According to a research report from Morgan Stanley, the bank maintains its Overweight rating on Kingdee International (00268) with a target price of HK$11.4.

The company's subscription Annual Recurring Revenue (ARR) for the third quarter of 2026 reached RMB 4.6 billion, representing a year-on-year increase of 19.3% and a quarter-on-quarter increase of 4.3%. The year-on-year growth rate accelerated compared to 18.7% in the first quarter and 18.3% in the second quarter.

Net new ARR in the third quarter grew 47% year-on-year. The company attributed the acceleration in ARR growth to rising customer demand for AI-native products such as Lingee.

Morgan Stanley noted that the contract value of Kingdee's AI-native products has exceeded RMB 1 billion, and the company is on track to achieve its full-year target of RMB 1 billion in AI-native product revenue.

The net revenue retention rate of Kingdee AI Cosmic, the largest ARR contributor, edged up slightly from 96% in the second quarter to 97% in the third quarter. The retention rate for the super intelligent AI management assistant Cosmic and Kingdee Cloud Cosmic remained flat quarter-on-quarter at 101%. The retention rate for small and medium-sized enterprises improved by 1 percentage point quarter-on-quarter to 95%.