Beisen Holdings is a leading company in domestic HCM SaaS
Beisen Holdings is an integrated human resources software company. It started in the early years through evaluation software. Since then, it has mainly provided cloud-native SaaS products to enterprises through the iTalentX platform to help enterprises efficiently recruit, evaluate, manage, develop and retain talents. According to IDC data, the market share of Hokusen Holdings in 2023H1HCM SaaS reached 15.1%, maintaining the highest market share for 7 consecutive years, and continued to increase since 2021. As of FY2024H1, the company has more than 5,300 customers. The company adheres to the public cloud subscription model, with an amount retention rate of 104%. The company is one of the few integrated HCM software companies in the industry. Among them, the core human resource module products are strong. The company's revenue in FY2023 was 751 million yuan, of which cloud subscriptions accounted for 72%, and the ARR exceeded 700 million yuan.
China's HCM SaaS market is in a high growth stage. There is heavy snow and a certain countercyclical domestic HCM market size of about 18.9 billion yuan in 2021, of which the cloud HCM solution market is 5.5 billion yuan, accounting for about 29% of the overall market. Compared with the 60% SaaS ratio in the US, there is still room for improvement. There is a marked trend of integration and cloud transformation in the HCM software market. Combined with the trend of digitalization, we believe that HCM SaaS is expected to maintain a high industry growth rate for a long time in the future. At the same time, against the backdrop of a slowdown in economic growth, modules such as Core-HR and performance management showed characteristics higher than the overall market growth rate, with obvious countercyclical properties.
The company's leading attributes continue to increase, and reporting performance continues to improve
The market share of North Sen Holdings has increased year by year since 2021. We believe that the reason behind this is the result of the company adhering to an integrated strategy and continuous improvement in the competitive landscape due to the primary market financing environment and other reasons. As can be seen from FY2024H1's financial results, against the backdrop of a slowdown in economic growth, the company's ARR growth rate and HCM subscription revenue growth rate showed an inflection point. At the same time, the cost ratio declined steadily during the period, and the net operating cash flow and profit situation continued to improve, indicating that the company's competitiveness continues to increase and its leading attributes continue to improve.
Investment advice: We believe that HCM SaaS is a long and snowy racetrack. Kitsen is a leading company in the industry, and its competitiveness is constantly increasing. With the increase in customer unit prices and the increase in the number of new customers brought about by the company's multi-module product sales, it is estimated that FY2024-FY2026's total revenue will be 887/10.78/1,340 million yuan, respectively. Considering the company's business attributes, we chose Kingdee International, User Network, Workday, Salesforce, Ceridian, Paycom, and Paylocity as comparable companies. The company's average PS value until 2024 was 6.36. Considering the leading attributes of Kitsen, the liquidity of Hong Kong stocks, and the high subscription fees in the company's revenue, we gave 5X PS in 2024, according to the fiscal year of Kitsen 2025 (April 1, 2024 to March 31, 2025) The revenue forecast gives a target market value of HK$5.930 billion, corresponding to a share price of HK$8.27.
Risk warning: the liquidity of the Hong Kong stock market falls short of expectations, macroeconomic recovery falls short of expectations, the trend of improving the company's competitive landscape falls short of expectations, and the risk of choosing comparable companies across markets