GF Securities has maintained its previous forecasts, projecting that Kingdee International's (00268) main business revenue for 2026 to 2028 will reach RMB 7.913 billion, RMB 8.901 billion, and RMB 9.939 billion, respectively, representing year-on-year growth rates of 12.9%, 12.5%, and 11.7%. Using comparable company valuations, the firm assigned Kingdee a 2026 price-to-sales (PS) multiple of 7 times. Based on an exchange rate of HK$1 to RMB 0.87, this corresponds to a reasonable value per share of approximately HK$17.94, leading to the reaffirmation of a "Buy" rating.

The key points from GF Securities are as follows: Annual Recurring Revenue (ARR) continues to show substantial growth. In the first quarter of 2026, the Net Dollar Retention (NDR) for major products remained robust. Profits are expected to continue improving significantly year-on-year. According to a voluntary announcement released by the company on the evening of April 13, the Q1 2026 subscription service ARR reached approximately RMB 4.22 billion, a year-on-year increase of about 19%. The group secured contracts with well-known enterprises such as Shuanghui Development, Mianbi Intelligence, Greentown Service, Allchip Technology, Puyang Steel, and Huatong Group. The NDR performance for key products in Q1 2026 was steady, with net dollar retention rates for Xinghan, Xingkong, and Xingchen products at 103%, 96%, and 94%, respectively, showing stability compared to the same period in 2025 (108%, 94%, 92%). High retention rates are a key indicator of healthy cloud service development, reflecting the comprehensive competitiveness of the company's cloud products. These strong retention rates also establish a foundation for the continued decline in the company's expense ratio, particularly the sales expense ratio. From a profit perspective, combined with sustained revenue growth, a further increase in the proportion of ARR, and the ongoing effects of cost-saving and efficiency improvements from workforce optimizations in 2025, profits in Q1 2026 are projected to show significant year-on-year improvement.

During Q1 2026, AI-related orders saw rapid growth. Leveraging its deep expertise in complex ERP scenarios, the company is well-positioned for significant achievements. The contract value signed for the company's native AI products (Kingdee AI Suite) in Q1 2026 reached RMB 230 million. Compared to the full-year 2025 AI contract value of RMB 356 million, the outlook for the expansion of AI orders in 2026 is viewed optimistically.

Risk warnings include potential fluctuations in downstream IT spending due to the economic environment, impacts from trading conditions in the Hong Kong stock market, and uncertainties related to the performance realization of AI applications.