Kingdee International Software Group: Valuation reset, fundamentals improving; upgrade to Buy

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Kingdee International Software Group: Valuation reset, fundamentals improving; upgrade to Buy

KingdeeKingdee International Software Group UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Can Kingdee maintain its product leadership in China's ERP market?

Yes and potentially evolve into a broader AI-powered enterprise application platform. We believe the

market continues to view Kingdee primarily through the lens of a traditional ERP vendor, while

underappreciating the strategic implications of its AI initiatives. As AI increasingly becomes a catalyst

for enterprise software spending and system modernization, in our view, Kingdee is well positioned

to capture this trend given its extensive public cloud footprint, strong customer relationships, and

ability to rapidly deploy new AI capabilities across its existing ecosystem. Over time, products such as

Lingee could expand Kingdee's role from a system of record to a system of intelligence, enabling the

company to participate in a broader enterprise application layer that spans ERP, workflow

automation, and AI-assisted decision making. As a result, we believe investors may be

underestimating both the durability of Kingdee's ERP leadership and its longer-term potential to

emerge as an AI-powered enterprise platform.

Q: Can AI become a meaningful driver of growth in the near term?

Not yet, as enterprise AI use cases are still in the early stages of maturation. However, we expect

margins to continue improving as Kingdee benefits from the operating leverage released by its multi-

year subscription transition, with AI monetization or efficiency gain as potential upside. At the same