In 2023Q2, the company achieved revenue of 590 million yuan (yoy -18%), and the year-on-year decline in cash repayments was in the middle of a single digit, mainly due to the slow recovery in corporate recruitment demand. In the context of the overall pressure on the recruitment market, the company has strengthened refined operations through customer stratification, continued to dig deeper into stock value for large customers, and launched lightweight online packages for small and medium-sized customers to expand customer coverage. At the same time, the company continues to be deeply involved in closed-loop headhunting services, and is expected to launch RCN for new products at the end of September, creating business growth while improving the standardization level of the headhunting industry.

We are still optimistic about the company's growth potential as a leader in high-end online recruitment in China, and maintain the company's “buy” rating.

Performance Overview: Short-term performance is under pressure, and continuous buybacks show confidence in development. In 2023Q2, the company achieved revenue of 590 million yuan, a year-on-year decline of 18.4% (the decline narrowed by 4 pcts), mainly due to the macroeconomic environment and continued weak corporate recruitment demand; according to the company's performance, 2023Q2, group and recruitment business repayments fell by mid-single digits year-on-year, and the decline narrowed month-on-month. Looking at the revenue structure, revenue from enterprises/individual users was 53/60 million yuan, respectively, -19.2%/-11.4% year-on-year. At 2023Q2, the company achieved gross profit of 450 million yuan, with a gross margin of 74.5% (yoy-3.7 pcts), mainly due to the increase in the share of low-margin service-type businesses; sales/management/R&D expenses were 280 million yuan/76.01 million yuan/80.8 million yuan, respectively, and the cost rate was 47.4%/12.9%/13.7% (yoy+10.3/+0.5/+0.7 pcts). The increase in sales expenses was mainly due to an increase in online and offline marketing investment. On the profit side, 2023Q2, the company achieved a net profit of 61.14 million yuan; a non-GAAP net profit of 64.24 million yuan, with a net interest rate of 10.9%. In terms of repurchases, as of August 25, the company had repurchased more than 10 million shares (accounting for about 2% of the total share capital), leaving a repurchase balance of about HK$200 million (about 5% of the current market value), which is valid until March 31, 2024.

Business data: The user growth trend is good, and the recruitment needs of enterprises are differentiated. On the B side, as of June 30, the number of enterprise users verified by the platform reached 1,217,000 (yoy +12.9%), the number of enterprise customers was 60,000 (yoy -9.6%), the payment rate was about 5.0% (yoy-1.2pcts), and the number of published posts was about 6.3 million (yoy -7.6%). By industry, 2023Q2, energy, chemicals, logistics trade, and consumer goods ranked in the top three, while recruitment activities in traditional major recruitment industries such as the Internet, real estate, and finance are still very cautious; by job, business-oriented recruitment demand is still sufficient, while recruitment for middle- and back-office functional positions and R&D positions is relatively cautious; by scale, small and medium-sized enterprises are recovering slightly faster than large enterprises. On the C side, as of June 30, the number of registered individual users on the platform reached 90 million (yoy +13.2%), and 2.7 million new job seekers were registered in 23Q2 (yoy +3.8%), and the proportion of complete resumes registered on the C side reached a record high. On the H side, as of June 30, the number of verified headhunters on the platform reached 219,000 (yoy +4.6%), and the number of individual users reached by headhunters reached 590 million times (yoy -7.5%).

Development Strategy: Customers are stratified to strengthen refined operations, reduce costs, increase efficiency, and improve profitability. In the context of the overall pressure on the recruitment market, the company strengthens refined operations through customer stratification. For large customers, the company continues to dig deeper into stock value by improving accurate matching and simplifying recruitment processes; for small and medium-sized customers, the company has targeted lightweight online packages to expand customer coverage by lowering purchase thresholds. Furthermore, according to the company's performance meeting, the company will release RCN products at the end of September to increase the level of standardization in the headhunting industry while creating business growth. On the profit side, the company will continue to reduce costs and increase efficiency. According to the company's performance, marketing expenses are expected to be optimized by 10%-15% this year, management and R&D efficiency will also be further improved, and profit margins are expected to gradually rise in the second half of this year and next year.

Risk factors: risk of business adjustments due to tightening policy supervision; risk of management adjustments related to data security; risk of falling short of expectations in the recruitment industry due to macroeconomic recovery and seasonal fluctuations in recruitment; worsening competition in the online recruitment industry due to increased competitors; company technology research and development and innovation falling short of expectations; expansion of company products and services falling short of expectations; risk of loss of users; risk of loss of core talent; risk of loss of majority shareholder holdings; risk of individual stock liquidity risk, etc.

Profit forecast, valuation and rating: Considering the weak recovery in corporate recruitment demand, we lowered the company's revenue forecast for 2023-2025 to 23.2/28.6/3.45 billion yuan (previous forecast value was 26.2/30.9/3.6 billion yuan), -12%/+23%/+21%; lowered the company's 2023-2025 adjusted net profit forecast to 1.2/28/4.2 billion yuan (previous forecast value was 2.6/34/4.4 billion yuan), -35%/+128%/+48%, current price The corresponding PE (adjusted) is 28x/12x/8x. Referring to comparable companies such as Cree International, Foreign Service Holdings, Beijing Manpower, and BOSS Direct Employment, etc., with an average valuation of about 20x PE (adjusted) in 2024 (based on the forecast of the CITIC Securities Research Department), and referring to each company's revenue and profit CAGR expectations for 2023-2025, taking into account the liquidity and valuation discounts of Hong Kong stocks, we gave Peer Hiring 17x PE in 2024, corresponding to a target price of HK$10, to maintain the company's “buy” rating.