Revenue increased by 59.5% in the first quarter of 2021 compared with the same period last year.

Revenue in the first quarter of 2021 increased by 59.5% compared with the same period last year. In 2020, the company recorded revenue of 2.83 billion yuan, an increase of 23.7% over the same period last year. The adjusted net profit was 183 million yuan, an increase of 36.5% over the same period last year, mainly due to flexible employment and business process outsourcing. In the first quarter of 2021, the company's revenue increased by 59.5% year-on-year to 1.02 billion yuan (without social security affected by the epidemic last year), adjusted profit increased by 44.2% to 40 million yuan, gross profit margin increased by 0.4% to 8.3%, and adjusted profit margin decreased by-0.4% to 3.9%. The decline in net profit margin is due to lower exchange and financial gains in the first quarter of this year than in the same period last year.

The number of management employment continues to rise: the income from flexible employment services in the past 20 years was 2.58 billion yuan, an increase of 19.8% over the same period last year, and the industry grew by 9.7% over the same period last year. There are 39000 + human resources service participants in the industry, and the company has a market share of 2.3 per cent in terms of flexible employment and 3.1 per cent in terms of revenue. In 2020, the average number of flexible employees was 35762, an increase of 42.4% over the same period last year, with 88.9% of new economy customers. The turnover rate of flexible employees dropped to 9.0% from 9.9% in the same period last year, thanks to the fact that the company set the turnover rate as the main assessment index. At the end of March 21, the number of flexible employees reached 36372, an increase of 6.6% (+ 2249) from the previous month, and an increase of 42.3% (+ 10809) over the same period last year.

The continuous development of BPO business has led to the rapid growth of the company: the company's revenue from business process outsourcing (BPO) services recorded 150 million yuan, an increase of 190.7% over the same period last year, and the gross profit margin of BPO business was 16.0%. The company has been appointed by customers to provide them with customer service representative, information audit and telemarketing business process outsourcing services. the growth of outsourcing business is mainly due to: (1) the increase in the number of customers. (2) the Partnership Entrepreneurship Plan was tried for the first time on May 28, 2020. A framework agreement was signed with two cooperation teams composed of two people with an average experience of about 10 years in the business process outsourcing industry to set up two non-wholly-owned subsidiaries in Yingkou, Liaoning and Taian, Shandong, respectively to engage in business process outsourcing services.

Adjust the target price to HK $48.8, buy rating: the company is in the leading position in the industry in the wastage rate and full rate, which reflects the competitiveness of the company. Flexible employment of the market space is broad, the industry is scattered, the company still has a lot of room for development. We value the company on the basis of DCF and 12 per cent on WACC, with a sustainable growth of 2 per cent, resulting in a target price of HK $48.80, which is 91 per cent higher than the previous closing price and maintains the buy rating.