Friday, March 5, 2021
 
Columnist
Martin Hennecke
 
KINGDEE INT'L
HKEx Stock Code : 00268 
 
Corporate Profile
The principal activities are developing, manufacturing and selling of enterprise management software products and provision of software-related technical services in the PRC.

Business Review - For the year ended December 31, 2012

In 2012, as the demand of Chinese enterprises for management software and service was impacted by macro-economic uncertainty, as well as the Group¡¥s proactive measures to adjust its strategy and enhance business quality, a negative growth in its turnover was recorded for the first time since its incorporation. Meanwhile, though the Group put much effort at the optimization of organizational structure, controlled cost increase, enhanced the competitiveness of core products, launched social ERP, proactively explored the three major emerging technologies¡XSocial Networking, Mobile Technology and Cloud Computing. Moreover, the Group strengthened its distribution partners ecosystem by shifting from a sales-oriented model to a delivery-oriented model, reinforcing project management and targeting the existing clients. As the Group continued to optimize its organizational structure and enhance risk control, profitability improved in the second half.

1. Enterprise Management Software and Services

Small and Medium-Sized Enterprise Market

During the reporting year, small and medium-sized enterprises faced pressure from the domestic and external economic environment, as well as other factors such as the increase in labor costs, and thus reduced expenditure on software. As such, revenue from KIS software, K/3 software and implementation service decreased as compared to the same period last year. To increase market share, the Group implemented multiple measures, such as integrating the distribution business of KIS and K/3 products, strengthening the core competitiveness of our distribution channels and partners, and launching value-adding training, so as to gradually establish a client-oriented business model with our partners as the main body. At the same time, the Group launched a series of Cloud Management products for small and medium-sized enterprises on the theme ''Cloud Management, Everywhere and Always'', which included the ''Cloud + Terminals'' Kingdee KIS Cloud Management software as the first of this kind catering to small and micro enterprises in China. Besides, multiple mobile applications targeting owners, sales personnel, etc. in small and micro enterprises came in the market. Furthermore, we made continuous improvement in K/3 WISE products and launched the Cloud-based ERP product K/3 Cloud V1.0, which can work with industry chains and clients to create third-party applications and add value to client services.

In 2012, the Group was honored as ''The No. 1 Market Share Leader in China?s SME Market'' for the eighth straight year (IDC, August 2012).

Large and Medium-sized Enterprises Market

During the reporting year, large and medium-sized enterprises were more stringent in their IT strategies and took on longer decision cycles. In addition, the Group proactively adjusted its business structure, which caused EAS software and implementation revenue to decrease as compared to the same period last year. The Group observed an acceleration in industry upgrade, where large and medium-sized enterprises became more concerned with business and management model innovations through IT. The Group thus launched China¡¥s first enterprise social ERP¡XEASV7.5, which integrated the three major emerging technologies of Cloud Management, achieving major breakthrough in enterprise management, mobile social application, personalized extension and performance upgrade. At the same time, the Group continued to enhance industry solutions for core industries such as real estate, launching Cloud Management applications such as Mobile Property Sales to assist enterprises in upgrading management efficiency. During the reporting period, long-term clients (including Qingdao Port, Zhongsheng Group, Xidian Group and Kingboard Chemical) were upgraded to EASV7.5, while well-known major clients (including Shandong Shiheng Special Steel Group, Ningxia Baofeng Energy Group, Hubei Changjiang Radio and Television Media Group and Shaanxi Expressway Group) signed contracts for our services as well, thereby reinforcing the Group¡¥s leading position in the market of large and medium-sized enterprises.

Consulting, Implementation and Maintenance Services

During the reporting year, the Group persisted in improving the core competitiveness of its management consulting businesses by focusing on ERP-related IT planning, organization, process, performance and system management to raise the value of ERP. Due to the decline in software revenue, the implementation service revenue was reduced as compared to the same period last year. The Group continued to accelerate towards a delivery-oriented model, aggressively expand its service partner base, enhance project management, strengthen the construction of delivery systems in sales branches and build up a service database, so as to assist clients in successfully adopting their information systems quickly and satisfactorily in the informatization process.

Despite the impact from the market environment during the reporting year, the Group¡¥s maintenance business revenue remained on the rise. Meanwhile, the Group¡¥s maintenance business underwent a strategic transformation towards ''Cloud + Terminals'' by setting up a new service model with a Cloud service platform as the core and a desktop service platform as client terminals, which would cover tens of thousands of clients and provide a one-stop Internet service experience. To meet large and medium-sized enterprises¡¥ demand for customized maintenance services, the Group optimized its maintenance solutions and offered a variety of IT service solutions to provide customized services and high value-added
maintenance service solutions to our clients for the purpose of sustainable growth of our maintenance business.

International Business

During the reporting year, the Group continued to boost business development in the Asia Pacific, with its focus on foreign enterprises operating in mainland China and Chinese companies with global reach. It established collaborative relations with more than 30 overseas partners. The industry giants that the Group secured as its clients included Quality HealthCare Medical Services Limited, Emerson Network Power, Yamazaki Mazak, Yanlord Land Group Limited, Singapore Xinyang Group and Tory Burch Far East Limited Company.

2. Enterprise Internet Service

During the reporting period, facing a new application renovation driven by emerging Internet technologies, the Group took the initiative to integrate and expand its businesses. It set up the Enterprise Internet Service Group and promoted emerging services, such as the enterprise social networking and SaaS, which was designed to provide a private ''Workspace of Social Networking'' for better communication, collaboration and management efficiency.

Among which, Cloud Hub (www.kdweibo.com), our enterprise social networking product, became the largest enterprise social network in China, with the number of registered enterprises exceeding 22,000 and enterprise users amounting to 350,000. It was granted the ''2012 Most Valuable Internet Product Award of Enterprise Class in China'' by the Public Service Platform of National Information Industry.

Youshang (www.youshang.com), the largest online accounting SaaS service platform in China, focused on the online accounting SaaS service with new paying subscribers at a stable growth of 40% year-on-year and retention rate at 80%.

Kuaidi 100 (kuaidi100.com) product achieved a breakthrough that single-day page view (PV) went beyond 9,000,000, and opened API for connection with nearly 10,000 domestic electronic commercial websites. It was a purple-gold-class strategic partner of Baidu and became the largest courier and logistics information enquiry and service platform in China.

Kingdee Wise Note product (zhj.kisdee.com) is the first ''Cloud + Terminals'' Sales-and-Inventory software in China. It had over 22,000 paying users and continued to lead in the individually-owned enterprise market.

3. Subsidiary Business

Kingdee Medical and Healthcare Software and Service

During the reporting period, we saw a strong demand from the PRC medical and healthcare sector. In 2011, following the completion of acquisitions and integrations with Guangzhou Wisetop Computer Co. Ltd. and Shanghai Kehuaqixiao Technology Co. Ltd., the Group launched the ''Medical Information Integration and Management Solution'', and successively released other new products such as a cloud computing platform hBOS for medical and healthcare organizations, mobile medical and healthcare products, HRP professional edition, E-record V7.5 and mobile BI. It also signed contracts with several important clients, including Wuhan Chinese Medicine Hospital, Henan Chest Hospital and Binzhou Regional Health Information Platform.

Middleware

During the reporting period, a new version of application server of our core product was released to the public. It had new competitive edges in terms of performance and application management, Cloud computing as well as support to visualization. In the same period, the Group consecutively obtained the planning and design projects of Cloud computing platform of giant enterprises including Hunan Tobacco Company and CNOOC. The nationally major science and technology project taken thereunder, entitled ''Core Electronic Parts, High-end Chips, Basic Software Products'', received an acceptance from the Ministry of Industry and Information Technology.

Business Outlook - For the year ended December 31, 2012

In 2013, the macro economy is beginning to stabilize, and demand for informatization among Chinese enterprises will see signs of recovery. At the same time, the competitive environment, both international and domestic, will push Chinese enterprises to accelerate their transformation and upgrade. The integration of the three major emerging technologies , Social Networking, Mobile Technology and Cloud Computing, and traditional IT services will drive a new round of enterprise informatization. ''Cloud Management'' is bringing innovative changes to enterprise management.

Looking ahead into 2013, the Group will proactively tackle changes in the external market following the overall strategy of ''Leading-Product, Partner-First, Enthusiastic-Professional, Mutual-Success''. We will continue to enhance product competitiveness with focus on core products, establish a new marketing framework of ''Client-Centric, Partner Ecosystem'' to transform continuously towards a delivery-oriented model, under which we will actively expand our service partners and promote client retention and loyalty. The Group will keep on developing the enterprise Internet business model and build the social workspace of Cloud Hub. More new and leading Cloud management products will be launched, while closer cooperation and mutual growth of the Group and its clients can be expected. The Group will optimize the business structure to improve profitability incessantly, and believes that it can achieve long-term sustainable growth to create greater value for shareholders and clients and become the Cloud Management leader. Invariably, it will continue to dedicate efforts toward nurturing its staff, leading industry re-imagination, generating internal synergies and collaborating closely with business partners that result in the advancement of customers¡¥ business and delivery of fair returns to shareholders.

Source: Kingdee Int'l (00268) Annual Results Announcement
Chairman XU Shao Chun Issued Capital (shares) 2,521M
Par Value HKD 0.025 Market Capitalisation (HKD) 4,387M
 
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