Kingdee issued a profit warning for 1H22, which mentioned that the Company expects to report a net loss ranging from Rmb347.4m to Rmb397.0m. Total revenue is expected to rise 15–20% yoy in 1H22, driven mainly by a 30–40% yoy increase in cloud revenue. Non-cloud revenue grew slower than expected in 1H22 in our view. Operating costs were also higher than expected in 1H22. We lowered our net profit forecasts for 2022F–2024F to factor in slower revenue growth and higher operating expenses. We reiterate our ADD rating despite factoring in a higher net loss for 2022F–2024F. We set a new target price of HK$22.10 based on a 2022F P/S target of 13x (down from 15x), higher than the average of its listed peers but in line with its historical average.