In-Depth Research Report on Yonyou Network: Evaluation of Cloud Transformation Results and AI Investment Capabilities

Now I will prepare a systematic and comprehensive investment research analysis report.

---

Yonyou Network Technology Co., Ltd. was founded in 1988, and is a leading enterprise in China’s enterprise software and cloud service sector, known as the “King of Chinese ERP”. The company became the first ERP enterprise listed on the Shanghai Stock Exchange in 2001. After more than 30 years of development, it has transformed from a traditional financial management software provider to a world-leading enterprise digital intelligence service provider[1][2].

The company is currently in a critical stage of transforming from a traditional licensed ERP system to a cloud service subscription model centered on the Yonyou Business Innovation Platform (BIP). This strategic transformation represents the company’s ambitions for the future and is a core initiative to respond to the changes in the era of cloud computing and artificial intelligence[2].

---

According to Yonyou Network’s 2024 annual performance forecast, the company expects to achieve operating revenue of RMB 9.1-9.2 billion, a year-on-year decrease of 6.1%-7.1%; the net loss attributable to owners of the parent company is RMB 1.72-1.92 billion, which is a further expansion of approximately 78%-98% compared to the net loss of RMB 967 million in 2023[1][3].

Indicator	2024	2023	Year-on-Year Change
Operating Revenue	RMB 9.1-9.2 billion	RMB 9.79 billion	-6.1%~-7.1%
Net Profit Attributable to Parent	-RMB 1.72~1.92 billion	-RMB 967 million	Loss Expanded
Gross Margin	47.54%	50.73%	-3.19 pct
Net Margin	-22.61%	-9.53%	-13.08 pct
R&D Expenses	RMB 2.122 billion	RMB 2.107 billion	+0.73%

Although the company remained in loss for the full year, it turned profitable in Q4 2024, recording a net profit attributable to the parent of approximately RMB 150 million in the quarter, which is an important positive signal[1][4]. This transformation is attributed to the following factors:

1. Notable Cost Control Results
   : The company’s employee count decreased by approximately 3,700 compared to the beginning of the year, effectively controlling labor costs
2. Contract Signings Driven by Product Upgrades
   : The BIP 3 R6 version was successfully launched, with strategic clients such as China Merchants Group, XD Electric, BYD, and Wanda Commercial Management onboarded
3. Rapid Growth in Subscription Revenue
   : Subscription-related contract liabilities reached RMB 2.31 billion, a year-on-year increase of 25.9%
4. Stable Cash Inflows
   : Cash received from the sale of goods and provision of services exceeded RMB 9.6 billion

Quarter	Operating Revenue	Net Profit Attributable to Parent	Remarks
2024Q1	RMB 2.18 billion	-RMB 320 million	Traditional Off-Season
2024Q2	RMB 2.23 billion	-RMB 280 million	Gradual Recovery
2024Q3	RMB 2.32 billion	-RMB 410 million	Impact of Delayed Demand
2024Q4	RMB 2.42 billion	+RMB 150 million	Turned Profitable

---

2024 was a year of critical breakthrough for Yonyou Network’s cloud transformation strategy. The company’s cloud service business revenue reached RMB 6.85 billion, accounting for 77.2% of total revenue, a year-on-year increase of approximately 12 percentage points[1][2]. This ratio is close to the level of leading international SaaS enterprises, marking the company’s basic completion of its strategic transformation to a cloud service model.

Year	Cloud Service Revenue	Share of Total Revenue	Year-on-Year Increase
2017	RMB 1.25 billion	19.7%	-
2019	RMB 2.32 billion	27.3%	-
2021	RMB 4.5 billion	50.4%	-
2023	RMB 6.35 billion	64.9%	-
2024	RMB 6.85 billion	77.2%	+12.3 pct

As the company’s flagship cloud service product, the Yonyou Business Innovation Platform (BIP) achieved revenue of RMB 3.14 billion in 2024, with its share of total revenue increasing by 2.4 percentage points year-on-year[1]. The launch of BIP3 R5 and R6 versions further enhanced the product’s AI integration, data services, and globalization capabilities.

• AI Deep Integration
  : Fully integrated with the YonGPT 2.0 large model, covering over 100 enterprise intelligent service scenarios
• Improved Resource Efficiency
  : Achieved a 50% year-on-year reduction in resource consumption and 30% savings in operation and maintenance costs
• Effective Customer Expansion
  : Signed 7 new central enterprises at the first tier, with a total of 44 signed central enterprises[1]

The company implemented differentiated operating strategies for three types of customers: large, medium, and micro/small enterprises, and achieved positive progress across all categories:

• YonBIP renewal rate reached 91.5%, maintaining a leading position in the industry
• A total of 44 first-tier central enterprises signed contracts, with 7 new additions
• Successfully replaced systems from international vendors, with clients including China Merchants Group, China Minmetals, etc.

• Cloud service revenue increased by 7.9% year-on-year
• YonSuite renewal rate increased to 95% (only 88% in 2021)
• Market penetration of cloud ERP for medium and large-sized manufacturing enterprises continues to increase

• Cloud subscription revenue reached RMB 660 million, a year-on-year increase of 34.1%
• Net profit doubled year-on-year
• Cumulative paying customers exceeded 120,000

The company’s contract liabilities reached RMB 3.05 billion, an 8.8% year-on-year increase, including:

• Cloud business-related contract liabilities: RMB 2.78 billion, a year-on-year increase of 13.0%
• Subscription-related contract liabilities: RMB 2.31 billion, a year-on-year increase of 25.9%[1]

The increase in advance receipts under the subscription model provides strong certainty for the company’s future revenue, while also improving its cash flow position. Although the company’s operating cash flow remained tight in 2024, it remained stable overall.

Despite the continuous increase in the proportion of cloud service revenue, the company’s gross margin decreased from 50.73% in 2023 to 47.54% in 2024, mainly due to the following reasons:

1. Increased Delivery Complexity for High-End Customers
   : The business complexity of large enterprise customers has increased, leading to higher delivery difficulties
2. High Delivery Costs for Cloud Services
   : Increased cost investment to ensure a high-quality delivery experience for BIP
3. Investment in Product Refinement Period
   : High continuous investment in product R&D and technology upgrades
4. Price Pressure from Intensified Competition
   : The domestic SaaS market is highly competitive, putting pressure on the pricing of some products

---

In 2024, Yonyou Network launched YonGPT 2.0, a vertical large model for enterprise services, marking the company’s entry into a new phase of its AI strategy. Through its architectural design of “1 platform + 2 application frameworks + data closed-loop”, YonGPT 2.0 effectively connects enterprise demands with general large models[1][5].

• 1 Large Model Platform
  : A unified enterprise AI service base
• 2 Application Frameworks
  : Agent framework and RAG (Retrieval-Augmented Generation) framework
• Over 100 Scenario-Based Services
  : Covering core business areas such as finance, human resources, and supply chain

In the first three quarters of 2025, Yonyou Network achieved breakthrough progress in AI-related businesses[2][4]:

Indicator	2024	First Three Quarters of 2025
AI Contract Signing Amount	RMB 420 million	Over RMB 730 million
Year-on-Year Growth	-	+74%
New AI Customers	-	Over 100
Onboarded Headline Customers	-	China Merchants Group, China Minmetals, etc.

• China Merchants Group
  : Human Resources Digital Intelligent Employee Project
• China Minmetals
  : Finance Digital Intelligent Employee Project
• Hong Kong Chinese Medicine Hospital, CRRC, Pangda Automobile Trade Group
  , etc. selected the Yonyou BIP Intelligent Platform[5]

Based on YonGPT 2.0, Yonyou BIP has built a complete AI product matrix:

Product Type	Core Function	Application Scenario
Zhiyou	Agent Assistant	Business consultation, process automation
Digital Intelligent Employee	Human-Computer Interaction (HCI) Service	Financial accounting, report generation
Intelligent Search	RAG Application Framework	Knowledge retrieval, intelligent Q&A
Intelligent Contract	Contract review and management	Risk identification, compliance inspection
Intelligent Monthly Closing	Financial monthly closing automation	Account processing, closing management
AI Interview	Talent recruitment	Resume screening, interview evaluation

Yonyou Network adopts an open multi-model ecosystem strategy, with YonGPT supporting access to mainstream general large models such as DeepSeek and Doubao, providing enterprises with flexible AI options[4]. Meanwhile, the company launched the “Agent Factory”, which supports users to build exclusive Agents within 10 minutes, significantly lowering the threshold for enterprise AI application.

---

• 2024 net loss of RMB 1.72-1.92 billion, free cash flow of -RMB 2.03 billion
• Net loss of RMB 1.47 billion in the first three quarters of 2025, and the loss scale has not yet effectively narrowed
• Operating cash flow continues to be under pressure, requiring attention to the rate of cash consumption

• Turned profitable in Q4, with an initial performance inflection point emerging
• Subscription revenue increased by over 25% year-on-year, with stable growth in ARR (Annual Recurring Revenue)
• Contract liabilities continue to increase, providing strong certainty for future revenue
• After optimizing employee scale, cost-side pressure is expected to ease in 2025

Investment Item	Amount	Proportion
R&D Expenses (2024)	RMB 2.122 billion	Approximately 23% of revenue
Amortization of Capitalized Intangible Assets	Approximately RMB 300 million	-
AI-Related R&D	Continuous investment in progress	-

1. Operating Cash Flow
   : 2024 sales collection exceeded RMB 9.6 billion, basically covering operating costs
2. Hong Kong IPO Financing
   : The company resubmitted its prospectus to the Hong Kong Stock Exchange, planning to raise funds for AI and other technology R&D
3. Subscription Revenue Conversion
   : Advance receipts under the subscription model can be converted into R&D investment
4. Cost Optimization Space
   : Personnel optimization can save approximately hundreds of millions of yuan in labor costs annually

• AI contract signing amount reached RMB 730 million in the first three quarters of 2025, and is expected to exceed RMB 1 billion for the full year
• The gross margin of AI-related businesses is expected to be higher than that of traditional software businesses
• AI customer renewal rate is good, with high lifetime value per customer
• Headline customer cases have a demonstration effect, which can drive industry replication

• Assuming AI business maintains an annual growth rate of over 50%
• AI contract amount is expected to reach RMB 1.5 billion in 2026
• As economies of scale emerge, the AI business is expected to achieve break-even before 2027

1. Sustained Loss Risk
   : If losses continue to expand, it may affect the sustainability of R&D investment
2. Intensified Competition
   : International vendors such as SAP and Oracle maintain advantages in the high-end market; domestic SaaS vendors are rapidly penetrating
3. Talent Atrophy
   : Fierce competition for key technical talents
4. Customer Retention Pressure
   : Average revenue from large enterprise customers has decreased, with the retention rate dropping to 74.1%[2]

• Focus on operating strategic and regional customers to expand revenue channels
• Strengthen cooperation with ecosystem partners to reduce customer acquisition costs
• Promote global layout, with overseas business revenue increasing by over 50% year-on-year in 2024[1]
• Continuously improve product standardization to enhance profit efficiency

---

As of January 14, 2026, Yonyou Network’s stock price closed at RMB 19.01, with a single-day increase of 10.01%, and its 52-week trading range is RMB 9.72-20.00[0]. The stock price has shown a strong upward trend since 2024, driven mainly by the following factors:

1. Q4 Profitability Turnaround
   : Positive market reaction after the release of the performance forecast
2. Emerging Results of Cloud Transformation
   : The cloud service share exceeding 77% validates the correctness of the strategy
3. Accelerated AI Commercialization
   : Exceeding expected growth in AI contract signings
4. Expectations of Hong Kong Listing
   : The IPO is expected to boost the company’s valuation

Indicator	Value	Signal Interpretation
Latest Closing Price	RMB 19.01	-
20-Day Moving Average	RMB 13.76	Stock price is above the moving average
50-Day Moving Average	RMB 14.00	Stock price is above the moving average
MACD	Bullish	No death cross signal
KDJ	K:94.7, D:89.9	Overbought zone
RSI	-	Overbought risk
Beta	0.4	Low correlation with the market index
Support Level	RMB 14.81	-
Resistance Level	RMB 19.01	-
Next Target	RMB 19.65	-

: The stock price is in an upward trend but has entered the overbought zone, and may face adjustment pressure in the short term. The medium-term upward trend remains intact, and it is recommended to pay attention to the support strength at the RMB 14.81 support level[0].

Valuation Indicator	Value	Industry Comparison
Market Capitalization	Approximately RMB 65 billion	-
P/E (TTM)	-32.41	Loss-making status
P/B (TTM)	8.77	Relatively high
P/S (TTM)	7.22	Medium

As the company is still in a loss-making state, the applicability of the traditional P/E valuation method is limited. Considering:

• Sustained growth in cloud service ARR
• Rapid development of AI business
• Subscription model improves cash flow stability

It is recommended to use the PS valuation or SOTP (Sum of the Parts) valuation method, and pay attention to the company’s progress in transitioning to profitability.

---

• SAP and Oracle maintain technological and ecological advantages in the high-end market
• Yonyou has a first-mover advantage in the process of domestic substitution

• Kingdee International: Fast growth in cloud business, relatively high gross margin
• SaaS vendors focusing on niche tracks: Penetrate the medium and small enterprise market with lightweight products

• Largest customer scale (over 1 million cumulative paying customers)
• Rich resources of central enterprise customers (signed 44 first-tier central enterprises)
• Most complete product line (covering large, medium, small, and micro enterprises)
• Leading integrated capabilities in AI + data + processes

Market Size Forecast	2024	2029	CAGR
Global Enterprise Software and Services	USD 381.3 billion	USD 671.7 billion	12.0%
Chinese Market	RMB 211.9 billion	RMB 381.6 billion	12.5%

The continuous growth of demand for enterprise digital intelligence transformation and AI applications will provide a broad market space for Yonyou Network[2].

---

1. Notable Cloud Transformation Results
   : Cloud service revenue accounts for 77.2% of total revenue, the competitiveness of BIP products continues to improve, and the subscription model enhances revenue certainty
2. Q4 Profitability Turnaround
   : An initial performance inflection point has emerged, but the company remained in loss for the full year, and it will still take time to return to profitability
3. Smooth Progress in AI Strategy
   : YonGPT 2.0 was launched, AI contract signings exceeded RMB 730 million, and the commercialization process is accelerating
4. Evaluation of Investment Support Capability
   : High R&D investment under the current loss-making state faces certain pressure, but subscription revenue growth, cost optimization, and the Hong Kong IPO are expected to provide funding support

Maintain “Outperform Market” rating (Guosen Securities)[1]

Year	Operating Revenue	Net Profit Attributable to Parent	Remarks
2025E	RMB 9.91 billion	-RMB 554 million	Loss Narrowed
2026E	RMB 10.84 billion	RMB 256 million	Turned Profitable
2027E	RMB 12.1 billion	RMB 1.051 billion	Profit Growth

1. Intensified Industry Competition
   : Domestic and foreign competitors continue to squeeze market share
2. New Product Promotion Falls Short of Expectations
   : There is uncertainty in the market acceptance of AI products
3. Overseas Operation Risks
   : Overseas business expansion faces compliance and cultural challenges
4. Loss of Key Technical Talents
   : Talent competition may affect R&D capabilities
5. Customer Churn Risk
   : Decline in retention rate of large enterprise customers

---

The figure above shows Yonyou Network’s financial performance and cloud transformation process from 2017 to 2024:

• Top Left
  : Changes in operating revenue and net profit; net profit turned from profit to loss starting in 2022
• Top Right
  : Cloud service revenue share continues to rise, reaching 77.2% in 2024
• Bottom Left
  : 2024 quarterly performance, turned profitable in Q4
• Bottom Right
  : Changes in revenue structure, cloud service revenue share continues to increase

The figure above shows Yonyou Network’s AI business and customer development:

• Top Left
  : AI contract signing amount grows rapidly, reaching RMB 730 million in the first three quarters of 2025
• Top Right
  : Customer scale continues to expand, with the fastest growth in micro/small enterprises
• Bottom Left
  : Renewal rate of core products steadily increases, with YonSuite reaching 95%
• Bottom Right
  : Contract liabilities continue to grow, reaching RMB 3.05 billion in 2024

---

[0] Jinling AI Financial Database - Yonyou Network Real-Time Market and Technical Analysis Data

[1] Guosen Securities Research Report - “Yonyou Network (600588.SH): Share of Core Product BIP3 Increases, New AI Products Expected to Drive Performance Recovery” (April 17, 2025)

[2] Hong Kong Stock Research Institute - “Yonyou Network Reapplies for Hong Kong Listing: When Will Cloud Transformation Reignite the Profitability Engine?” (2026