Kingdee International (268.HK) Strong growth of Cloud services, but a slower growth in traditional ERP July 12, 2019

PSR Recommendation: BUY Status: Maintained
Target Price: HKDHKD8.90

Investment Summary
he Group announced a profit warning, where the net profit attribute to the owner in
2019H1 decreased by 30%-40%. However, the revenue increased by 15%-20% and the
revenue from cloud services also rose by 50%-60%. During the period, Cosmic
developed well. It acquired 28 new clients in the first half this year, with RMB 1.1 mn
average price. Slower growth in traditional ERP and increase in R&D leads to a drop in
net profit. We believe if the Cloud services is going well, the reason to buy still exists,
even though the growth of traditional ERP dropped. We give a TP of $8.90, 3.4% lower
than previous, updating to “Buy” recommendation, with 25.5% potential upside. (Closing
price at 10 Jul 2019)

About the author

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Terry Li
Investment Analyst

Graduated from Lingnan University, with Master of Science in International Banking and Finance and Bachelor of Business Administration respectively. Specializes in analyzing company fundamentals and valuation to explore investment opportunities in TMT, Education and Financial industry.

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