Robotics Firm Yunji Surges 101% in Hong Kong Grey Market

Service robotics company Yunji shares surged 101% in Hong Kong grey market.

Yunji’s specialty is service-oriented robots that do repetitive and labor-intensive work, with hospitality as its most important focus. Such robots currently account for 83% of the company’s revenue, and can carry out a huge variety of tasks, from room service delivery to cleaning duties, such as vacuuming hallways or cleaning public areas. They can also assist with functions like guest reception and navigation by providing directions to rooms and restaurants. They can even offer check-in and check-out services, enhancing convenience for guests.

The potential market for such products is huge in a Chinese hospitality industry with hotel chains operating about 90,600 properties containing 16.5 million guest rooms at the end of 2023. The industry is currently undergoing a rapid digital transformation with aims of enhancing guest experience, improving operating efficiency and reducing costs. Over half of the hotels in China currently plan to invest more in robotics technologies. That’s left Yunji in a sweet spot not just at home but also globally, thanks to its position as industry leader with 9% of the worldwide market for hospitality robots.

The industry’s strong prospects have attracted a wide range of investors to Yunji over its eight financing rounds since its inception. Those include investment companies affiliated with tech giants like e-commerce giant Alibaba, gaming leader Tencent, PC giant Lenovo and top online travel agent Trip.com. The company’s major institutional investors include Qiming Venture, Citic Securities and China Everbright Group, all aiming for a piece of the action.

The company derives its revenue from two primary sources. The larger of those, robots and functional kits, provided 77.2% of Yunji’s revenue last year, while the remaining 22.8% came from AI-driven robotic fundamental services. Under its robots and functional kits business, the company either collects one-time payments for products or obtains recurring fees under rental arrangements. Its AI digitalization systems provide fundamental services from the company’s AI-driven robots for subscription or one-off service fees.

The company generated 245 million yuan in revenue last year, up by an impressive 68.6% from 2023. Even more impressive, its gross margin for the year jumped by 16.5 percentage points to 43.5%, producing a 170% surge in gross profit to 106 million yuan. But heavy spending on R&D, sales and marketing ultimately dragged Yunji into the red, though its loss last year narrowed by 30% to 185 million yuan.