Bernstein analyst Boris Van maintained a Buy rating on Kingdee International Software Group Co (KGDEF – Research Report) today and set a price target of HK$18.00.
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Boris Van has given his Buy rating due to a combination of factors that highlight Kingdee International Software Group Co’s strategic initiatives and financial prospects. The company has announced a 15% increase in subscription fees for advanced implementation services, which is expected to positively impact revenue and gross profit margins. This move is particularly targeted at large enterprise cloud customers and aims to shift the focus from customizations to configurations within their PaaS platforms.
By implementing this pricing strategy, Kingdee is not only enhancing its revenue streams but also improving the structural relationship between revenue and gross margins. This approach allows for better management of implementation resources, reduced costs, and scalable revenue growth. The anticipated gradual rollout of the price increase is expected to result in incremental revenue growth and significant improvements in gross margins over time, making Kingdee a promising investment opportunity.