IPO Report: JST Group Corporation Limited(06687.HK)
Basic Information
06687.HK
Company Name: JST Group Corporation Limited
Industry: SaaS
IPO Price: 30.60 HKD
Oustanding Shares: 68,166,200 shares
Expected Market Capitalization: HKD 13.037 billion
Board Lot Size: 100 Shares
Minimum Investment Amount: 3,090.85 HKD
Listing Date: 2025-10-21
Use of Proceeds: 10% for general corporate purposes; 10% for strategic investments over the next five years; 25% to enhance sales and implementation capabilities; 55% for R&D
Greenshoe: Yes, 15%
Sponsor: CICC (HK), J.P. Morgan
Cornerstone Investor: About 13 cornerstone investors; total subscription ~ 48.50%
Company Overview
Founded in 2014 and headquartered in Shanghai, JST Group is China’s largest e-commerce SaaS ERP provider. In 2024, revenue reached 910 million with 30.5% growth, turning profitable and serving over 88,400 paying merchants.
Business Model Analysis
Core Business
The company sells subscription e-commerce ERP that manages orders, inventory, procurement and operational workflows. Core product Jushuitan ERP charges by store subscription and connects to more than 400 platform interfaces. In 2024, SaaS revenue was 878 million, exceeding 95% of total, supported by 115% net revenue retention.
Target Customer
Primary customers are small and midsize e-commerce merchants, with apparel, shoes and bags exceeding forty percent. Average monthly spend per customer is about 800, while the base expanded from 33.1k to 66.1k. Customers are fragmented with no single major account; LTV to CAC reached 9.3x in 2024.
Revenue Streams
Revenue is highly concentrated in software subscriptions, contributing over 95% with recurring annual payments. Non-subscription revenue includes marketing service sharing and hardware sales, each together below five percent. Cross-selling across modules and products increases average revenue per customer and deepens account penetration.
Key Resources
Proprietary ERP architecture supports massive order processing and reliable, high-concurrency operations at nationwide scale. A nationwide service network and around 2,200 employees deliver implementation, training and responsive customer support. Access to cross-platform transaction data and 400+ integrations strengthens product iteration; 2024 R&D spending reached 240 million.
Cost Structure
Major costs relate to cloud infrastructure, with a single supplier accounting for 50.3% in 2024. Gross margin stays around sixty-five to seventy percent; R&D expense ratio is 26.4%, while sales expenses are high. Post-listing the company targets a net cash position and improved capital structure to reduce risk.
Industry & Market Analysis
Market Size
China’s e-commerce SaaS market expanded from 73 billion in 2020 to 101 billion in 2022. It is expected to reach 291 billion by 2027, implying approximately 22.6% compound annual growth. Within the segment, the e-commerce ERP market size in 2024 was about 31 billion. JST held a 24.4% share, exceeding the combined shares of the second through fifth players. Merchant spending on traditional e-commerce ERP remained negligible, indicating significant penetration headroom for SaaS adoption. Growing order volumes and omnichannel operations further expand addressable demand for standardized, scalable ERP solutions.
Industry View
Competition is intense, with one clear leader and numerous niche players across solution verticals. Weimob, Youzan and Guangyun represent major peers spanning marketing SaaS, private-domain commerce and ERP. Outside the top five, fragmented vendors together still account for roughly thirty percent market share. Scale advantages arise from data, integration coverage, and nationwide service networks that enable faster deployments. Switching costs, embedded workflows and multi-product bundling reinforce customer stickiness and lifetime monetization opportunities. Pricing competition appears episodic, while differentiation centers on reliability, scalability, ecosystem depth and analytics.
Trends & Growth
Omnichannel retail and emerging formats raise operational complexity, intensifying demand for integrated ERP suites. AI-powered forecasting, automation and copilots accelerate innovation and expand upsell paths across modules and channels. Tighter regulation on data security and platform practices heightens compliance requirements and raises competitive barriers. Capital flows support consolidation, with leading vendors absorbing adjacent capabilities and long-tail share over time. Cross-border commerce and warehouse automation broaden scenarios, reinforcing standardized cloud deployments over on-premise alternatives. SMB digitalization continues, yet budget sensitivity necessitates measurable ROI and clear integration roadmaps for adoption.
Main Competitors
06687.HK
In 2024, revenue reached 910 million with 30.5% growth, alongside gross margin about 67% and profitability. Price-to-sales of 13.0x exceeds Weimob and Youzan, reflecting stronger retention and monetization efficiency at current scale. Net revenue retention reached 115% and LTV to CAC achieved 9.3x, supporting durable growth and margins. Compared with Guangyun Technology, scale leadership and steadier growth trajectory underpin competitive positioning in ERP solutions.
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Weimob Inc. focuses on social commerce and marketing SaaS, operating at larger revenue scale than the IPO target. In 2023, revenue reached 22.28 billion, up 21.2%, with gross margin around 66% but negative operating margin. Price-to-sales near 4.0x trails the IPO’s 13.0x, reflecting weaker profitability and monetization efficiency in recent periods. Despite faster top-line growth relative to peers, sustained losses constrain investment capacity and product breadth expansion. Its offerings complement back-end ERP players, competing more on ecosystem access, marketing tooling, and service integration.
8083.HK
Youzan Technology prioritizes private-domain e-commerce SaaS, yet faces growth headwinds and elevated churn dynamics among merchants. In 2024, revenue was 14.4 billion, decreasing 3.7%, with gross margin near 60% and negative operating margin. Price-to-sales about 4.5x lags the IPO’s 13.0x, underscoring monetization and profitability gaps versus scaled vertical peers. Net revenue retention trails the IPO’s 115%, highlighting weaker upsell, cross-sell, and subscription durability over time. Strategic focus remains on merchant enablement, but category saturation and competition constrain acceleration in core segments.
688365.SH
Guangyun Technology is a direct ERP competitor with smaller scale and earlier profitability relative to the IPO. In 2023, revenue reached 4.75 billion, down 3.7%, with gross margin 68.6% and operating margin −3.8%. Price-to-sales around 13.7x approximates the IPO’s 13.0x, suggesting similar growth-quality expectations from current market comparisons. Revenue scale equals about fifty-two percent of the IPO company, despite comparable gross margin levels today. It holds approximately 11.8% market share, reinforcing its relevance in the competitive landscape for ERP demand.
Porter’s Five Forces Model
Existing Competitors
Rivalry is high, with frequent feature parity and periodic pricing campaigns across adjacent SaaS modules. Ecosystem depth and integrations differentiate offerings more than headline prices in increasingly sophisticated categories. National service networks and implementation capacity act as barriers, slowing vendor substitution after deployment. Data network effects and cross-sell bundles intensify competition by locking customers into multi-product suites.
New Entrants
Traditional ERP giants and platforms could enter or expand, leveraging installed bases and traffic advantages. However, domain expertise and high-reliability operations create practical hurdles for fast replication at scale. Customer acquisition channels are costly, and long implementation cycles raise capital requirements for challengers. Overall threat remains moderate, with credible entrants focusing on complementary tooling before core ERP.
Threat of Substitutes
On-premise software and manual processes exist but struggle with scalability, reliability and cross-platform integration. Platform-native tools may evolve, yet current functionality remains basic relative to specialized ERP suites. Building proprietary systems proves costly for SMBs and often underperforms standardized cloud offerings significantly. Overall substitute threat is low, constrained by complexity and continuous feature delivery demands today.
Supplier Bargaining
Cloud providers possess leverage, evidenced by a single supplier accounting for 50.3% of purchases. Service interruptions or price increases could pressure margins and reliability commitments to merchants materially. The company is promoting multi-cloud deployment to diversify risk and enhance negotiating position over time. Post-listing cash resources may improve terms, though switching costs and migration complexity persist meaningfully.
Customer Bargaining
Customers are fragmented, lacking concentration; switching costs and embedded workflows reduce churn propensity significantly. Net revenue retention of 115% indicates pricing power through upsell and cross-sell expansion initiatives. Large accounts may negotiate discounts, but overall price sensitivity remains limited among SMB cohorts. Service quality and ecosystem integrations matter more than headline pricing for mission-critical operations today.
Financial Analysis
Growth Potential
Three-year revenue CAGR reached 31.9%, with 2024 growth of 30.5% driven by customers and ARPU. Paying merchants increased to 88,400, while cross-sell expanded multi-product adoption across the base materially. New markets and strategic investments open growth vectors alongside the core e-commerce ERP franchise. High net retention and store-based pricing underpin compounding revenue at stable unit economics over time. Management targets mid-term doubling potential as penetration deepens across verticals and omnichannel workflows nationwide.
Profitability
The company turned profitable in 2024, with operating margin of 1.2% and gross margin about 65–70%. Expense ratios remain elevated, particularly sales, though LTV to CAC at 9.3x supports sustained investment. Scale economies and product mix improvements should lift contribution margins as adoption broadens further. Cloud efficiency gains and multi-cloud negotiation could reduce unit costs and protect gross margin. Profit trajectory depends on disciplined acquisition spending and continued retention-driven expansion within accounts over time.
Cash Flow
Operating cash flow is improving and expected to turn positive alongside rising deferred revenue balances. Deferred revenue increased from 103 million in 2021 to 327 million in 2024 cumulatively. Capital expenditures remain modest below 20 million, keeping free cash flow sensitivity primarily operating. IPO proceeds reduce financing needs and support working capital for expansion and resilience initiatives. Conversion will depend on renewals, prepayments, and disciplined receivables management across merchant cohorts nationwide.
Financial Health
Post-listing, leverage declines with net cash targeted; no interest-bearing debt is contemplated currently either. Asset-liability ratio falls below thirty percent, strengthening solvency and flexibility for investment allocation. Liquidity metrics exceed one, with positive working capital and short receivables cycles observed. Improved capital structure hedges macro volatility and supports sustainable growth initiatives ahead too. Funding redundancy reduces refinancing risk and allows opportunistic strategic investments when accretive appearing.
Risk Assessment
Intensifying competition among SaaS vendors could raise customer acquisition costs and compress subscription pricing over time. Platform self-developed tools may reduce third-party relevance by embedding native features and preferential access to traffic. Reliance on SMB cohorts exposes renewals to macro shocks and operating volatility in discretionary categories. Data security or privacy incidents would damage brand trust and could trigger compliance penalties or contract churn. Dependence on a single cloud supplier for 50.3% purchases concentrates operational risk, despite ongoing multi-cloud initiatives. Product iteration lagging AI or automation trends risks functional substitution and slower upsell across modules. Regulatory changes around data, payments, or platform governance could increase compliance costs and slow product launches. Talent attrition within engineering and sales would weaken execution, elongate deployments, and erode service quality.
Management & Shareholder Background Analysis
Core Management Team
Founder and CEO Luo Haidong brings roughly twenty years of ERP domain experience and entrepreneurial execution. He previously founded businesses and led retail operations, informing product design around omnichannel workflows and scalability. CTO He Xingjian oversees architecture and reliability, ensuring high concurrency and nationwide deployment continuity. Sales leadership comprises industry veterans who built a nationwide service network with approximately 2,200 employees. The team emphasizes implementation excellence, training, and responsive support to sustain retention and cross-sell momentum. Equity incentives align management with long-term strategy, reinforcing disciplined growth and profitability objectives.
Key Shareholders
Luo Haidong controls 39.37% of voting rights and serves as the company’s ultimate controlling shareholder. Institutional investors, including Sequoia and Hillhouse, collectively hold around 47.21% according to disclosed ownership. Shareholding is clearly structured, with governance emphasizing transparency and board oversight practices. The IPO introduces new investors through global offering allocation alongside existing long-term backers. Cornerstone participation totals approximately 48.50% across about thirteen investors, enhancing float stability at listing. Post-offering ownership remains diversified, supporting strategic optionality and ongoing capital market access.
Investment Horizon Analysis
Short-term View
Margin subscription reportedly reached fourteen times, while cornerstone demand reduces effective free float during debut. Joint sponsors CICC and J.P. Morgan price at 13x sales, above peer multiples yet supported by retention. Market sentiment appears neutral, suggesting a modest initial premium rather than aggressive momentum. Tactical stance favors holding and avoiding early profit-taking to gauge orderbook quality and stability.
IPO Subscription Rating: Bullish
Long-term View
Competitive moat stems from first-mover scale, ecosystem stickiness, and high switching costs across workflows. The addressable market remains large, likely sustaining over twenty percent growth in coming years. Share leadership and an emerging profitability inflection support compounding revenue and margin expansion. Industry consolidation should benefit the leader through selective acquisitions and broader product penetration.
Overall Rating
Bullish
78/100
*Sources: HKEXnews disclosures, listing documents/prospectus, listing announcements, company reports and IR releases; minor scope/timing variance; for research only, not investment advice.
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