Macquarie Research raised its target price for Kingdee (00268) to HK$3.5 from HK$3.4, and maintained its "outperform" rating.
The research house expects Kingdee's revenue to grow 13% YoY in 1H and forecast net profit will drop 23% YoY to Rmb71m, as it expects loss in cloud to widen.
Macquarie raised its FY2016 and FY2017 revenue by 4% and 6%, and net profit by 36% and 11%, factoring in the recent disposal of some cloud businesses and a better ERP/cloud outlook, but partly offset by a decline in NAV of investment property on our more conservative cap rate and margin assumptions.
It also expects more visibility on cloud profitability going into 2017-18 which would be a potential catalyst for a re-rating.
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