Investment Rating - The report maintains a "BUY" rating for Kingdee, indicating a potential return of over 15% over the next 12 months [17]. Core Insights - Kingdee reported a revenue of RMB 7.0 billion for 2025, reflecting a year-on-year growth of 12.0%, which aligns with Bloomberg consensus. However, the net profit attributable to ordinary shareholders was RMB 92.9 million, falling short of the consensus estimate of RMB 132 million [1]. - The company is committed to AI transformation, with significant growth in cloud revenue, which increased by 13.2% year-on-year to RMB 5.8 billion, accounting for 82.5% of total revenue [6]. - Kingdee's management anticipates double-digit revenue growth for 2026, with the Kingdee AI Suite revenue expected to exceed RMB 1 billion, driven by AI-native business revenue generation [6]. Financial Performance - For 2025, Kingdee's annual recurring revenue (ARR) grew by 19.2% year-on-year, and subscription-related contract liabilities increased by 20.7% year-on-year [6]. - Key product lines showed robust subscription revenue growth, with Kingdee Cloud Cosmic & Constellation achieving revenue of RMB 1.94 billion, up 28.0% year-on-year, and Kingdee Cloud Galaxy recording subscription revenue of RMB 1.52 billion, up 19.3% year-on-year [6]. - The company has guided for an adjusted net margin to rise to approximately 7% in 2026, up from 3.3% in 2025, which is ahead of Bloomberg consensus [6]. Valuation and Target Price - The target price for Kingdee has been revised to HK$ 15.1 from the previous HK$ 19.2, reflecting a downside of 50.7% from the current price of HK$ 10.02 [2]. - The target EV/Sales multiple has been lowered from 8.4x to 5.4x to align with the two-year mean, indicating a shift in market sentiment [1]. Share Performance - Kingdee's market capitalization stands at HK$ 35.42 billion, with a 52-week high of HK$ 18.82 and a low of HK$ 9.09 [3]. - The stock has experienced a decline of 40.6% over the past six months [5].

Kingdee International Software Group FY2025 Annual Results Stock code: 268.HK 18 March 2026 2 2025 Financial Highlights Sustained Resilient Revenue Growth: Subscription ARR Surpasses RMB4 Billion, Leading China SaaS Industry (RMB million) Continued Operating Leverage Release from Subscription Business, Driving Steady Improvement in Operating Quality 毛利率 营销费用率 管理费用率 研发费用率 67.1% 38.9% 9.2% 21.3% 65.8% 42.5% 29.3% 12.3% 96.0% 96.5% 22.6% 22.5% Gross margin S&M ratio G&A ratio R&D ratio Implementation, Consulti ...

Core Viewpoint - Kingdee reported a revenue increase of 11.2% YoY in 1H25, with a net loss of RMB97.7 million, which is an improvement from the previous year's loss [1][5] Financial Performance - Revenue for 1H25 was RMB3.19 billion, aligning with forecasts and consensus [1] - Net loss attributable to ordinary shareholders was RMB97.7 million, improved from RMB217.9 million in 1H24 [1][5] - Cloud services revenue grew 11.9% YoY to RMB2.67 billion, accounting for 83.7% of total revenue [3] - Cloud subscription revenue reached RMB1.68 billion, up 22.1% YoY, making up 52.8% of total revenue [3] - Annual recurring revenue (ARR) for cloud subscription was RMB3.7 billion, an increase of 18.5% YoY [3] Strategic Focus Areas - Kingdee's three strategic focuses are subscription, AI, and globalization [5] - AI contract value exceeded RMB150 million in 1H25, with expectations for AI-related revenue to contribute over 30% of total revenue by 2030 [4][5] - Management anticipates international business revenue to contribute 5-10% of total revenue in the next 3-5 years [5] AI Development - Kingdee launched the Cosmic AI Agent Platform 2.0 and has an active user base of 170,000 enterprises for its AI Assistant [4] - AI-powered applications have improved bookkeeping efficiency by 80%, invoicing efficiency by 40%, and tax filing efficiency by 60% for SMEs [4] Future Guidance - Management maintains guidance for breakeven and over RMB1 billion in operating cash flow (OCF) generation for 2025 [5] - Target for OCF is over RMB3 billion by 2030 [5]