Introduction to this report:
Results are in line with expectations, and revenue growth is slowing down due to macroeconomic fluctuations, but the company will focus on profits to improve shareholder returns.
Key points of investment:
The performance was in line with expectations, and the holdings were increased. Considering that the company reduced the guaranteed profit from R&D and marketing investment, the adjusted net profit for 2024 was raised to 2.801 billion yuan (+0.153 billion). At the same time, considering the slowdown in revenue growth, the adjusted net profit for 2025/26 was lowered to 35.17/42.02 (-2.92/-5.96) billion yuan. As the leading recruitment platform, the company gave a valuation of 15xPE higher than the industry average in 2025, and lowered the target market value in 2024 to RMB 52.7 billion, corresponding to the target price of HK$64.11.
Performance summary: In 2024Q2, the company achieved cash revenue of 1.95 billion/ +20.45%, operating income 1.916 billion/ +28.85%, GAAP net profit of 0.422 billion/ +36.22%, and adjusted net profit to mother of 0.718 billion/ +26.42%.
Macro effects are slowing revenue growth. ① The company's business is: 1) The accelerated increase in job seekers drives the accelerated growth of MAU; 2) However, due to the rapid increase in the ratio of job seekers and recruiters, the difficulty of matching on the enterprise side has decreased, and the willingness to pay for recruitment has declined, so the number of paid enterprise users is slowing down.
3) This affected companies' willingness to pay in advance, and revenue remained faster than cash revenue (+29%) due to previous prepayments. ② The reduction in revenue expectations has been fully discussed in previous guidelines, but the forecast that 24Q3 revenue growth will slow further to 18.2%-19.5% this quarter has heightened market concerns about the growth trend. Previously, the 24Q1 company still bucked the trend and achieved relatively high growth. The above situation shows that even though the company's efficiency advantages lead the industry, the macro impact on the revenue side is still significant.
Adjust the target to focus on profit to ensure stable and confident shareholders' returns. ① On the business strategy side, choose:
1) Guarantee profits; 2) Focus on short-term projects with monetization capacity. Reflected in the financial report, it is clearly more restrained sales and a rapidly reduced R&D cost rate. Considering the job search needs of C-side job seekers, the company has more room to optimize marketing expenses to balance growth and profit. ② As a result, 24Q2's 34.4% adjusted operating margin was actually the best since listing. ③ The company has also entered the stage of releasing profits and increasing shareholder returns. The revenue side entered the 15-20% growth range, and achieved a continuous increase in profit margins by controlling marketing delivery and R&D. However, the basis for profit release comes from its advantages in recruitment efficiency and blue-collar job search environment ecology. These advantages have not been reduced by macro-fluctuations.
Risk warning: Economic fluctuations affect recruitment and increased competition on recruitment platforms.