At 2023Q2, the company achieved operating income/cash revenue of 1,49/ 1.62 billion yuan, a year-on-year increase of 34%/65%; achieved non-GAAP net profit of 570 million yuan, with a margin of 38.2% (yoy16.4pcts). The number of platform users continued to grow strongly. 2023Q2, MAU reached 43.6 million (yoy +65%), 14 million new and improved users, blue-collar and low-tier cities continued to contribute growth momentum, and 2023Q2, blue-collar/second-tier cities and below accounted for over 32%/60% of revenue. Since August, the platform's overall recruitment demand has recovered rapidly, and the upward trend has continued until now. We believe that with the gradual restoration of business confidence, recruitment demand is expected to continue to rise, thus driving the company's performance growth. We are optimistic about the medium- to long-term growth potential driven by BOSS's direct products and efficiency advantages. We suggest continuing to pay attention to the growth trend of the company's users and cash revenue, and maintain the company's “buy” rating.

Performance Overview: Revenue slightly exceeded expectations, and profitability reached a record high. At 2023Q2, the company achieved GAAP revenue of 1.49 billion yuan (yoy +33.7%), exceeding the upper limit of the company's previous guidelines by 1.9%; realized cash revenue of 1.62 billion yuan (yoy +65.4%, qoq -1.8%), slightly lower than Bloomberg's unanimous expectation of 1%. In terms of costs and expenses, 2023Q2, the company's gross margin was 81.8% (yoy-2.5pcts), mainly due to the increase in server and bandwidth costs and payment fees; sales/development/management expenses were 4.7/37/20 billion yuan, respectively, and the cost ratio was 31.7%/24.6%/13.6%, yoy-4.2/-3.1/-0.8 pcts. In terms of profit, the company achieved adjusted operating profit of 4.3 million yuan, with a margin of 29.2% (yoy+8.8 pcts); non-GAAP net profit of 570 million yuan, with a margin of 38.2% (yoy+16.4 pcts), mainly due to cost optimization and increased financial revenue. According to company guidelines, GAAP revenue is expected to reach 15.3-1.56 billion yuan (yoy +29.8% ~ +32.3%) in 2023Q3.

Business data: The number of users continues to increase, and blue-collar workers continue to contribute growth momentum. 2023Q2, the platform MAU reached 43.6 million (yoy +64.5%), and 14 million new and improved users were added, mainly due to the growth of the blue-collar and second-tier markets. By the end of July, the number of blue-collar users accounted for over 31%. On the enterprise side, as of 2023Q2, the company's cumulative number of paying enterprise users in the past 12 months reached 4.5 million (yoy +18.4%, qoq +12.5%). ARPPU declined slightly year on year and month on month, mainly due to an increase in revenue contributions from small and medium-sized customers. According to the company's performance, in 2023Q2, the share of blue-collar revenue increased to over 32%, second-tier cities and below contributed more than 60% in revenue for the first time, and recruitment demand for restaurants, hotels, tourism, beauty and health care, transportation, warehousing and logistics increased markedly.

Development outlook: Recruitment demand improved marginally in August, with active reserves to wait for demand to be released. According to the company's performance, since August, the platform's overall recruitment demand has recovered rapidly, and the upward trend has continued until now. Blue collar workers, represented by the service industry, have maintained strong growth. At the same time, white-collar jobs in personnel, finance, administration, and operations have also steadily rebounded. Since 2023Q2, the number of new jobs in large enterprises with more than 10,000 people and medium-sized enterprises with 500-1000 people has increased rapidly over the previous year. At the same time, the platform supply and demand structure continues to improve. Since this year, the platform C/B ratio has continued to improve, and reached the best level during the year in August, and the relationship between platform supply and demand has continued to improve. Looking forward to the future, the company will continue to strengthen services for users at different city levels through improvements in algorithms and product capabilities, so it is expected to gain more customers and budget shares as business confidence gradually recovers and recruitment demand is gradually released.

Risk factors: the risk that user growth falls short of expectations; competition in the online recruitment industry worsens due to the entry of giants; the development of the recruitment industry falls short of expectations due to macroeconomic growth falling short of expectations; technology development and innovation falling short of expectations; product and service expansion falling short of expectations; risk of US stock delisting, etc.

Profit forecast, valuation and rating: Considering the positive trend of corporate recruitment recovery, we slightly raised the company's revenue forecast for 2023-2025 to 58.7/76.8/9.37 billion yuan (previous forecast value was 57.7/755/ 9.2 billion yuan), an increase of 30%/31%/22% over the previous year; considering the continuous improvement in the company's fee-control capacity and financial revenue contribution, we raised our non-GAAP net profit forecast to 18.4/23.5/3.07 billion yuan (previous forecast value was 16.234/1/30.02 billion yuan), year-on-year Increased by 130%/28%/31%. Referring to the current valuation of the benchmark company (the average PE for companies such as Peer Hunting, ZipRecruiter, Shell, etc. in 2024 is about 20x based on the unanimous profit expectations of Reuters), considering that the company's growth rate is higher than that of comparable companies and industry status premiums, we gave the company 25x non-GAAP PE in 2024, corresponding to a target price of 18 US dollars/ADS for US stocks, and a target price of 72 HK$/share for Hong Kong stocks. We continue to be optimistic about the medium- to long-term growth potential driven by BOSS's products and efficiency advantages, and maintain the company's “buy” rating.