As the Chinese e-commerce industry revolutionized the shopping experience with one-click ordering and next-day delivery, it has also introduced significant challenges in managing an overwhelming number of orders and clients. This is where Software as a Service (SaaS) comes into play, providing various business support services such as inventory management, store oversight, and customer service for e-commerce operators.

Amid the thriving e-commerce growth, the business behind SaaS has also flourished. JST GROUP (聚水潭), which claims to be the largest domestic e-commerce SaaS ERP provider with a market share of 24.4%, is set to go public on the Hong Kong Stock Exchange. The company kicked off its IPO subscription on October 13 and is expected to list on the main board of HKEX on October 21. It plans to issue 68.1662 million shares, comprising 6.8167 million shares for Hong Kong's public offering and 61.3495 million shares for international offerings, priced at HKD 30.6 per share, raising approximately HKD 2.086 billion, corresponding to an IPO valuation of HKD 13 billion. Sequoia Capital China and several cornerstone investors are collectively subscribing to USD 130 million (approximately HKD 1.012 billion).

After four unsuccessful IPO attempts in June 2023, March 2024, November 2024, and May 2025, JST GROUP now sees a light at the end of the tunnel, edging closer to its target of public listing by the end of 2025.

Generating an annual revenue of nearly 900 million, JST GROUP finally turned a profit in 2024. Beyond platforms like Taobao, JD.com, and Pinduoduo, other notable players such as Douyin, Kuaishou, Xiaohongshu, and Dewu also partake in the e-commerce segment. E-commerce merchants aiming to expand their operations across multiple platforms face the challenge of managing varying systems and a large number of SKUs and orders. SaaS provides essential tools for synchronizing and coordinating all store, order, product, and inventory management, making it indispensable for merchants engaged across various e-commerce platforms.

As highlighted in their prospectus, JST GROUP's principal product is its e-commerce SaaS ERP system, designed to provide a unified and user-friendly suite of business monitoring and management tools, enabling clients to make data-driven decisions. During the 2023 Double Eleven shopping festival, the platform processed approximately 1.4 billion orders. Once an order is placed, it is automatically fed into the ERP system, which employs both automatic and manual review methods to manage orders across various platforms effectively.

From 2022 to the first half of 2025, revenue from e-commerce SaaS ERP products was CNY 457.1 million, CNY 600 million, CNY 765 million, and CNY 428 million, respectively—accounting for 87.4%, 86.1%, 84%, and 81.7% of total revenue. JST GROUP also offers marketing services and equipment sales to other companies, enjoying consistent revenue growth over the reporting period, totaling CNY 523 million, CNY 697 million, CNY 910 million, and CNY 520 million.

Furthermore, the company's gross margin steadily increased, reported at 52.3%, 62.3%, 68.5%, and 71.8% during the said period. This led JST GROUP to achieve profitability in its eleventh year, recording net profits of -CNY 507 million, -CNY 490 million, and CNY 10.58 million. It’s crucial to note that the profit in 2024 significantly stemmed from approximately CNY 90 million in deferred tax contributions; factoring that out would have left a loss of about CNY 80 million. In the first half of 2025, JST GROUP reported additional losses, totaling CNY 39.544 million, attributed to adjustments related to convertible redeemable preferred stock.

Despite achieving profitability, JST GROUP faces ongoing challenges related to user refunds, which have drawn notable scrutiny. As indicated in the prospectus, the volume of pending refunds surged rapidly: from CNY 195 million in 2022 to CNY 336 million in 2023, representing a year-on-year increase of 72.31%, and further climbing to CNY 418 million in 2024—demonstrating over a twofold increase in just two years.

Pending refund fees arise when e-commerce firms utilizing SaaS-based ERP systems are entitled to reimbursements based on contractual agreements but have not yet received them. Typically, merchants must pay these fees upfront, and certain circumstances—such as service interruptions or non-fulfillment of contract obligations—may necessitate refunds. Merchants reported facing automated rejections for refund requests due to arbitrary criteria, severely impacting cash flow.

Customer complaints on the “Heimai Complaints” platform indicate 433 concerning JST GROUP, highlighting issues such as misleading advertising, refund refusals, discrepancies between trial and actual software versions, and inadequate after-sales service. One customer expressed frustration over continued subscription fees despite the software's functionality being impaired without an upgrade.

Despite the challenges, JST GROUP's potential in the booming SaaS industry remains evident, with founder Luo Haidong, a Shanghai University alumnus, successfully navigating the company's transformation since its inception in 2014 alongside his core team. With multiple rounds of financing secured and strategic partnerships formed over the years—including a notable investment partnership with Sequoia and CICC—JST GROUP has increased its valuation significantly.

With the founder's divorce issues now resolved, JST GROUP is set to inaugurate its IPO journey, which may further enhance its standing in an ever-expanding market. The transition toward cross-border e-commerce, alongside partnerships with platforms like AliExpress and Shopee, reflects JST GROUP's ambitions for broader market engagement while solidifying its place as a frontrunner in the domestic SaaS sector. Investors remain watchful for JST GROUP’s growth trajectory amidst evolving market dynamics.