Kingdee International swings to H1 profit of up to 60m yuan

Kingdee International expects first-half profit of as much as 60 million yuan, reversing a year-earlier loss on its AI strategy.

"The group's deepened execution of its 'AI-first, Subscription-first, Globalization' strategy drove continued rapid growth in subscription revenue and strong growth in AI-native products," the company said in a filing to the Hong Kong stock exchange.

Revenue for the six months ended June 30 is expected to range between approximately 3.608 billion yuan and 3.639 billion yuan, representing year-on-year growth of 13% to 14%. The midpoint of 3.624 billion yuan would mark the highest first-half revenue in the company's history. The company swung to a profit attributable to equity holders of 40 million yuan to 60 million yuan, compared with a loss of about 98 million yuan in the same period of 2025, representing a swing of as much as 158 million yuan.

The turnaround was mainly driven by economies of scale in the subscription business and efficiency improvements from AI, the company said. Kingdee did not disclose earnings per share or declare an interim dividend, consistent with its policy of reinvesting in growth. The company has not paid a dividend since 2024, prioritizing investment in its cloud and AI transformation.

Kingdee's AI push centers on "Lingji," an enterprise AI operating system launched to help businesses integrate large language models into their workflows. The platform competes with similar offerings from Chinese tech giants including Alibaba Cloud and Baidu AI Cloud, though Kingdee differentiates through its deep integration with enterprise resource planning software used by more than 7 million customers. The company has been investing heavily in AI capabilities, embedding generative AI features across its financial management, human resources, and supply chain software modules.

Shares of Kingdee rose as much as 10% on Wednesday, with short selling accounting for 21.6% of turnover. Citi analysts focused on the second-half contribution from Lingji, which the brokerage sees as a potential driver of further subscription acceleration. The stock has gained more than 30% year to date, outperforming the Hang Seng Tech Index, which has risen about 15% over the same period.

The profit alert shows that Kingdee's multiyear transition from perpetual licenses to a subscription model is reaching an inflection point, with AI-native products beginning to contribute meaningfully to the bottom line. The company competes with Yonyou Network Technology and SAP in China's enterprise software market, and its AI-driven turnaround could pressure rivals to accelerate their own subscription transitions. China's enterprise software sector has been under pressure from slowing corporate IT spending, making Kingdee's profit turnaround a notable outlier.

The interim results, due to be published in August, will provide the first full look at Lingji's revenue contribution since its launch. Analysts will also scrutinize subscription revenue as a percentage of total revenue, a key metric for the company's strategic shift. Investors will watch the full interim report for subscription revenue growth rates and Lingji adoption metrics.

This article is for informational purposes only and does not constitute investment advice.