金蝶国际 (0268.HK): Kingdee International: Cloud execution improving; AI upside and competitive impact remain to be proven; assume coverage at Neutral

We assume coverage of Kingdee International at Neutral with a Dec-27 price target of HK$8.3, based on 20x 2028E P/E. Kingdee enters the AI transition with improving fundamentals after a decade-long Cloud migration. Our 2026-28E revenue and profit forecasts are broadly in line with consensus, suggesting that much of the underlying Cloud improvement is already reflected in expectations. Cloud revenue has reached 86% of group revenue, with subscription revenue up 20.4% YoY and ARR 18.3% in 1H26, while gross margin reached 67.7% and revenue per employee increased 20.8%. AI creates meaningful optionality as agents expand the amount of enterprise work addressable by software, with AI-native revenue up 189% YoY to Rmb296mn in 1H26, including Rmb146mn of AI-native subscription revenue, up 283%. The financial impact remains early, however, and competition for the workflow is widening as general-purpose agents and AI-native enterprise products can increasingly sit above incumbent ERP systems. Ki