Group 1 - The core viewpoint indicates that the fundamentals are likely to continue supporting the relative performance of Hong Kong stocks, particularly in the internet sector, as evidenced by the rise of the Hong Kong Internet ETF (159568) and individual stocks like Kingdee International [1][2] - As of March 25, 2025, the Hong Kong Internet ETF has shown a maximum monthly return of 30.31% since its inception, with a historical one-year profit probability of 100% [1][2] - The ETF's management fee is 0.50% and the custody fee is 0.10%, which are among the lowest in comparable funds [2] Group 2 - The Hong Kong Internet ETF closely tracks the CSI Hong Kong Internet Index, which consists of 30 listed companies involved in internet-related businesses [3] - The top ten weighted stocks in the CSI Hong Kong Internet Index account for 78.75% of the index, with major players including Alibaba, Xiaomi, and Tencent [3][4] - The current price-to-earnings ratio (PE-TTM) of the index is 24.21, indicating it is at a historical low compared to the past five years [2]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported a revenue of 6.256 billion yuan for 2024, representing a year-on-year growth of 10.2%. The cloud business contributed 5.107 billion yuan, growing by 13.4% and accounting for 81.6% of total revenue. The annual recurring revenue (ARR) from cloud subscriptions reached 3.43 billion yuan, up 20% year-on-year, with contract liabilities increasing by 28.5%. The net loss attributable to shareholders for 2024 was 142 million yuan, an improvement from a loss of 270 million yuan in 2023 [4][5] Summary by Sections Financial Performance - For 2024, the company achieved a revenue of 6.256 billion yuan, with a year-on-year increase of 10.2%. The projected revenues for 2025, 2026, and 2027 are 7.040 billion yuan, 7.965 billion yuan, and 8.912 billion yuan, respectively, indicating growth rates of 12.5%, 13.1%, and 11.9% [10] - The net profit for 2024 was a loss of 142 million yuan, with forecasts of 96 million yuan, 237 million yuan, and 416 million yuan for 2025, 2026, and 2027, respectively, showing significant year-on-year growth of 167.9%, 145.8%, and 75.4% [10] Product Development - The company has fully empowered its products with AI, leading to a revenue of 1.304 billion yuan from its large client offerings, which grew by 32.9% year-on-year. The total contract value reached approximately 2.1 billion yuan, up 51.9% year-on-year [5] - The small and micro product segment also saw the implementation of AI features, generating 1.229 billion yuan in revenue, a year-on-year increase of 13.8%, with a net renewal rate of 93% [5] Future Outlook - The company expects revenues for the fiscal years 2025 to 2027 to be 7.040 billion yuan, 7.965 billion yuan, and 8.912 billion yuan, respectively, with net profits projected at 96 million yuan, 237 million yuan, and 416 million yuan [7][10] - The company maintains a "Buy" rating based on these projections, indicating confidence in its growth trajectory and profitability improvements [7]

Summary of Kingdee International Conference Call Company Overview - **Company**: Kingdee International - **Industry**: China Software/SaaS Key Points and Arguments Performance Highlights - Kingdee's stock has outperformed significantly year-to-date, with a gain of **77%**, compared to **32%** for HSTECH and **36%** for its peers [1][2] - The company achieved a **10%** revenue growth in FY24, reaching **RMB 6.3 billion**, which is notable against peers like Yonyou, which experienced a **7%** revenue decline [7][19] - Operating cash flow reached a near-record of **RMB 934 million**, up **43%** year-over-year [7][19] - Despite a **-2%** net profit margin, Kingdee's performance was characterized as "very respectable" given macroeconomic challenges [7][19] Financial Metrics - Kingdee's adjusted EPS for FY25E is projected at **RMB 0.08**, down from a previous estimate of **RMB 0.12** [5] - The company maintains a **6x EV/sales** multiple for FY25E, which is considered reasonable compared to global ERP peers trading at around **8x** [2][14] - The gross profit margin improved to **65.1%**, up **90bps** from the previous year [19] Market Position and Growth Potential - Kingdee is viewed as the best play in the China software/SaaS space, benefiting from policy tailwinds from Digital China and localization efforts [10][14] - The company is expected to continue double-digit top-line growth, with a projected **13% CAGR** from FY24 to FY27 [14] - Kingdee's cloud products, particularly Cloud Cosmic and Constellation, showed strong growth, with a **33%** increase in revenue [19] Challenges and Risks - Annual recurring revenue (ARR) growth decelerated to **20%**, down from **34%** in FY23, primarily due to macroeconomic headwinds affecting mid-sized enterprises [17][19] - The large enterprise segment, while growing at **30%**, still represents a small portion (26%) of total cloud revenues [17][19] Valuation Insights - The price target for Kingdee is set at **HK$ 17.5** by December 2025, based on DCF analysis, implying a **7x** forward EV/Sales [11][14] - The valuation reflects a sustainable net margin potential of **20-30%** as the company ramps up its operations [14] Additional Considerations - Kingdee's management will host an FY24 results briefing on **March 18, 2025**, which will provide further insights into the company's performance and outlook [20] - The company has a strong cash position with approximately **RMB 4 billion** in net cash as of the end of FY24 [19] Conclusion Kingdee International is positioned strongly within the China software/SaaS industry, demonstrating resilience and growth potential despite macroeconomic challenges. The company's focus on cloud services and strategic positioning in the market, combined with a reasonable valuation, makes it a compelling investment opportunity.

Investment Rating - The report maintains a "Hold" rating for Kingdee International (268 HK) with a target price of HK$14.94, indicating a potential downside of 1% from the current price of HK$15.14 [1][8]. Core Views - The report highlights that Kingdee's stock price has increased by 94% year-to-date, outperforming the Hang Seng Index, which rose by 23%. However, the company's fundamental recovery is lagging behind this valuation increase [6]. - For the second half of 2024, Kingdee's revenue grew by 9% year-on-year to RMB 3.39 billion, which was below market expectations. The annual recurring revenue (ARR) increased by 20% to RMB 3.43 billion, also falling short of expectations [6][10]. - The report notes that Kingdee's cloud service revenue grew by 10% year-on-year to RMB 2.72 billion, again below market consensus [6][10]. - The management expects ARR to grow by approximately 20% in 2025, with revenue growth anticipated to accelerate to 14% year-on-year [6][10]. Summary by Sections Investment Rating and Price Target - The target price has been raised from HK$6.38 to HK$14.94, reflecting a significant increase of 134% [2][12]. - The current valuation is aligned with global peers, with a projected P/S ratio of 7.0, up from 2.8 [8][12]. Financial Performance - For 2025, the expected revenue is RMB 7.15 billion, with a year-on-year growth of 14% [9][10]. - The report projects a net profit of RMB 176 million for 2025, with an EPS of RMB 0.05 [9][10]. - The operating profit is expected to reach RMB 75 million in 2025, indicating a return to profitability [9][10]. Adjustments and Forecasts - Due to underperformance in the second half of 2024, revenue forecasts for 2025 and 2026 have been adjusted downwards by 3% and 5%, respectively [7][10]. - The ARR forecast for 2025 has been revised to a growth of 22%, down from previous estimates [7][10]. Market Comparison - Kingdee's market capitalization is approximately US$6.99 billion, with a three-month average daily trading volume of US$89 million [1][12]. - The report compares Kingdee's performance with global peers like SAP and Workday, noting that Kingdee's revenue growth and AI monetization capabilities are still developing [8][12].

Investment Rating - The report maintains a "Hold" rating for Kingdee International (268 HK) with a target price of HK$14.94, indicating a potential downside of 1% from the current price of HK$15.14 [1][8]. Core Insights - The report highlights that Kingdee's stock has appreciated by 94% year-to-date, outperforming the Hang Seng Index, which rose by 23%. However, the company's fundamental recovery is lagging behind this valuation increase [6]. - For the second half of 2024, Kingdee's revenue grew by 9% year-on-year to RMB 3.39 billion, which was below market expectations. The annual recurring revenue (ARR) increased by 20% to RMB 3.43 billion, also falling short of projections [6][10]. - The report notes that Kingdee's cloud service revenue grew by 10% to RMB 2.72 billion, again underperforming against market expectations [6][10]. - The management anticipates a revenue growth acceleration in 2025, projecting a 14% increase compared to the 9% growth in the second half of 2024, supported by a low base and macroeconomic recovery [6][10]. Summary by Sections Investment Rating and Price Target - The target price has been raised from HK$6.38 to HK$14.94, reflecting a significant increase of 134% [2][12]. - The report adjusts the target price-to-sales (P/S) ratio to 7.0, aligning it with global peers in the ERP sector [12][13]. Financial Performance - Kingdee's revenue for 2025 is projected at RMB 7.15 billion, with a year-on-year growth of 14% [9][10]. - The report anticipates that Kingdee will achieve a breakeven point in operating profit and net profit in 2025, despite downward adjustments in earnings forecasts due to underperformance in 2H24 [6][10]. Earnings Forecast Adjustments - The earnings per share (EPS) estimates for 2025 and 2026 have been revised downwards to RMB 0.05 and RMB 0.11, respectively, reflecting a decrease of 61% and 36% from previous estimates [2][10]. - The ARR for 2025 is expected to grow by 22%, while the growth rate is projected to slow to 20% in 2026 [7][10]. Market Comparisons - Kingdee's market capitalization stands at approximately US$6.99 billion, with a three-month average daily trading volume of US$89 million [1][12]. - The report compares Kingdee's performance with global peers, noting that its current valuation is in line with similar companies that have larger customer bases and stronger profitability [8][12].

Group 1 - The core viewpoint of the report indicates that Kingdee International's 2024 performance slightly underperformed expectations, with a revenue growth of 10.2% year-on-year and a net loss of 142 million yuan, although the loss has narrowed [1] Group 2 - According to CICC, Kingdee's subscription transformation continues to deepen, and AI is enabling the release of business value [2] - The operating loss for 2024 is expected to narrow to 335 million yuan, with a forecast of achieving breakeven in net profit by 2025 [2] - Considering macroeconomic impacts, CICC has lowered Kingdee's 2025 revenue forecast to 7.1 billion yuan and introduced revenue, net profit, and operating cash flow forecasts for 2026 [2] - CICC maintains an "outperforming the industry" rating and raises the target price to 17 HKD [2]

Group 1 - The core point of the article is that Dong Mingzhu, a non-executive director of Kingdee International (00268.HK), reduced his holdings by 100,000 shares at an average price of HKD 15.35 per share, totaling HKD 1.535 million [1] - After the reduction, Dong Mingzhu holds 300,000 shares, representing 0.01% of the total shares [1] - Morgan Stanley downgraded Kingdee International's rating to "Equal-weight" with a target price of HKD 13.50 [1]

Investment Rating - The report maintains a "Strong Buy" investment rating for the company [2][6][7] Core Insights - The company's revenue and cost dynamics show improvement, with a significant reduction in losses and a substantial increase in operating cash flow, indicating ongoing operational improvement [6][7] - AI has become a core strategic focus for the company, with a full range of AI products launched across all product lines, and a strong customer demand expected to translate into performance [6][7] Financial Performance - In 2024, the company achieved a total revenue of 6.256 billion yuan, a year-on-year increase of 10.2%, and a net loss of 142 million yuan, down from a loss of 210 million yuan in the previous year [6][8] - Operating cash flow reached 934 million yuan, a 42.9% increase year-on-year, with cloud service revenue accounting for 81.6% of total revenue [6][8] - The gross margin improved to 65%, with a notable increase in productivity and a reduction in operating expenses [6][8] Growth Drivers - Large enterprises continue to be the growth engine, with significant contract growth and a renewal rate of 108%, indicating strong ongoing demand [6][7] - The company has embraced AI in its management solutions, integrating AI across various applications, which is expected to enhance operational efficiency for clients [6][7] Future Projections - Revenue projections for 2025-2027 are estimated at 7.326 billion, 8.700 billion, and 10.241 billion yuan, respectively, with expected growth rates of 17%, 19%, and 18% [7][8] - The company anticipates a return to profitability with net profits projected at 165 million, 247 million, and 412 million yuan for the same period [7][8]

Summary of Kingdee International's Conference Call Company Overview - **Company**: Kingdee International Software Group Co., Ltd. - **Fiscal Year**: 2024 - **Total Revenue**: RMB 3.93 billion, with cloud service revenue accounting for 81.6%, a year-on-year increase of 13.4% [2][3][4] - **Net Loss**: Reduced by 32.3% to RMB 142 million [2][3] - **Operating Cash Flow**: Increased by 42.9% to RMB 934 million [2][3] - **Cash Reserves**: RMB 4.65 billion at year-end, indicating a healthy financial position [2][3] Key Financial Metrics - **Profit Margin**: Increased from 3% in 2023 to 6% in 2024 [2][5] - **Research and Development (R&D) Investment**: Stable with a slight increase of 0.4% [2][6] - **Administrative Expenses**: Increased by 9.9% due to personnel restructuring [2][5] Cloud Service Performance - **Cloud Service Revenue Growth**: 13.4% increase, contributing to 81.6% of total revenue [2][4] - **Annual Recurring Revenue (ARR)**: Grew by 20% to RMB 3.43 billion, with a 5.4 times increase since 2020 [2][4] - **Contract Liabilities**: High levels indicating potential future revenue [4] Large Enterprise Market - **Contract Growth**: Number of contracts over RMB 10 million doubled, totaling RMB 2.1 billion [2][7] - **New Customers**: 652 new large enterprise customers [2][7] - **ARR Growth for Large Clients**: Increased by 30% [2][7] - **Net Renewal Rate**: Improved to 108% [2][7] AI Integration and Innovations - **AI Applications**: Significant improvements in client management and operational efficiency, e.g., a 70% reduction in workload for China Merchants [2][8] - **AI Product Launches**: Introduction of EBC digital employee solutions and the Cangqiong GPT platform [2][11] - **Future AI Spending**: Expected global IT spending on AI to reach USD 500 billion by 2027 [2][10] Strategic Direction - **AI Development Goals**: Aim to become a leading enterprise management AI company by 2030 [2][10] - **Internal AI Utilization**: Initiatives to enhance efficiency and reduce costs through AI [2][20] - **Market Positioning**: Focus on becoming a benchmark for AI usage within the software industry [2][20] Challenges and Outlook - **Market Sensitivity**: The small and medium enterprise market is sensitive to economic conditions, impacting growth [2][19] - **Future Growth Expectations**: Anticipated improvement in performance due to increased demand for digital transformation among SMEs [2][19] - **Profitability Outlook**: Continued profitability expected, with a conservative approach to future guidance [2][21] Conclusion - **Investment Potential**: Kingdee International is positioned as a valuable player in the enterprise management AI sector, with a focus on sustainable growth and innovation in cloud services and AI applications [2][29]

Kingdee International Software Group Company (00268) H2 2024 Earnings Call March 18, 2025 07:36 AM ET Moderator And analyst to Jonas for the Kinti International twenty twenty four Annual Results Announcement. First of all, please allow me to introduce the management team with SKT A. There, Chairman of the Board and CEO, Mr. Robert Xu President, Mr. Jason Zhang Executive Director and CFO, Mr. Linbo Vice President and the General Manager of the R and D Center, Mr. Liu Zhong Wen General Manager of the IR, Mr. ...