[ET Net News Agency, 16 August 2019] Credit Suisse raised its target price for Kingdee
International Software (00268) to HK$7.02 from HK$6.5 and maintained its "underperform"
rating.
The research house said Kingdee's 1H results were largely in line, except for operating
profit which came in above on higher-than-expected government grant and rental income.
Management maintained guidance for 2019 cloud services revenue to growth by 50%, and 60%
cloud business mix by 2020.
Credit Suisse still thinks it's difficult to meet 2020 revenue mix given: (1) limited
Cosmic revenue contribution in 2019/20; (2) operating profit pressure to persist given
higher sales and R&D investment into Cosmic Cloud; (3) ERP (enterprise resource planning)
business needs drop 16% CAGR to achieve the min. cloud target. (KL)