Analyst Boris Van of Bernstein maintained a Buy rating on Kingdee International Software Group Co (KGDEF – Research Report), retaining the price target of HK$18.00.
Boris Van has given his Buy rating due to a combination of factors that highlight Kingdee International Software Group Co’s potential for growth despite current challenges. The company’s revenue showed a year-over-year increase, although it missed consensus estimates, indicating some resilience in a weak macroeconomic environment. Notably, the gross margin expanded to 66.6%, reflecting improvements in the company’s service implementation mix and operational efficiency.
Boris Van also notes the robust performance in Kingdee’s large enterprise and SME cloud segments, particularly driven by AI upselling and cloud migration trends. Despite some challenges in customer acquisition for the Galaxy segment, the overall dollar retention and ARR growth remain strong. The analyst believes that profitability is within reach, contingent on slight improvements in gross margin and stable non-operating line items. The upcoming management meeting is expected to provide further insights into macro demand and AI strategy, which could positively influence the stock’s outlook.