CICC published a research report stating that, considering the impact of industry headwinds, it has lowered MING YUAN CLOUD's (00909) revenue forecasts for 2025 and 2026 by 18.0% and 17.6% to RMB 1.27 billion and RMB 1.27 billion respectively. Taking into account the company's cost control measures, the adjusted net profit attributable to shareholders forecasts for 2025 and 2026 have been raised from -RMB 1.91 million and RMB 17.73 million to RMB 68.10 million and RMB 87.05 million respectively. Considering the upward shift in industry valuation center, CICC maintains its Outperform rating and target price of HK$3.5 (based on 5x 2025 P/S ratio). The company currently trades at 5x 2025 P/S ratio.
CICC's main views are as follows:
**MING YUAN CLOUD's H1 2025 Revenue Below Expectations, Profit Exceeds Expectations**
MING YUAN CLOUD announced its H1 2025 results: revenue declined 15.9% year-on-year to RMB 610 million, below previous expectations, mainly affected by real estate industry headwinds. Adjusted net profit recorded RMB 33.12 million, achieving a turnaround to profitability (compared to a loss of RMB 16.96 million in the same period last year), corresponding to an adjusted net profit margin of 5.5%, exceeding previous expectations, mainly benefiting from the company's cost control.
**Industry Headwinds Continue to Impact**
In H1 2025, affected by domestic residential market headwinds and the company's optimization of certain product lines, short-term contract signings declined, putting pressure on revenues from some business segments. The company's cloud services revenue declined 14.3% year-on-year to RMB 520 million in the first half, with customer relationship management/project construction/asset management & operations/Tianji PaaS platform revenues declining 13.1%/25.5%/+2.0%/23.5% year-on-year to RMB 380 million/RMB 46.56 million/RMB 47.24 million/RMB 47.52 million respectively. On-premise software and services revenue declined 24.8% year-on-year to RMB 81.12 million.
Looking ahead to H2 2025, as the industry gradually stabilizes and the impact of business focus optimization gets digested, CICC expects MING YUAN CLOUD's revenue decline to narrow in the second half.
**AI and Overseas Markets Become Important Growth Drivers**
In H1 2025, MING YUAN CLOUD achieved significant results in AI deployment. The Yunke AI product recorded contract signings of RMB 32 million in the first half, exceeding last year's full-year new contract signings (RMB 28 million). AI traffic optimization, AI sales representatives, AI badges and other products cover core real estate marketing segments, cumulatively covering approximately 2,000 real estate projects.
In overseas markets, the company achieved approximately RMB 15 million in contract signings in the first half, launched Linkforce, a safety and labor management platform for real estate construction companies, and completed the full acquisition of Japanese PropTech company ASIOT Co., Ltd. in August 2025. Currently, MING YUAN CLOUD has established localized teams in Japan, Hong Kong, and Southeast Asia. The company expects overseas product contract signings to reach RMB 50 million for full year 2025.
**Significant Cost Reduction and Efficiency Improvement Results**
In H1 2025, MING YUAN CLOUD continued cost reduction and efficiency improvement initiatives, exploring AI empowerment. Overall expenses (excluding share-based payments) decreased 20% year-on-year to RMB 560 million in the first half, with management/R&D/marketing expenses declining 5%/21%/22% respectively. Per capita productivity increased 14.6% year-on-year to RMB 345,000.
Under cost reduction and efficiency improvement measures, the company recorded adjusted net profit of RMB 33.12 million in the first half, achieving a turnaround to profitability. Net operating cash outflow was RMB 42.80 million, narrowing 74% year-on-year. Excluding the impact of annual performance payments, operating cash flow has turned positive.
**Risk Factors:** Declining real estate industry sentiment; intensifying competition.