Kingdee International (0268) is a leading provider of enterprise management software and e-commerce application solutions in the Asia-Pacific region and one of the fastest-growing independent software vendors in the global software market. In terms of income structure, it is mainly divided into two parts: ERP service and enterprise cloud service. Its main ERP enterprise software products include Kingdee KIS, Kingdee Apusic and Kingdee K/3. Kingdee KIS and K/3 are the enterprise management software with the highest market share of small and medium-sized enterprises in China. In terms of cloud services, PaaS platform is the main platform, and there are also many cloud products such as Star Cloud, Star Cloud, Jingdou Cloud and Customs, covering many important fields such as corporate finance, supply chain, HR and manufacturing.
2. Endogenous transformation and external stimulus contributed to the sharp rise.
Kingdee International rose from 7.832 yuan at the beginning of last year to the highest of 35.250 yuan this year, with the largest increase of 352.49%, which is supported by strong logic.
Endogenous logic
1. Upgrade the Sky strategy and deepen the transformation of Kingdee Cloud.
On the whole, digital upgrade is the future development trend of China enterprises, and SaaS industry will be a high-quality track that will benefit for a long time. Compared with the SaaS industry in western developed countries, the SaaS market in China is obviously in the initial stage of development. The industry is gradually infiltrating from the general category to the vertical category, and more sub-sectors will emerge as leaders. In order to comply with this wave of development, Kingdee International actively abandoned the traditional software business, accelerated the process of enterprises going to the cloud, upgraded all the original product systems to the cloud, and took the annual fee as the main profit model.
Secondly, actively going to ERP, from traditional ERP iteration to EBC is the latest industry trend. In 20 19, Gartner put forward the concept of EBC, and predicted that 40% of ERP suppliers will transform to EBC in 2023, which represents the latest industry trend. The company grasped the direction of change and transformed EBC. At the same time, domestic Internet giants are expanding into enterprise cloud products, and the development of cloud products by Internet companies is essentially a performance of de-ERP. In the long run, EBC is an alternative model of traditional ERP. The company actively subverts itself and is committed to active ERP. From the proportion of operating income, it can be reflected that the proportion of traditional ERP income decreased from 93. 14% in 20 14 years to 42.5% in mid-2020. And it is expected to be reduced to below 30% within two years. Through products and services to dig deep into the moat of the company, with the help of industry changes, it is expected that overtaking in corners will become the first in the industry.
It is true that voluntarily giving up the original business will have a temporary negative impact on the performance of enterprises. Since 2020, Kingdee has voluntarily stopped selling KIS and K/3WISE. In the first half of this year, traditional ERP decreased by 37% year-on-year, and overall revenue decreased by 7% year-on-year. But after the low point, the performance reversal will form a strong upward force.
2. The customer is sticky, the expansion of new households is accelerated, and the future price increase is expected to be good.
In the traditional ERP business, due to the consideration of data security, large enterprises still prefer private cloud and self-developed system. At the same time, in terms of cloud transfer, due to the complexity of internal processes, the difficulty of cloud transfer has increased in time and length. Kingdee's model is to focus on small and medium-sized users, and then concentrate on infiltrating into large users; The small and medium-sized user base is conducive to improving customer stickiness, the customer renewal rate reaches 90%, and the degree of customer loss is low in business transformation and upgrading. On the other hand, the transformation has brought the extension and expansion of customers. Take Sky Series as an example, 47% of the existing customers are new customers of the company, and the distribution ratio in various industries is relatively uniform, with excellent and diverse channels and no path dependence.
The new customer effect of Kingdee Cloud Star products is more obvious. 77% of enterprises are new ERP customers, 13% are customers who replace competitors, and 10% come from the upgrade of existing customers. In addition, 32% customers choose more than two Kingdee solutions, and 17% customers choose more than three Kingdee solutions. To sum up, good old customer stickiness, accelerated expansion of new customers, and diversified customer channels have given enterprises more room to raise customer unit prices through product upgrades, and it is expected that future performance will rise in volume and price.
External stimulus
1. Five safety measures to accelerate the localization of ERP.
At present, the market share of ERP in China is mainly occupied by American high-end software suppliers, especially in the field of high-end ERP, SAP and Oracle account for more than half of the market share of large enterprises. The total scale is tens of billions, and the overall ERP level in China is relatively high at present. Combined with the five national security policies of science and technology, the future is a good prospect for domestic ERP replacement, and the market may release about 654.38+000 billion shares, accelerating the sky. Sky has been recognized by benchmarking companies. As the first cloud-native enterprise-level cloud service platform in China, it will certainly benefit from the situation.
2. Popular factors accelerate network office and product coverage.
Enterprises' recognition of public cloud has increased, and the epidemic situation or catalytic enterprises have accelerated the speed of going to the cloud. In the post-epidemic era, the cloud demand of enterprises will increase rapidly. Compared with competitors, Kingdee has a large number of SME customers. The outbreak of epidemic situation makes the digital management of enterprises a necessary management tool. It is expected that in the economic recovery period after the epidemic, the starry sky for growth enterprises and small and medium-sized enterprises will usher in accelerated demand.
Three. Future development
1. From traditional ERP iteration to EBC
In the future, the growth point of enterprises will continue to fall on the iteration from traditional ERP to EBC. By the mid-year report in 2020, among Kingdee International's revenue composition, ERP revenue accounts for 42.5%, and cloud service accounts for 57.5%. Since 2020, the company has basically stopped developing traditional ERP business. In the next few years, it is expected to realize low-end ERP and increase the proportion of cloud services. Realize the expansion of customer base and the promotion of the company's gross profit, and further optimize the company's performance level with the increase of volume and price.
2. Infiltration of large enterprises under the background of industrial localization
Under the environment of five safety policies, the orderly withdrawal of foreign high-end ERP schemes in large enterprises, especially state-owned enterprises, has provided Kingdee with a sustainable development channel and a market of tens of billions. The company's channels are already perfect and diversified. At present, the company has nearly 100 branches and more than 2000 downstream channels. 20 19 China Unicom, China Mobile and Kingdee reached a channel cooperation, adding large-scale state-owned enterprise channels and increasing the channel advantages under the trend of industry localization. And it is expected to rely on the channels of large state-owned enterprises to accelerate the penetration into the high-end ERP market of large enterprises. Increase the competitiveness of Sky Platform in the large enterprise customer market and seize more shares.