The company released its 2022 Annual Report & 2023 Quarterly Report: 1) Full year: Revenue of 14.664 billion yuan/ +28.02%, mainly due to increased revenue from business outsourcing projects; net profit of 546 million yuan/ +2.76%, after deducting net profit of non-Gwimo's net profit of 454 million yuan/ -1.13%. 2) Spin-off Q4 of '22: Achieved revenue of 4,252 million yuan/ +34.08%, net profit of 107 million yuan/ -19.29%, and net profit of the non-return mother of 89 million yuan/ -27.71%. 3) Cash flow: Achieved net cash from operating activities of 855 million yuan/ -59.67%, mainly due to customer year-end performance payments received at the end of '21 within 22 years. 4) Dividends: Cash dividends of RMB 120 for every 10 shares, totaling RMB 274 million (tax included). 5) 2023Q1: Revenue of 4.639 billion yuan/ +31.61%, mainly due to the increase in outsourced business service revenue; the mother's net profit was 183 million yuan/ +5.56%. After deducting net profit of 113 million yuan/ +0.83%, net cash flow from operating activities was -85 million yuan/+67.82%, mainly due to centralized payment of year-end performance payments received from customers at the end of 21 in the same period last year.

Revenue from various businesses grew steadily, and the rapid development of emerging businesses helped business restructuring while bringing room for growth. In 2022, the retention rate of the company's top 200 customers reached 100%, and various businesses progressed steadily. The proportion of domestic enterprise customers, emerging business customers, and regional customers across the country is increasing. In 2022, the company's domestic corporate customers accounted for 49%, emerging businesses accounted for more than 90% of revenue, and businesses outside of the Shanghai headquarters reached 43%. 1) Personnel management services (accounting for 8.4% of total revenue): Achieved revenue of 1,232 million yuan/+6.33%, and gross margin was 75.64% /-5.56pct. This was mainly due to the impact of the epidemic in '22 and a decline in the number of employees in stock customers. 2) Personnel dispatch services (accounting for 0.98% of total revenue): Achieved revenue of 144 million yuan/+8.53%, with a gross margin of 71.06% /-5.04pct. This is mainly due to the slowdown in business growth for foreign clients. 3) Compensation and welfare business (accounting for 11.52% of total revenue): Achieved revenue of 1,689 million yuan/+13.18%, with a gross margin of 27.12% /-4.07pct. On the one hand, this is due to an increase in the penetration rate of existing customers, and on the other hand, due to effective cost control. 4) Business outsourcing services (accounting for 73.36% of total revenue): Achieved revenue of 10.757 billion yuan/+34.63%, with a gross margin of 1.7% /-0.29pct. This is mainly due to accelerated market development, continuous expansion of customer base, and improvement in the level of specialized services. Revenue from health management and commercial welfare businesses increased by nearly 10% and 33%, and 15 or 18 new customers signed up to over 1,000 people. 5) Recruitment and flexible employment services (accounting for 5.48% of total revenue): Achieved revenue of 803 million yuan/+24.81%, gross margin of 7.05% /-0.8pct. More than 6,800 service employees and 309 new customers were signed in 2022, an increase of 50% over the previous year. Among them, the performance of Yuanmao Co., Ltd., which was the target of the acquisition in 2022, increased significantly, with revenue of 1.32 billion yuan/ +22.8%, and net profit of 587 million yuan/+43.44%. The synergies after the acquisition were remarkable, and the volume of Blue Collar Smart's employment business grew rapidly.

Expense control is good, and overall gross margin declined as the share of outsourced revenue increased. 1) 2022 full year: ① Overall gross margin net interest rate: 11.93% /-3.22pct, mainly due to the increase in business outsourcing costs due to the increase in business outsourcing revenue. Net profit margin 4.17% /- 0.96pct. ② Expense rate: The sales expense ratio is 4.74% /-1.38pcts, and the sales rate is stable; the R&D expense ratio is 0.48% /+0.18pct, mainly due to increased investment in R&D projects; the management expense ratio is 2.75% /-0.53pct, and the cost control effect is good. 2) 2023Q1: gross profit margin 9.52% /-1.72pcts, net interest rate 4.37% /-1.08pcts, sales expenses ratio 3.77% /-1.01pcts, management expenses ratio 2.54% /-0.17pcts, financial expense ratio -0.79% /+0.002pcts, R&D expenses rate 0.28% /+0.1pcts, strong corporate expense control capability.

Investment advice: It is expected that the company's traditional business will maintain steady and small growth throughout the year. After the acquisition of Yuanmao shares, the outsourcing business will strengthen the business collaboration of outsourcing in the blue-collar employment sector, while continuing to expand general job outsourcing needs of new and old customers. It is expected that the outsourcing business will continue to grow at a relatively rapid pace. The buyer was given a -A rating, with a six-month target of 7.8 yuan, corresponding to a price-earnings ratio of 30X in 2023. We expect the company's revenue growth rates from 2023 to 2024 to 32.9% and 34.1% respectively, corresponding revenue of 19.49 billion yuan and 26.13 billion yuan, and net profit of 603 million and 704 million yuan.

Risk warning: risk of macroeconomic fluctuations, risk of increased market competition, etc.