Incident: The company released its 2024 semi-annual report, achieving revenue of 2.87 billion yuan, a year-on-year increase of 11.9%; net profit loss of 0.22 billion yuan, a year-on-year decrease of 23.2%.
The cloud transformation progressed steadily, and losses narrowed further. With 2024H1, the company achieved cloud revenue of 2.39 billion yuan, up 17.2% year on year, accounting for 83.2% of cloud revenue; ARR revenue of 3.15 billion yuan, up 24.2% year on year; subscription contract debt of 3.18 billion yuan, up 28.2% year on year, and the cloud service business continued to grow at high quality. There was significant improvement on the cost side. The sales, management, and R&D cost rates of 2024H1 were 42.7% (yoy-1.85pp), 8.7% (yoy-0.63pp), and 28.1% (yoy-0.89pp), respectively. On the profit side, 24H1 lost 0.22 billion yuan, which is significantly narrower than 2023H1 (0.28 billion yuan) losses. The business scale effect of large enterprises is gradually showing, and they are steadily entering the stage of high-quality management.
The market leadership position of medium-sized enterprises continues to be stable, and cloud revenue for small and micro enterprises is growing rapidly. 2024H1, Starsky achieved revenue of 1.05 billion yuan, a year-on-year increase of 14.3%, ARR growth of 24%, and a net renewal rate of 95%. As of the end of 24H1, the number of Starsky customers reached 0.042 million, and 611 new enterprises were newly signed at the national and provincial levels, further increasing its market share. Furthermore, 24H1 Starlight, AWS, and Microsoft jointly supported the compliant operation, data security and local business strategies of Chinese enterprises going overseas, and signed 121 new companies, covering areas such as Indonesia, Singapore, Thailand, Vietnam, the Philippines, the United States and Europe. Cloud revenue in the small and micro enterprise market grew rapidly. 24H1 achieved revenue of 0.59 billion yuan, a year-on-year increase of 17.3%, and ARR increased 31% year-on-year. Among them, Star had a year-on-year increase of 70.8%, and the renewal rate reached 92%.
The large enterprise market is growing with high quality and continues to explore AI application innovations. 2024H1, Sky Star earned 0.55 billion yuan, a year-on-year increase of 38.9%. ARR growth rate was 29%, and renewal rate was 97%. Kingdee grasped the digitalization and domestic replacement opportunities for large enterprises, and successfully signed contracts with leading companies in the industry in the first half of the year, such as China National Petroleum Group, China Airlines Group, Dongfeng Motor, and Tongwei Co., Ltd. Furthermore, on May 15, Kingdee Cloud Sky was upgraded to a next-generation enterprise-level AI platform, and Cosmic, a super intelligent AI management assistant, was launched to provide AI applications in various fields such as finance, manpower, supply chain, manufacturing, and development, and launched AI-related applications in the financial and human resources systems of large enterprises such as Hisense Group, Wen's Co., Ltd., China Jinmao, and C&D Real Estate.
Profit forecast and rating: The company's revenue is expected to maintain a compound growth rate of 16.6% in 2024-2026.
The company has been deeply involved in the ERP market for many years. Starry Sky and Star have a stable position in the SME market, and the renewal rate remains high, providing the company with stable cash flow; Sky Star has outstanding technical advantages, quickly opening up the large enterprise customer market, and the number of customers continues to increase, providing sufficient impetus for the company's long-term growth and improvement; in addition, the company has always insisted on cloud transformation, created value products, built a good ecosystem, and formed a strong support for the company's stable development and maintained a “buy” rating.
Risk warning: Risks such as increased market competition, insufficient demand for enterprises to go to the cloud than expected, and customer expansion falling short of expectations.