The company released the mid-2022 report: 1) 2022H1: realized revenue of 6.786 billion yuan / + 24.95%, net profit of 322 million yuan / + 19.29%, consistent with the previous performance forecast, deducting 254 million yuan / + 11.54% of non-return net profit. 2) 2022Q2: achieve revenue of 3.261 billion yuan / + 21.73%, return net profit of 149 million yuan / + 6.52%, and deduct non-return net profit of 142 million yuan / + 568.77%. 3) the net operating cash flow is 373 million yuan /-210.78%, which is mainly due to the payment of the end-of-year performance pay received by the company at the end of the previous year.

Thanks to high-quality customer base and good customer relationship, all main business sectors have achieved growth. The company is headquartered in Shanghai, but the epidemic in Shanghai in the second quarter did not disrupt the normal progress of the business. Flexible employment and outsourcing business continued to maintain the rapid growth rate of 2021, and the payroll and tax business grew by double digits compared with the same period last year. Service operation efficiency continues to improve, per capita income and profits have reached an all-time high. In the first half of 2022, the revenue of personnel management / compensation and benefits / psychic workers / outsourced services was 6.050.71 1.2pct/-1.6 pct/+0.1 pct/+ 2.9pct, accounting for RMB 3.879.29 billion compared with the change at the end of 2021.

Although the epidemic affects market development in some areas, it does not affect the company to continue to accelerate the development of emerging business, optimize customer structure, increase the proportion of national business, and accelerate digital transformation. 1) expand new customers: in the first half of the year, 12 new customers with more than 1000 people were added and 15 customers with more than 300 customers were obtained through competitive marketing. Compensation and benefits business added 15 thousand-level benchmarking projects, creating compensation solutions and MBP solutions based on pharmaceutical, financial and other industries, and 92 new customers in recruitment and flexible employment business. Successfully developed 2 state-owned enterprise customers and 3 central enterprise customers at the head of the industry. Steadily promote overseas layout, sign 12 new overseas customers, and complete the establishment of FSG TG Thailand company. 2) outside Shanghai-the proportion of domestic customers has increased: relying on the national service network to open up the national market except the Shanghai headquarters, the proportion of national business has increased by 4 percentage points. Focusing on domestic enterprise customers, the proportion of domestic business increased by 2.5 percentage points. 3) strengthen the construction of the talent team: the equity incentive scheme will be landed, the equity incentive will be granted, and 20.0173 million shares will be issued to the incentive targets. In the second half of the year, we will increase the proportion of outstanding young cadres and highly potential talents in the post-80s and 1990s, and speed up the building of a younger and professional team.

Investment suggestion: the company's revenue in 2022-23 is estimated to be 15.429 billion yuan, with a net profit of 496 million yuan. Give a buy-A rating with a 6-month target price of 8.15 yuan.

Risk hints: risks such as the impact of COVID-19 's epidemic situation exceeds expectations and the progress of emerging business falls short of expectations.