Hi Pakman,
You have configured it in correct way. Ideally GUP should update at midnight and clients as well.
Make sure SEPM is configured to update at mid-night only.
One possibility could be the SEPM rejected connection to update GUP, need to check throgh Sylink monitor logs/ Debug logs. These logs will can show when the connection was trigger on client machine and it's subsequent activities.
SEP 12.1 RU5 is released & there is one fix id related to GUP. Verify smc.exe status on GUP machine.
Smc.exe process terminates unexpectedly on a Group Update Provider (GUP)
Fix ID: 3387423
Symptom: The SMC.exe process terminates unexpectedly when the Group Update Provider downloads content.
Solution: Modified the Group Update Provider feature to avoid a potential race condition before freeing memory