In 2023Q3, the company achieved operating income/cash income of 16.1/1.64 billion yuan, an increase of 36%/32% over the previous year; achieved non-GAAP operating profit/net profit of 55/ 7.1 billion yuan, with a margin of 34.2%/44.4% (yoy+8.5/12.5pcts). Thanks to the peak Q3 recruitment season, corporate recruitment demand gradually recovered, and the average number of monthly active recruiters and companies reached record highs. Among them, blue-collar workers continued to contribute to growth momentum, and the share of 23Q3 revenue increased to nearly 35%. Looking ahead, considering that medium and large enterprises usually sign annual statements at the end of the year, we expect to drive the company's 23Q4 cash income to achieve month-on-month growth. Furthermore, the company announced its first dividend payment after listing, with a dividend amount of approximately US$80 million (corresponding revenue of about 1%), demonstrating confidence in development. We are optimistic about the medium- to long-term growth potential driven by BOSS's direct products and efficiency advantages. We recommend continuing to pay attention to the growth trend of the company's users and cash income to maintain the company's “buy” rating.

Performance Overview: Profits exceeded expectations, and the first dividend payout enhanced shareholder returns. In 2023Q3, the company achieved GAAP revenue of 16.01 billion yuan (yoy +36.3%), exceeding the upper limit of the company's previous guidelines by 3.2%; it achieved cash income of 1.64 billion yuan (yoy +32.1%, qoq +1.0%). In terms of costs and expenses, in 2023Q3, the company's gross margin was 83.3% (yoy+0.4pct), mainly due to revenue growth and effective cost control; sales/development/management expenses were 4.6/4.1/220 million yuan, and the cost rate was 28.5%/25.8%/13.7%, and yoy-5.2/+1.2/+0.4pcts, respectively. In terms of profit, the company achieved adjusted operating profit of 550 million yuan, margin reaching 34.2% (yoy+8.5pcts); achieved non-GAAP net profit of 7.1 billion yuan, margin reached 44.4% (yoy+12.5pcts), exceeding Bloomberg's unanimous expectations of 49.7%, mainly due to cost optimization and financial revenue growth. According to company guidelines, 2023Q4 GAAP revenue is expected to reach 1,53-1.56 billion yuan (yoy +39.6% ~ +43.3%). At the same time, the company announced that it will pay dividends for the first time after listing. The dividend capital comes from the company's surplus. The dividend amount is $0.09 per common share/$0.18 per ADS, or $80 million (corresponding income about 1%), which is expected to be paid in mid-late December 2023.

Operating data: New user strength, blue-collar workers drive growth. In 2023Q3, the MAU of the platform reached 44.6 million (yoy +37.7%), adding nearly 12 million improved users. The cumulative number of improved users increased by more than 40 million in the first three quarters, and user activity remained at a high level. On the enterprise side, as of 2023Q3, the company's cumulative number of paid enterprise users over the past 12 months reached 4.9 million (yoy +32.4%, qoq +8.9%). ARPPU declined slightly year-on-year, mainly due to an increase in SME revenue contribution. Thanks to the peak recruitment season in the third quarter, corporate recruitment demand continued to recover. According to the company performance meeting, the average number of monthly active recruiters and companies on the 2023Q3 platform both increased by more than 5% month-on-month and reached a record high. Among them, the blue-collar service industry was the industry that contributed the most to the number of jobs and revenue growth in a single quarter. Active online jobs in the 2023Q3 service industry increased by more than 13% month-on-month, with catering and retail increasing by more than 20% month-on-month. Thanks to this, the 2023Q3 blue-collar revenue share has increased to nearly 35%, and the number of jobs and revenue share in second-tier cities and below has further increased.

Development outlook: recruitment demand is gradually recovering, and customer acquisition targets balance growth and efficiency. According to the company's performance report, overall recruitment demand is gradually recovering, and the 2023Q3 recruitment end month performance has reached a record high. Among them, large enterprises showed a more obvious recovery. In 2023Q3, the number of new jobs posted by more than 10,000 people per day increased by more than 8% month-on-month, yet enterprises still need to strengthen their confidence in shifting from business recovery to expansion. Looking ahead, growth is still the company's primary goal, and user growth is the most important driver, but the company will focus on marketing efficiency and balance growth and profit in the process of acquiring customers. At the same time, the company will adjust the C-side customer acquisition strategy according to the recovery and customer acquisition situation on the enterprise side next year to ensure a relatively balanced state of supply and demand for the platform.

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 that 2023Q3 revenue exceeded expectations, we slightly raised our 2023 revenue forecast to 5.91 billion yuan (previous value was 5.87 billion yuan), up 31% year on year, but considering that the subsequent macroeconomic environment and recruitment demand are still uncertain, we slightly lowered the 2024-2025 revenue forecast to 74.5/90.8 billion yuan (previous value: 768/9.37 billion yuan), up 26%/22% year on year; considering the company's improved operating efficiency and financial revenue contribution, we slightly raised 2023- The 2025 non-GAAP net profit forecast was 22.0/26.9/31.2 billion yuan (previous value was 18.4/23.5/3.07 billion yuan), up 175%/22%/16% year on year. Referring to the current valuation of comparable companies (peer recruitment, ZipRecruiter, Shell and other companies based on Reuters's unanimous profit expectations for 2024, about 20x average PE), considering that the growth rate we expect for the company is higher than that of comparable companies and industry position premiums, we gave the company 22x non-GAAP PE in 2024 to maintain a target price of $18/ADS for US stocks and HK$72 per share. 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.