Under the wave of digital economy, with the emergence of a variety of new business type and new models, the flexible labor market characterized by platform and flexibility is showing a trend of rapid development.

According to the report on China's flexible Employment Market 2022 released by iResearch Consulting, China's flexible labor market will exceed 1 trillion yuan in 2022, an increase of 34.9 percent over the same period last year and a five-year high. The flexible labor market is expected to continue to increase to 1.4 trillion yuan in 2023.

At this time, a self-change-driven evolution with digital genes (06919) is coming towards us, as can be seen in its latest earnings report.

On August 23, flexible employment dragon head personnel Rui talent disclosed the financial results for the first half of 2023. Data show that in the first half of 2023, the company achieved revenue of about 2.068 billion yuan, an increase of about 19.3 percent over the same period last year, and a net profit of about 10.1 million yuan, turning a loss into a profit. At the same time, the company's gross profit has also risen sharply: in the first half of the year, Renrui talent margin was about 168 million yuan, an increase of 154.8 per cent over the same period last year.

The reason given by Renrui for the significant growth in revenue and gross profit is "due to the rapid growth in revenue from digital technology and cloud services".

The bright financial data show the good operating results of the company in the past, and more importantly, have a more in-depth understanding and grasp of the good achievements of the company, in order to better see the operation law and context of the industry behind it. The following might as well through Renrui talent financial report for further analysis: what is the deeper reason behind the strong growth of the company's performance? Will the company's growth continue to be the same in the future?

First, focus on digital technology, catalytic digital technology and cloud service business shows multiple growth.

From the perspective of split business structure, the business of Renrui talents is mainly divided into two parts: one is comprehensive flexible employment business, and the other is professional recruitment and other human resources solutions. Among them, the integrated flexible employment business is the company's core source of income, covering three business divisions: general service outsourcing, digital technology and cloud services, digital operations and customer service.

In recent years, in order to better grasp the opportunity of the development of the digital wave and respond to the employment needs of enterprises and the strategic needs of digital transformation, Renrui talents began to focus on the digital field, through the strategic layout of "endogenous extension", expand the company's brand effect in the information technology and digital talent service market, thus prompting the company's integrated flexible employment business segment digital technology and cloud services to show explosive growth.

According to the financial report, in the first half of 2023, due to the active implementation and smooth implementation of the business upgrading strategy, the company achieved explosive growth in digital talent business through endogenous growth and acquisitions: during the period, the company's revenue from digital technology and cloud services reached 736 million yuan, a year-on-year increase of 560.5%, accounting for 35.9% of comprehensive flexible employment business income from 6.6% in the same period in 2022. The number of digital and information technology talents reached about 7830, an increase of 6616 over the same period in 2022. With the explosive growth of digital technology and cloud services business, the company's income from comprehensive flexible employment business increased significantly. During the period, the revenue of this sector was 2.051 billion yuan, an increase of 21.0% over the same period last year.

It can be seen that with the trend of the industry, Renrui talents have grasped the development dividend of the wave of digital economy, and the strong growth of the company's performance is not accidental, but the strategic layout of the company's forward-looking focus on the digital field.

Second, increase R & D investment to improve operational efficiency and promote the company's profitability for a long time.

Of course, Renrui talents want to focus on the digital field through strategic transformation, and Renrui talents are not unfounded. During the period, the company increased its investment in research and development and further enhanced the company's digital technology and cloud service capabilities through technological empowerment measures. According to the financial report, in the first half of 2023, the company's R & D expenditure was 26.2 million yuan, an increase of 97% over the same period last year, mainly due to the company's use of digital technology for business operation and management upgrades. in particular, the further development of Ruizhi system focusing on human resources solutions for digital and information technology talents, as well as the R & D expenditure of Shanghai Sili.

The action of increasing R & D investment and improving operational efficiency has also led to a significant increase in the profitability of Renrui talents-the company's gross profit margin was about 8.1% in the first half of 2023, a significant increase of 4.3 percentage points over the same period last year. The growth is mainly due to the company's high-value digital talent service, which has achieved strong sales performance among new and old customers, with more than 200 new customers. Strong growth has been achieved in the automotive, communications and financial industries.

For this, Renrui talent also said in the financial report, "as the company further expand the scale of digital technology and cloud services, there is still a lot of room for the improvement of the company's gross profit margin."

The expansion of revenue scale and the substantial improvement of profitability all suggest that Renrui talents have handed over a relatively high-quality report card.

However, looking back at its performance in the secondary market, Zhitong Financial APP observed that Renrui talent seems to be undervalued: so far, the share price is less than HK $4, down sharply from its previous peak of HK $54.50, and is obviously "undervalued", which also means that Renrui talent is in urgent need of a revaluation.

Nowadays, the digital technology and cloud service business of Renrui talent is growing explosively. In the wave of digital economy, this is undoubtedly a sure "value transition" opportunity for the company and its investors. The performance of its share price rising by more than 8% the next day is the best proof.