Core Insights - Northstar Holdings reported a revenue increase of 18.2% year-on-year to 516 million yuan for 1HFY26, with adjusted net profit turning positive at 19.59 million yuan, aligning with market expectations [1][2] Performance Review - Revenue and adjusted net profit met market expectations, with revenue growth driven by strong performance in cloud HCM solutions, which saw a 22.2% increase to 414 million yuan, accounting for 80.3% of total revenue [1] - Adjusted gross margin reached 69.9%, up 4.2 percentage points year-on-year, primarily due to improved margins from subscription services [2] Development Trends - The company is advancing its AI product commercialization, with new AI Family products generating over 26 million yuan in new contracts, covering more than 800 enterprise clients [1] - Annual recurring revenue (ARR) grew by 22% to 956 million yuan, with core HCM solutions ARR increasing by 27%, now representing 58% of total ARR [1] Profitability Outlook - Management expects adjusted net profit margin to reach 5% in FY26 and nearly 10% in FY27, supported by margin improvements and effective cost control [2] - The company maintains its revenue forecasts for FY26 and FY27, while adjusting the forecast for adjusted net profit upwards due to better-than-expected margin improvements [2] Valuation and Market Position - The company is currently trading at 4.2 times FY26 sales, indicating a potential upside of 66% based on a target price of 11.5 HKD, which is derived from a 7.0x FY26 sales multiple [2]