CICC has released a research report stating that it largely maintains its revenue and adjusted net profit forecasts for JST GROUP (06687) for 2026. However, considering potential headwinds from the macroeconomic environment that could negatively impact 2026 orders and 2027 revenue, the firm has lowered its 2027 revenue forecast by 9.2% to RMB 1.58 billion and its 2027 adjusted net profit forecast by 12.7% to RMB 550 million. CICC maintains its Outperform rating on the stock. Due to a downward shift in industry valuation benchmarks, the target price has been reduced by 24% to HK$31, which is based on 30 times 2026 price-to-earnings ratio. The company currently trades at 20 times 2026 P/E, implying a 59% upside potential to the target price.

CICC's primary views are as follows:

**2025 Performance Met Expectations** JST GROUP reported its 2025 results: revenue increased 25.6% year-on-year to RMB 1.14 billion, aligning with expectations. Adjusted net profit grew 282.2% year-on-year to RMB 230 million, representing an adjusted net profit margin of 20.2%, which also met expectations.

**Core Business Shows Steady Growth, Focus on Overseas Expansion and AI Opportunities** In 2025, JST's SaaS revenue increased 26% year-on-year to RMB 1.10 billion. Within this, ERP revenue grew 20% to RMB 920 million, while collaborative product revenue surged 65% to RMB 190 million. Benefiting from the strength of its ERP products and the strong performance of collaborative products, the total number of JST's SaaS customers increased 28% year-on-year to 113,000 in 2025. The volume of orders processed grew 18% to 38.8 billion, and the SaaS revenue contribution per order increased 7% to RMB 0.029, driven by growth in both collaborative products and the number of small and medium-sized clients. The company's overseas business progressed rapidly, with revenue from Southeast Asia increasing 119% year-on-year to approximately RMB 21.9 million. In response to AI trends, the company has established partnerships with major model providers to develop AI applications for e-commerce operations.

Looking ahead, management indicated it will focus on: 1) deepening its presence in the domestic market by continuing to develop ERP and collaborative products and expanding customer coverage; 2) expanding its overseas business footprint, with plans to establish subsidiaries in countries such as Malaysia, Vietnam, Indonesia, and the Philippines; 3) advancing its supply chain strategy based on a large distribution framework; and 4) fully embracing AI to enhance product functionality, usability, and internal efficiency.

**Profitability Remains Robust, Cash Flow Grows Rapidly** In 2025, JST continued to demonstrate operating leverage, with its gross margin improving by 5.1 percentage points year-on-year to 73.6%. The adjusted net profit margin increased by 13.6 percentage points to 20.2%. Efficiency gains were supported by the application of AI in areas such as programming, customer service, and contract review. In terms of cash flow, the company's operating cash flow reached RMB 400 million in 2025, a 45% increase year-on-year.

Risks include macroeconomic headwinds, setbacks in the development of new products, net profit growth falling short of expectations, intensifying competition, and challenges in overseas expansion.