Goldman Sachs's latest report: AI monetization in China's software industry will accelerate in 2025! Sorting out all 14 companies including Yonyou
The Zhitong Finance App learned that recently, Goldman Sachs (Goldman Sachs) released a stock research report focusing on the performance of China's software industry in 2025, updating profit forecasts for the industry and key enterprises, focusing on the three major directions of AI tool monetization, business diversification, and integration of AI and core software, and providing industry valuation judgments and corporate rating adjustments. The main contents are as follows:
I. Overall performance of China's software industry in 2025
1. Overview of the first half of the year results
In the first half of 2025 (1H25), the average revenue of Chinese software companies covered by Goldman Sachs increased 9% year over year; affected by seasonal weakness in the industry in the first half of the year, the average net profit margin was -3%. However, it is worth noting that the increase in productivity of software companies has begun to drive improvements in profit margins:
(1) Companies that exceed expectations
Kingsoft Office (Kingsoft Office), Thundersoft (Thundersoft), and Sensetime (Sensetime) surpassed expectations in 2025/1 due to increased corporate AI investment; Glodon (Glodon) and Sangfor (Sangfor) had better net profit performance in the second quarter of 2025 (2Q25) due to increased employee productivity.
(2) Industry outlook ERP (Enterprise Resource Planning) suppliers (Yonyou, Kingdee) and AI vendors (Shangtang Technology, iFlyTek) are optimistic about revenue growth in the second half of 2025 (2H25). The core drivers include growing demand for AI capabilities, the popularity of cloud platforms with data services, and the launch of new products such as AI agents and AI-enabled edge devices.
2. The direction of corporate strategy focus
After the release of the second quarter results, Goldman Sachs observed that industry companies mainly focused on three strategic directions to cope with market changes:
AI tool monetization: develop AI tools with value-added functions to meet the actual needs of customers and achieve commercialization;
Business diversification: Expanding into overseas markets or new business areas to offset the impact of a slowdown in IT spending in specific segments;
AI and core software integration: Integrate AI technology into core software products to increase customer willingness to pay and market share.
3. Industry valuation level
As of the release of the report, the average price-earnings ratio (P/E) of Chinese software companies has risen to 55-60 times (the average of companies covered by Goldman Sachs is 59 times), and the average corporate value/sales ratio (EV/sales) has risen to 8-9 times (the average number of companies covered by Goldman Sachs is 11 times), driven by early signals of AI monetization. Despite a recovery in valuations, EV/sales are still below 12-18 times the 2020-2021 level.
Goldman Sachs believes that with the growth of AI-related revenue and the transformation of companies to subscription businesses, there is room for further increases in the valuations of Chinese software companies.
II. Performance and valuation analysis of key software companies
1. Yonyou Network (stock code: 600588.SH) — Rating: Neutral
(1) 2025 performance
User Network's revenue in 2025 was RMB 22.03 billion (RMB, same below), up 7% year on year, which is basically in line with Goldman Sachs expectations (only 1% deviation from expectations); net loss narrowed to RMB 2.09 billion, a significant improvement over the 2024 loss of RMB 3.41 billion. Core drivers include:
The growth of small and medium-sized enterprise (SMB) business and the recovery of demand from large customers drove revenue growth to 7% year-on-year in the second quarter (-21% in the first quarter);
The contract amount increased 18% year-on-year in 2025, with YonBIP (YonBIP Business Innovation Platform) AI orders reaching 3.2 billion yuan;
Increased personnel efficiency: The number of employees dropped to 19,000 by the end of 2025 (21,000 at the end of 2024), and management expects the number of employees to remain stable and productivity to continue improving in the future.
(2) Profit forecast correction
Goldman Sachs lowered its profit forecast based on users' 2025 results: net loss for 2025 was revised to 5.94 billion yuan (previously forecast was 5.17 billion yuan); net profit for 2026-2027 was reduced by 8%, respectively. The main reasons include:
The cloud business of medium-sized enterprises is in a transition period, and revenue is lower than expected, and the revenue forecast for this business has been lowered;
Although the business is skewed towards a subscription system (product structure optimization), it will take time to improve efficiency, and the operating expenses ratio (Opex ratio) for 2026-2027 will increase by 0.4 and 0.2 percentage points, respectively.
(3) Valuation and target price
Based on the correlation between its peer's 2026 price-earnings ratio and 2027 profit and operating margin, Goldman Sachs gave users a target price-earnings ratio of 106 times in 2026 (previously 88 times), corresponding to a 12-month target price of 17.19 yuan (previously 16.16 yuan), maintaining a “neutral” rating.
(4) Performance chart reference
User Network 2025 performance snapshot (including 2024-2025 revenue, gross profit, operating profit, net profit and various profit margins)
2. Glodon (stock code: 002410.SZ) — Rating: Sell (Sell)
(1) 2025 performance
In 2025, Guanglianda's revenue fell 5% year-on-year, mainly driven by the construction cost software business (pressured by the industry environment); however, the construction management software business gradually recovered, combined with product structure optimization and cost control, and the net profit margin rebounded to 13% in the second quarter (11% for the same period in 2024 and -2% in the first quarter of 2025).
Management pointed out that although the real estate market is still suppressing the construction of new projects, future growth will depend on three core drivers: infrastructure solutions, AI tools (with orders of 400 million yuan), and overseas business (Asia/European market), while profit margins are expected to continue to improve.
(2) Profit forecast correction
Goldman Sachs lowered its 2025-2028 revenue forecast by 1%-3% (the construction cost software business was weaker than expected); however, due to increased employee productivity and effective cost control, the operating expense ratio declined, and the 2025-2028 net profit forecast was raised by 1%-18%. Taking 2025 as an example, net profit was revised to $510 million (previously $433 million), an increase of 18% over the previous year.
(3) Valuation and target price
Based on the correlation between peers' price-earnings ratio and profit growth, Goldman Sachs gave Guanglian a target price-earnings ratio of 31 times in 2026 (previously 33 times), corresponding to a 12-month target price of 12.2 yuan (previously 11.9 yuan), maintaining a “sell” rating. The target price-earnings ratio is between the company's average price-earnings ratio (63 times) and the average price-earnings ratio minus 1 standard deviation (28 times) since January 2018.
(4) Performance chart reference
The revenue growth rate of Guanglianda's business segments in the first half of 2025 (overseas, construction management, total revenue, construction costs, design software)
(Changes in Guanglianda's contract liabilities and contract debt ratio from 2022 to 2025)
3. China Science and Technology Chuangda (Thundersoft, stock code: 300496.SZ) — Rating: Sell
(1) 2025 performance
In 2025, Zhongke Chuangda's revenue reached 1,831 billion yuan, up 50% year on year and 25% month on month. The core driving force is the AIoT (Artificial Intelligence Internet of Things) business — which grew 136% year over year. However, due to the decline in gross margin of the AIoT business in the first half of the year, the company's overall gross margin declined year-on-year/month-on-month; when combined with the increase in operating efficiency in the second quarter but the tax rate rose, net profit in 2025 was 660 million yuan, up 384% year on year and down 29% month on month, lower than Goldman Sachs's expectations of 33%.
Management said that in the future, it will focus on the IoT and smart car business, increase technology research and market share competition, and support continued revenue growth.
(2) Profit forecast correction
Goldman Sachs raised its 2025-2027 revenue forecast by 4%-8% (the AIoT business included generative AI functions, and revenue exceeded expectations); however, due to the company's focus on market share, the gross margin of the IoT business fell short of expectations and lowered the gross margin forecast for the same period; at the same time, benefiting from operating efficiency exceeding expectations in the second quarter of 2025, the operating expense ratio was lowered, and ultimately the 2025-2027 net profit forecast was fine-tuned by 0%-1%.
(3) Valuation and target price
Based on the correlation between its peer's price-earnings ratio in 2026 and the increase in net profit in 2027, Goldman Sachs gave Zhongke Chuangda a target price-earnings ratio of 36.6 times in 2026, corresponding to a 12-month target price of 52.4 yuan (previously 46.0 yuan), maintaining a “sell” rating. The company's current price-earnings ratio is 55 times higher than the target price-earnings ratio, and Goldman Sachs believes its valuation is too high.
(4) Performance chart reference
Revenue growth rate of each business segment of China Science and Technology Chuangda in the first half of 2025 (smart AIoT, total revenue, smart software, smart cars
Snapshot of Zhongke Chuangda's 2025 results (including 2024-2025 revenue, gross profit, operating profit, net profit and various profit margins)
4. Summaries of other key enterprises
III. Industry Risk Factors
Goldman Sachs pointed out that the core risks and opportunities faced by Chinese software companies mainly include: macro and industry environment: speed of digitalization of the construction industry, progress of real estate market recovery (affecting companies such as Guanglianda); intensity of IT demand of small and medium-sized enterprises (affecting users, deep confidence, etc.); business execution and competition: sales execution efficiency, progress of subscription system transformation; increased competition in market segments such as CAD and security software (such as Zhongwang Software, Shenzhen Trust); Technology and products: speed of commercialization of AI tools, progress of core product development such as 3D CAD (affecting Zhongwang Software); smart cars, IoT Technology implementation results in the field (affecting China Science and Technology Chuangda).