Kingdee eyes mainland funds from cross-border trading links to drive its cloud expansion
Kingdee International Software Group, the biggest enterprise application provider to small businesses in mainland China, expects to raise more cross-border funding under the new Shenzhen-Hong Kong Stock Connect scheme to help drive its cloud computing expansion plans.
“Kingdee has been undervalued for a long time,” company chairman and chief executive Robert Xu Shaochun said on Monday.
“The selection of Kingdee as one of the eligible securities for the Shenzhen-Hong Kong Stock Connect will provide us a convenient channel to attract mainland funds.”
That scheme, which went live on Monday, enables mainland investors to trade in 417 Hong Kong-listed stocks up to a daily quota of 10.5 billion yuan (HK$11.82 billion), while allowing international investors to trade in 881 Shenzhen-listed stocks up to a quota of 13 billion yuan.
Xu expected the new cross-border trading link would “help us to further unleash our potential value”, which meant focusing more resources in the development of its cloud business.
His optimism, however, was dashed on the first day of the cross-border trading scheme, as Kingdee’s share price fell 2.65 per cent to reach HK$3.30 at the close of trading.
Founded by Xu in 1993, Shenzhen-based Kingdee has built up its mainland operations on the back of the company’s locally-developed enterprise resource planning (ERP) software. The company also has a cloud version of this product.
An ERP system allows companies to integrate and manage core parts of its business, including supply chain, manufacturing, human resources and financial activities.
Cloud computing enables companies to buy, sell, lease or distribute online a range of software and other digital resources as an on-demand service, just like electricity from a power grid.
Signalling Kingdee’s growth potential, Chinese online retail giant JD.com last year acquired a 10 per cent stake in the Hong Kong-listed company for HK$1.3 billion in cash.
Nomura research analyst Rex Wu estimated that Kingdee’s Cloud ERP business had more than 2,000 customers as of June 30 and made up 11 per cent of its 913.20 million yuan interim revenue.
Xu said the company’s Cloud ERP business “commands the largest share in China’s market”.