With leading companies such as Dongguan Yiheda Automation Co.,Ltd. (301029.SZ), Zhenkunhang (ZKH.US), and JD INDUSTRIALS (07618) successively entering the capital markets, the listed cohort in China's MRO procurement and digital supply chain services sector continues to expand, and the industry's competitive landscape is becoming increasingly defined. This growing lineup now welcomes a new contender—Shanghai-based YESMRO has officially commenced its listing process, making a bid for the capital markets. It has been observed that on January 30, YESMRO Holdings Limited submitted its application for a main board listing on the Hong Kong Stock Exchange, with ABCI acting as the sole sponsor.
According to data from CIC, based on 2024 revenue, YESMRO ranked third in China's niche market for digitalized factory automation (FA) component procurement services, holding a market share of approximately 8.5%.
Financially, YESMRO has yet to achieve profitability. The prospectus shows that in 2023 and 2024, YESMRO's revenue was RMB 534 million and RMB 637 million, respectively. The adjusted net losses for these periods were RMB 38.808 million and RMB 28.154 million, indicating a narrowing loss. For the first three quarters of 2025, revenue reached RMB 554 million, a year-on-year increase of 22.33%. The adjusted net loss was RMB 12.093 million, continuing to narrow compared to the loss of RMB 24.34 million in the same period of 2024. Despite remaining in a state of continuous loss, the company shows a clear trend of shrinking losses. Achieving profitability as soon as possible and accelerating profit generation will be critical factors for YESMRO to secure a high valuation in the capital markets.
Cost reduction has been key to the ongoing reduction in losses. YESMRO's growth trajectory can be clearly divided into three stages. In 2016, the company was founded and launched its e-commerce service, initially validating the feasibility of using a digital platform model to provide FA component procurement services for small and medium-sized enterprises (SMEs). Starting in 2019, YESMRO entered its second phase of development, completing multiple rounds of financing and embarking on a period of rapid expansion, continuously strengthening its supply chain and technological foundation. Beginning in 2023, YESMRO shifted its strategic focus towards deepening profitability and building competitive barriers, officially launching its own brand "Huo Ye" and achieving commercialization, thereby forming a new dual-engine development structure of "platform + own brand."
To date, YESMRO has built an extensive supply chain ecosystem. On the supply side, it has established cooperative relationships with approximately 2,500 suppliers and over 800 brands, including many internationally renowned names. On the client side, YESMRO has served over 24,000 automation equipment manufacturers of various sizes, spanning multiple industries such as automotive, consumer electronics, logistics, cosmetics, food and beverage, new energy, semiconductors, biopharmaceuticals, and robotics. Regarding its own brand, as of September 30, 2025, YESMRO's own brand portfolio covered all seven major categories—industrial control, low-voltage control, sensors, pneumatic components, mechanical parts, electrical auxiliary materials, and factory consumables—comprising over 837,000 stock keeping units (SKUs).
The prospectus indicates that YESMRO consistently leverages its inventory availability advantage. As of September 30, 2025, the company could offer a vast product library of over 3.6 million available SKUs and achieved an industry-leading ready stock rate of 81.3%, enabling it to efficiently meet customers' tight delivery cycles. In 2023, 2024, and the first three quarters of 2025, YESMRO's inventory turnover days were 17 days, 13 days, and 14 days, respectively, while its cash conversion cycle was 1 day, -7 days, and -1 day, highlighting its highly efficient fulfillment operations.
This efficient fulfillment has led to increasing customer stickiness. The average monthly purchase frequency per customer increased from 3 times in 2023 to 3.5 times in 2024, and further rose to 3.7 times in the first three quarters of 2025. The corresponding customer retention rates for these periods were 67.3%, 70.9%, and 73.3%, respectively, showing a continuous improvement in retention metrics. The sustained revenue growth at YESMRO is primarily driven by the steady expansion of its paying customer base and the deepening of customer purchasing behavior. On one hand, the number of paying customers has continued to climb, growing from 14,723 at the end of 2023 to 15,990 at the end of 2024. In the first three quarters of 2025, the number of paying customers reached 16,396, a significant increase compared to the same period last year (13,986), indicating a continuously solidifying customer base. On the other hand, customer activity and purchasing depth have improved simultaneously. While the average spending per customer has remained stable or increased, the average monthly purchase frequency per customer gradually rose from 3.0 times in 2023 to 3.7 times in the first three quarters of 2025, reflecting enhanced customer loyalty and the further establishment of purchasing habits on the platform.
While scale expansion drives revenue growth, YESMRO's operational efficiency has continuously improved, and enhanced cost control capabilities have also supported profitability enhancement. Data shows that the proportion of operating expenses (selling, general and administrative, and R&D) to revenue has significantly optimized, decreasing from 16.0% in 2023 to 12.87% in 2024, and further dropping to 9.99% in the first three quarters of 2025, a notable decline compared to 14.02% in the same period of 2024. Thus, the continued narrowing of YESMRO's adjusted net loss is essentially the result of combined effects from steady revenue growth and effective expense control. The significant decrease in the operating expense ratio also reflects that the company's pre-IPO development strategy has clearly tilted towards improving profitability.
Why, then, does YESMRO not choose to rapidly expand scale to stimulate economies of scale and thereby achieve profitability? The trend in its gross margin might reveal part of the reason: gross margins for 2023, 2024, and the first three quarters of 2025 were 7.62%, 7.29%, and 7.23%, respectively, showing a slight overall downward trend. This indicates that revenue growth has not been accompanied by an improvement in gross margin. Against this backdrop, compressing expenses has a more direct and significant effect on improving profitability than merely pursuing revenue scale expansion.
The divergence between gross profit growth and gross margin decline exposes long-term operational challenges. Although the growth in revenue and the trend of narrowing losses together paint an overall picture of improving financial performance for YESMRO, the failure of revenue growth to translate into higher gross margins actually reveals a deeper challenge within its business model: the company may not yet have established strong pricing power or cost-pass-through capabilities. Its current growth, to some extent, might still rely on "trading price for volume" or the expansion of low-margin product categories. This raises a crucial question about the sustainability of its profit quality.
According to the prospectus, the decline in YESMRO's gross margin is primarily due to the continued drag from falling gross margins of third-party brands. In 2023 and 2024, the gross margins for third-party brands were 7.1% and 6.3%, respectively, declining further to 6.2% in the first three quarters of 2025, compared to 6.5% in the same period of 2024. In stark contrast to the continuous decline in third-party brand gross margins is the significant increase in the gross profit generated from third-party brand business. The gross profit from third-party brands was RMB 36.459 million in 2023 and RMB 38.256 million in 2024. For the first three quarters of 2025, it reached RMB 32.432 million, a substantial increase from RMB 28.247 million in the same period of 2024.
The divergence between gross profit growth and gross margin decline suggests that YESMRO's sustained growth on the revenue side might be dependent on "trading price for volume" strategies or the expansion of low-margin categories within its third-party brand business. The root of this development path can potentially be traced back to YESMRO's initial market positioning. By targeting SMEs as its entry point, the company successfully filled a market gap and built differentiated competitive barriers. However, this model inherently carries long-term structural challenges. Specifically, orders from SME customers are fragmented, making it difficult to achieve economies of scale, which directly constrains pricing power and profit margins. Simultaneously, the high purchase frequency and low average order value of SME customers also drive up service and operational costs. Furthermore, SMEs generally have weaker risk resilience, and their demand is susceptible to macroeconomic cycles and industry fluctuations, posing potential concerns for the sustainability and stability of the company's growth.
More critically, the strategic focus on serving SMEs may have caused YESMRO to miss the window of opportunity to extend its services to medium and large-sized clients. In the MRO procurement and digital supply chain services sector, leading platforms, after firmly capturing the medium and large client market, have begun to expand downwards into the SME segment. This undoubtedly creates significant pressure on YESMRO's attempts to move up the customer hierarchy.
To break through these development challenges, YESMRO began focusing on its own brand business starting in 2023, attempting to optimize its profit structure. However, after nearly three years of development, the revenue contribution from this business has only increased to 5.2%, indicating slow growth. Although the gross margin for the own brand reached 26.2% in the first three quarters of 2025, significantly higher than the 6.2% for third-party brands, its contribution to overall revenue remains very limited. Under pressure from the slower-than-expected scaling of its own brand, the company may be forced to rely even more on "trading price for volume" to expand its third-party brand business, further entrenching itself in a cycle of "scale growth accompanied by declining gross margins."
YESMRO states in its prospectus that the customer transaction data accumulated on its platform can drive the strategic development of own brand products in high-demand categories, thereby enhancing gross margins and profitability levels. However, based on current results, progress along this development path has been slow, with limited practical effect. Until YESMRO can effectively demonstrate to the market that the "data-driven → own brand → profitability improvement" model is viable, the company may struggle to achieve a high valuation given its current profitability challenges.
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