting that Gorly delivers all its solutions in the form of customized projects, and revenue recognition rhythms may be affected by project stages. Therefore, the short-term decline in revenue from CIM business may be related to delayed project acceptance points, and its subsequent performance will need to be observed continuously. The revenue contribution of the intelligent big data engine platform and digital device platform remains relatively small, and market penetration has not yet been achieved. Although Gorly's revenue has continued to grow, its profit side has consistently recorded losses, a classic case of "increased revenue but no profit." From 2022 to 2025, the adjusted net losses were 85.57 million, 126 million, 102 million, and 32.43 million. This is mainly due to two reasons, with the first being the significant fluctuations in gross profit margin. Data shows that from 2022 to the first four months of 2025, Gorly's gross profit margin was 16.9%, 3.4%, 13.2%, and 6.1%, showing significant roller-coaster-like fluctuations, posing a major challenge to profit stability. This exposes the weaknesses of its project-based high-cost business model - individual high-cost projects can easily drag down overall profits, with low product standardization, weak pricing and cost control capabilities. In addition, the provision for losses on contracts and impairment losses on inventory further exacerbate the fluctuation in gross profit. Secondly, high operating expenses have severely eroded profit margins. Data shows that from 2022 to the first four months of 2025, Gorly's operating expenses as a percentage of revenue remained high at 97.65%, 91.48%, 93.11%, and 133.75%, respectively. Among them, research and development investment is the primary expenditure item, accounting for 47.3%, 46.5%, 47.9%, and 70.8% during the same period. This indicates that the company is currently in a stage of growth driven by high-intensity research and development efforts, with resources notably tilted towards long-term technology capacity building but also putting continued pressure on profit performance. Of course, Gorly's continued losses are also closely related to changes in the overall industry environment. Chairman Sun Zhiyan explicitly pointed out that the industry has entered the stage of stock competition, with price wars caused by homogenized products intensifying, directly squeezing the profit margins of enterprises. However, price pressure is not the only challenge it faces - Gorly also faces the risk of high customer concentration in its operations. According to the prospectus, from 2022 to the first four months of 2025, the revenue contribution of its top five customers was as high as 62.4%, 54.2%, 46.7%, and 52.5%, respectively, showing that the company's business has always had a high level of dependence on a few core customers. This structure may limit Gorly's bargaining power, concentrate risks in terms of payment collection and credit, and lead to performance fluctuations. In addition, some industry opinions have pointed out that traditional CIM systems based on complex code stacking may be reconstructed by "AI-native" intelligent manufacturing systems based on large models. If Gorly cannot quickly embrace this change, its existing technology assets may face the risk of devaluation. In summary, although Gorly has become a leading company among domestic manufacturers, it still faces systemic challenges. Its growth model of high research and development investment in exchange for technological breakthroughs and market positioning is challenged by the harsh reality of low-margin project-based business, and industry price wars. The company is currently at a critical crossroads: whether it can rapidly improve product standardization and profitability in the window of domestic substitution, transitioning from "capital exchange market" to "self-sustained growth," will determine whether it can cross the cycle and truly become a long-term leader in the industry.