A market leader in cloud HCM solutions in China. The Beisen brand was founded in 2002 and is the largest provider of cloud-based human capital management (HCM) solutions in China. Through the innovative integrated HR SaaS and talent management platform, iTalentX, we provide Chinese enterprises with all technologies and products in the human resources management scenario, including HR software, talent management technology, employee service ecology, and an end-to-end overall solution for a low-code platform. Help enterprises achieve digital management covering the entire life cycle from employee recruitment, entry, management to exit, rapidly improve human resource management efficiency and talent management capabilities, help employees grow, and achieve smart decisions. The company's revenue has grown rapidly, and losses have narrowed. The company's revenue increased from 382 million yuan in FY 2019 to 751 million yuan in FY 2023, with a four-year CAGR of 18.4%; the total revenue of FY2024H1 reached 401 million yuan, an increase of 14.19% over the previous year.

In line with the general trend, there is a broad market space for cloud HCM solutions. According to Insight Consulting, China's HCM market grew from RMB 375.7 billion in 2017 to RMB 660.8 billion in 2021, with a compound annual growth rate of 15.2%. It is expected to reach 1,625.9 billion yuan by 2027, and the CAGR is 16.2% from 2021 to 2027. China's cloud HCM solution market reached 5.5 billion yuan in 2021, an increase of 28% over the previous year. The cloud HCM solution market is expected to reach 34 billion yuan in 2027.

Customers cover a wide range of customers, focusing on “integration of business manpower”. According to Insight Consulting's data, Beisen is the first and only company in China that can provide an integrated cloud HCM solution covering the entire life cycle of employees, enabling seamless connectivity between different modules and data. Kitasen's exclusive cloud-based HCM solution has built a unified and open PaaS infrastructure. The unique integrated approach enables Beisen to establish long-term customer relationships and loyalty, and create numerous cross-selling opportunities. The scalability and synergy benefits of the company's main product, the Core HCM integrated solution, are outstanding. According to data from the 2024 fiscal year report issued by the company, during the reporting period, the Core HCM integrated solution added 300 new Core HCM integrated solution customers, and the cumulative number of customers exceeded 1,600. The company actively embraces AI, combines more than 20 years of technology accumulation in the field of talent management, and has established cooperative relationships with major model manufacturers such as Wenxin Yiyan to create the SenGPT Human Resources Model to provide intelligent services for all HR scenarios such as intelligent recruitment, process application, talent management, data analysis, and employee services. In the future, the company will gradually form a characteristic AI family to create a new generation of smart AI SaaS.

Profit prediction and investment advice: As a leader in the Chinese cloud HCM solution market, the company has a comprehensive product line, extensive customer coverage, and actively embraces AI to enrich the company's product functions and application scenarios. The company's revenue for FY2024-FY2026 is estimated to be 854 million yuan/983 million yuan/1,146 million yuan, respectively, net profit of -3.16 billion yuan/-270 million yuan/-112 million yuan, EPS of -4.47 yuan/-0.38 yuan/-0.16 yuan, respectively, and P/S of 4/3/3 times respectively. For the first time, we have given an “increase in weight” rating.

Risk warning: Macroeconomic recovery falls short of expectations, competitive pressure for talent intensifies, there is a risk that public data used in research reports may be delayed or not updated in a timely manner, and business development falls short of expectations.