Shanghai Geruili Software Co., Ltd. (hereinafter referred to as "Geruili") has recently submitted a listing application to the main board of the Hong Kong Stock Exchange once again, with Guotai Haitong and Minyin Capital acting as joint sponsors. This marks the company's second attempt to list in Hong Kong. As one of the early enterprises in China to develop semiconductor CIM (Computer Integrated Manufacturing) systems, Geruili has significantly benefited from the rapid growth of the domestic pan-semiconductor industry in recent years, leading to a notable increase in its revenue scale. However, behind the facade of swift performance growth, the company has reported substantial losses for three and a half consecutive years. Simultaneously, as a software company, its escalating accounts receivable pose a risk factor that cannot be overlooked in its pursuit of capital market entry.
Notably, Geruili completed its Series D financing round in October 2023, achieving a post-investment valuation of 3.54 billion yuan, a 368.87% increase compared to the valuation after its Series B financing in December 2019 (755 million yuan). Throughout these financing rounds, Geruili attracted renowned institutions such as the National Investment Major Special Fund, Guokai Manufacturing, Shenzhen Chenxin, and Shenzhen Investment Holdings. Prior to the IPO, these experienced independent investors collectively held approximately 24.58% of Geruili's total issued share capital.
The growth in scale has failed to translate into improved profitability, raising concerns about the core business's ability to generate cash. According to the prospectus, Geruili is one of the leading providers of Intelligent Manufacturing Software Solutions (IMSS) in China's pan-semiconductor industry, holding about 11.7% of the total market share in 2024. The company focuses on the research, development, and commercialization of IMSS tailored for advanced manufacturing in the pan-semiconductor sector. Leveraging advancements in artificial intelligence, Geruili has continuously optimized and enhanced its IMSS offerings. Utilizing its research and expertise in the pan-semiconductor industry, the company has launched AI-enabled IMSS for various manufacturing scenarios. Its AI models continuously learn from production and operational data, enabling self-awareness, self-learning, and assisted decision-making to help production lines increase capacity and quality while reducing wastage costs.
According to a Frost & Sullivan report, based on revenue generated in 2024, Geruili ranked second in the Chinese pan-semiconductor IMSS market. It is the largest domestic provider of pan-semiconductor IMSS and the first Chinese company to achieve software solution coverage across the entire value chain of the pan-semiconductor industry. It offers end-to-end solutions spanning from materials and processing to components, assembly, and downstream applications, covering all segments of the pan-semiconductor sector.
The prospectus reveals that from 2023 to 2025, Geruili's revenue increased from 165 million yuan to 300 million yuan, with a compound annual growth rate of 34.8%, indicating seemingly impressive growth on the surface. However, a closer look at the profit side shows accumulated losses exceeding 330 million yuan over the three years, with a net loss still as high as 104 million yuan in 2025, representing a severe deviation from revenue growth. This situation of "increasing revenue without increasing profit" reflects that the company's business expansion is heavily reliant on high investment and has not yet developed an effective ability to convert growth into profitability.
Although the gross profit margin recovered from 3.4% in 2023 to 14.2% in 2025, the absolute value remains low. For a company that prides itself on being technology-driven, a 14.2% gross margin falls far short of reflecting the expected technology premium. Instead, it exposes underlying issues such as high product or project delivery costs and insufficient pricing power.
In 2025, the company's R&D expenditure reached 66.25 million yuan, accounting for 22.1% of revenue; combined sales and administrative expenses totaled 91.4 million yuan, exceeding 30% of revenue. Together, these two items consumed over 50% of the revenue. High R&D investment should ideally be a moat for software companies, but if it fails to translate into gross profit margins, it risks becoming "ineffective investment." Current data indicates that the company remains in a stage of "burning cash for market share," with an urgent need to improve its operational efficiency.
Furthermore, although provisions for inventory impairment and contract liabilities narrowed in 2025, they continued to erode profits over the past three years. Combined with the prevalent issue of high accounts receivable in the software industry, impairment risk remains a "Sword of Damocles" hanging over the company. If collection efficiency and inventory turnover do not improve, they could persistently drag on cash flow and profit performance.
The prospectus shows that during the reporting periods, revenue from Geruili's top five clients was 69.2 million yuan, 89.7 million yuan, 116 million yuan, and 42.5 million yuan, accounting for 62.4%, 54.2%, 46.7%, and 52.5% of total revenue for the respective periods. This reliance on major clients has kept the accounts receivable balance high. As of the end of each reporting period, Geruili's combined trade receivables, notes receivable, and contract assets reached 108 million yuan, 117 million yuan, 168 million yuan, and 183 million yuan, respectively.
Overall, Geruili is in a period of contest between "scale expansion" and "profitability challenges." The quality of its revenue growth is diluted by persistent losses, low gross margins, and high expense ratios.
The proportion of core business is declining, while diversification efforts show initial success. Observation of the revenue composition reveals that income generated from CIM software solutions within IMSS was 137 million yuan, 196 million yuan, and 215 million yuan, accounting for 82.7%, 78.5%, and 71.6% of total revenue respectively. This indicates a structural shift characterized by a contracting share of the core business and a gradual diversification of revenue sources.
This change reflects two trends: firstly, the company is actively adjusting its business structure, reducing reliance on a single product, and gradually expanding into other platforms and maintenance services within the IMSS framework; secondly, the growth rate of non-CIM businesses has surpassed that of the core business, suggesting that product line extension is beginning to yield results. However, whether this diversification possesses a sustainable competitive foundation remains to be seen.
As the technological cornerstone of the company, the gross margin performance of the CIM software has shown significant volatility: it was 21.9% in 2023, rose slightly to 23.1% in 2024, but then dropped sharply to 15.0% in 2025, depicting an inverted V-shape trend of rising first and then falling. This trend warrants close attention. In the industrial software sector, the gross margin of core products typically reflects the height of technological barriers and the strength of productization capabilities. A 15.0% gross margin is not only far below mature industry levels (often exceeding 50%) but also exposes deep-seated challenges the company faces in terms of profit quality.
Firstly, the decline in gross margin, instead of an increase, suggests the company may have undertaken more low-margin customized projects or been forced to concede pricing power in market competition. This contradicts the scalable profit logic of industrial software companies, which is based on "develop once, reuse multiple times."
Secondly, against the backdrop of continuous revenue growth in the CIM business, its gross profit amount decreased from 45.2 million yuan to 32.2 million yuan, a drop of 28.8%. This indicates that cost growth has significantly outpaced revenue growth, potentially linked to factors such as increased project complexity and decreased delivery efficiency.
In summary, Geruili is in a critical phase grappling with the balance between "scale expansion" and "profit quality." On one hand, leveraging its first-mover advantage in the semiconductor CIM field, the company has capitalized on the industry红利 of domestic substitution, continuously expanding its revenue scale and showing initial success in diversification. On the other hand, the sharp decline in the core product's gross margin, consecutive years of substantial losses, and high accounts receivable profoundly reveal the essence of its predicament: increasing revenue without corresponding profits. As a software company aiming for a Hong Kong listing, Geruili urgently needs to find a balance between project-based work and productization, transforming its substantial R&D investments into sustainable profitability and positive cash flow performance.
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