Performance summary: revenue of 3.04 billion yuan (yoy+22.1%) in 2019; net profit of 110 million yuan (yoy+12.2%); adjusted net profit of 140 million yuan (yoy+19.3%) excluding non-recurring gains and losses such as listing fees. In addition, the company announced a dividend of HK $0.27 per share, corresponding to a dividend rate of 45 per cent.
The business is focused on spiritual workers, and the number of flexible workers in the mainland has increased by 65%. Headhunting and RPO are affected by the macro environment:
1) during the reporting period, the company continued to focus on the mainland psychic business, continuing the upward trend of volume and price. The annual revenue of psychic workers reached 2.69 billion yuan (yoy+26.4%), mainly due to the 65% + high growth of the number of people sent to the mainland, the overall number of employees increased to 34000 (yoy+9.7%), and the unit price of outsourced staff increased to 89000 yuan (yoy+11.3%). 2) under the background of weak macro-economy, the performance of headhunting business has slowed down, with revenue of 240 million yuan (yoy- 10%) and annual delivery of 3400 jobs (yoy-17.1%), with an increase in the average level of service fees; PRO business has achieved annual revenue of 33.64 million yuan (yoy+11.6%) and annual delivery of 3100 jobs (yoy+47.6%) through active market development.
The structural adjustment of the business led to a reasonable decline in gross profit margin and a significant improvement in operating efficiency: 1) the proportion of flexible employment / headhunting / RPO income in 2019 was 88% (yoy+3ppt) / 8% yoy-2pp respectively. The proportion of spiritual workers increased further, and the overall gross profit margin decreased slightly to 22.1% (yoy-2pp) driven by structural changes. 2) the overall operating efficiency has improved significantly, the per capita output of headhunting consultants has increased to 680000 (yoy+17.4%), the cost-side scale effect continues to be reflected, and the rate of sales expenses / management expenses has decreased to 11.4% (- 2.1p) / 2.5% (yoy-0.2pp) respectively. After deducting the influence of listing costs, the overall per capita adjusted net profit of the company has increased by 30% + after adjusting the net interest rate of 4.4% (yoy+0.2pp). The efficiency of endogenous profitability is better.
The cash is abundant and the running ability is excellent, and the acceleration technology products are partial. 1) by the end of 2019, the company had 800 million in cash and 130 million in transactional financial assets, leading the industry in terms of capital scale. abundant cash helps to reduce capital turnover costs and improve the operational efficiency of psychic business. at the same time, it provides the basis for R & D investment, extension mergers and acquisitions and so on. 2) the company has gradually built a digital strategy platform by constantly upgrading and optimizing its operating system and introducing innovative products of technology platform. in December 2019, the company launched the mobile Internet talent platform "Tiantian U Cai" to improve the efficiency of job matching and the level of talent reservation. in addition, it plans to launch a digital "Tiantian U sheet" flexible recruitment platform in the first half of 2020, fully integrating the advantages of various technology products. To build a full range of human resources solution service providers, the overall profitability is expected to continue to improve.
The leader of human resources services in Greater China, the high prosperity of the mainland spiritual industry contributes to high growth: the company is the head supplier of human resources services in Greater China, pays close attention to the high growth trend of the domestic spiritual industry, and customers maintain high quality. by the end of 2019, there were 340 new customers, including 39.4% year-on-year growth in new economy and technology customers, covering 150 + cities. Benefiting from the high prosperity of the flexible employment industry in the mainland and the company's excellent brand strength, the company's overall performance is considerable and steady growth, of which revenue in the mainland increased by 28% in 2019 compared with the same period last year. Under the background of the epidemic, the rapid growth of the flexible employment industry may be accelerated again, and the company's performance can continue to grow at a high speed.
Profit forecast and rating: according to the disclosure of the annual report, we make some adjustments to the profit forecast. It is estimated that the net profit from 2020 to 2022 will be 130 million yuan, 150 million yuan and 180 million yuan respectively, and the corresponding PE will be 13x, 11x and 9x respectively. Considering the high growth of the company's flexible employment business and abundant cash flow level, we believe that the company is still significantly undervalued and maintains a "buy" rating.
Risk tips: the risk of the loss of major cooperative customers, the expansion of new cities or less than expected, and the risk of sustained macroeconomic weakness affecting the employment environment.