Event: foreign Service Holdings released its third quarterly report in 2023. 1) performance: company 23Q1-3 realized operating income of 139.59 billion yuan / yoy+34.07%, net profit of 476 million yuan / yoy+8.28%, deducting non-return net profit of 372 million yuan / yoy+1.78%. The company announces 3Q23 results. 3Q23 realized revenue of 4749 million yuan / yoy+31.00%, net profit of 133 million yuan / yoy+11.61%, deducted non-return net profit of 113 million yuan / yoy+1.27%. 2) profitability: 3Q23 realizes gross profit margin 10.70%/-1.56pcts and net profit margin 3.37%/-0.25pcts.
With the improvement of the company's internal management and the increase of superimposed income, the expense rate has decreased. The sales / management / R & D / financial expense rates of 23Q1-3 are 3.92%, 2.53%, 0.30%, 0.67%, respectively, and the year-on-year change is-1.17/-0.43/-0.02/+0.4pcts. Under the condition of good cost control, the company's net interest rate has decreased by 0.69pcts to 3.98% over the same period last year. 3Q23 realized the sales / management / R & D / financial expense rate of 3.87% 2.66% and 0.32%, respectively, with year-on-year changes-0.94/-0.55/-0.07/+0.42pcts. The net interest rate decreased from 3.37% to 3.37% compared with the same period last year, and 0.84pcts decreased compared with the same period last year.
Q3 government subsidies increased month-on-month. The government subsidy revenue of 23Q1-3 was 170 million yuan, an increase of 72.77 percent over the same period last year. The government revenue reached 37.64 million yuan, an increase of 453.65 percent over the same period last year, and an increase of 5.64pcts over the same period last year.
Speed up the development of the domestic enterprise market and steadily promote the expansion of overseas business. In the third quarter of this year, the company's domestic revenue and overseas revenue were 9.209 billion yuan and 205500 yuan respectively, + 35.71% and 12.96% respectively compared with the same period last year.
Focusing on the domestic enterprise market, the company created six brand-new special solutions for domestic enterprises in the first half of the year, and launched key products such as "archival through-train" full-process service, job value evaluation and talent planning. Through the focus of central state-owned enterprises, carry out targeted marketing, increase the sales of new industries, new business type, new field leading enterprises, and successfully sign 26 central enterprise customers and local state-owned enterprise customers. The company also uses overseas company FSG TG as a starting point to sign 20 new customers in Hong Kong, Japan and Singapore. Overseas solutions have landed in 17 countries and regions, and the service capabilities of contracted partners can cover 50 countries and regions around the world.
Build a digital organization in an all-round way and strive to promote digital transformation. 1) steadily advance various digitization projects:
In the first half of this year, a total of 8 self-funded projects were implemented and 33 were checked and accepted; the overall design of "rapid creation and decoupling" was completed, and key projects such as supplier center, order center and production system were promoted in an orderly manner; identify management change points such as product management model, project management model, etc., and promote the unbinding of emerging product lines from traditional business systems. 2) continuous construction of digital ecology: the Foreign Service Cloud platform (FSGPLUS) implements the transformation of micro-service architecture, launches digital business cards and enables first-line sales. In the first half of the year, the net increase in individual users of the cloud platform was about 90,000, an increase of 4.07% over the end of 2022, and the cumulative number of individual users reached 2.2875 million. Cohesion platform (HRally) online new aggregation encyclopedia, create online and offline integration of policy information, expand the policy base to 120 cities. The Business backup platform (BBC) accelerates the integration of innovative technologies, and the project directly connected to the Social Network Office is located in Sichuan and Zhejiang. To improve the application rate of electronic signatures, 82% of electronic contracts are used in Shanghai, and 18 regional companies across the country have opened electronic signature accounts.
Investment suggestion: based on the domestic human resources service market in East China, the company is one of the oldest human resource service enterprises in China. In the first half of 2023, the growth rate of the company's outsourcing is eye-catching, the digital transformation continues to recommend, the performance has achieved growth, the acquisition of Yuanmao synergy is emerging, and the company is optimistic about the follow-up development. We expect the company's 2023-2025 net profit to be 611, 731, 000., corresponding to PE, 19-16-14, maintaining the "recommended" rating.
Risk tips: macroeconomic growth is not as fast as expected; loss of major customers, etc.