Jinwu Financial News | According to Haitong Securities Research Report, Kingdee International (00268) disclosed its 2023 annual report. In 2023, the company achieved operating income of 5.679 billion yuan, a year-on-year increase of 16.7%; net profit loss to mother of 210 million yuan, loss of 389 million yuan for the same period in '22; and net operating cash flow of 653 million yuan, an increase of 74.5% year-on-year. 23H2 achieved operating income of 3.113 billion yuan, an increase of 16.6% over the previous year; net profit to mother was 74 million yuan, or 0.3 billion yuan for the same period in '22. The narrowing in net profit loss is mainly due to the long-term development of the cloud subscription model and the improvement in the quality of operations. In 2023, the company's cloud service business achieved revenue of 4.505 billion yuan, an increase of about 21.3% over the previous year, accounting for about 79.3% of the group's revenue. The annual recurring revenue (ARR) of cloud subscription services was approximately $2.86 billion, up 33.1% year over year, and contract liabilities related to cloud subscription services increased 29.6% year over year.

According to the bank, the company has an enterprise-level large model capability platform, Kingdee Cloud GPT, which has extensive access to general large model capabilities such as Baidu and Microsoft to build rich intelligent applications in complex enterprise management scenarios. The company launched the first major financial model, encapsulating the company's 30 years of financial knowledge and the practice of serving more than 7.4 million customers, providing enterprises with intelligent services in the financial field, and applying practices to enterprises such as C&D Real Estate and Hisense Group. In addition, the flagship edition of Kingdee Cloud Starry Sky also implements multi-scene AI intelligence, including intelligent IPO testing, BOSS assistant, intelligent sales forecasting, intelligent supply chain risk monitoring, data markets, etc.

According to the company's 2023 performance briefing guidelines, the company will adhere to the strategy of “subscription first, AI first”, with the goal of achieving 15-20% CAGR of revenue and 30% CAGR of subscription ARR in 2024-2026, demonstrating the company's confidence in development. The bank believes that under the general trend of digitalization and intelligent development, the company continues to consolidate product capabilities and provide innovative applications to improve service quality, and the advantages of the cloud subscription model will gradually become prominent. In this context, the bank believes that the company can achieve business goals in 2024-2026. The company expects to achieve operating income of 65.96/77.41/9.125 billion yuan respectively in 2024-2026, an increase of 16.1%/17.4%/17.9%; net profit to mother - 0.95/0.99/245 million yuan, an increase of 54.8%/ 204.4%/147.5% Referring to comparable companies, the company was given 6-7 times PS in 2024. Based on 2024 operating income of 6.596 billion yuan (RMB), the reasonable market value range was 395.76-46.172 billion yuan (RMB). Based on HK$1 = RMB 0.92, the reasonable market value range was HK$430.1-50,187 billion, corresponding to a reasonable value range of HK$11.97-13.97 (RMB 11.01 to 12.85) /share, maintaining the “superior to the market” rating.