In 2023, companies made a series of structural changes and optimization or business direction adjustments, which were reflected in the recruitment market. The vast majority of companies were conservative about expansion. With active policy encouragement, the market is cautiously optimistic about the continued recovery of the recruitment market in 2024.

However, in the long run, the recruitment industry is a procyclical industry, and against the backdrop of continued macroeconomic recovery, the industry is expected to continue to recover. As a leading recruitment leader in middle and high-end recruitment, B-side service capabilities are being actively improved. It is expected that in the future, by seizing industry development opportunities, it will drive restorative growth in performance.

On March 22, Peer Recruitment (06100) released its 2023 annual report results: during the period, the company's revenue was 2,282 billion yuan (unit: RMB, same below); non-GAAP operating profit of 139 million yuan; and non-GAAP profit attributable to equity shareholders was 106 million yuan. Under pressure for a short time, it is expected to be gradually repaired over the long term. Looking at the longer term, the company is expected to benefit from the industry's beta repair and the release of its own alpha.

Understanding 1: Abundant cash flow, improved internal efficiency to achieve continuous performance

Peer recruitment has always focused on improving business quality and efficiency, and continues to deliver on the performance side.

In 2023, the company's marketing and sales expenses were 1,082 million yuan, a year-on-year decrease of 17.2%. Sales expenses are the company's core costs. With the release of the business scale effect, the gradual downward trend in the expense ratio has been determined.

On the R&D side, the company's products are still being iteratively upgraded, and the cost is quite rigid in the short term. During the period, R&D expenses were 360 million yuan, a year-on-year decrease of 10%. Considering that investment in R&D can help form economies of scale and further enhance the company's competitiveness and market share, it is of positive significance in the long run.

Overall, there was a steady decline in peer recruitment fees. According to calculations, the total three fees during the period decreased by 12.6%. Looking optimistically, with long-term optimization of cost ratios, it is expected that profit performance will continue to improve.

More importantly, the profit quality of peer hunters continues to be optimized, and the cash flow situation is quite excellent. At the end of 2023, the company's cash and cash equivalents were $667 million, with sufficient cash on the books. As cost reductions and efficiency gains continue to be realized, there is still room for improvement in the company's cash.

Overall, the company is in an internal optimization period in 2023, and total costs and expenses are expected to decline year over year. With the gradual elimination of one-time factors, the foundation for subsequent performance recovery is good.

Understanding 2: Implementing lightweight products to expand the number of paying users

At the business level, B-side penetration rate is the core driving force for peer recruitment growth. Enterprise-side payments are the company's core revenue source, accounting for about 90%.

Expanding the number of registered enterprise users remains the main driving force for the company's development. Since 2023, the recruitment demand of SMEs has recovered significantly. The company followed the trend. After combining enterprise user ratings and demand identification, it launched a targeted lightweight basic package to enhance the service capabilities of SMEs. The package mainly covers standardized online recruitment products, making it easy for small and medium-sized enterprises with a small number of middle to high-end recruitment requirements to quickly link high-quality talents, thereby expanding the market penetration rate of such companies.

In the second half of 2023, the launch of the basic package brought about a significant increase in the company's corporate customers, reversing the year-on-year decline in the number of paying enterprise customers in the first half of 2023. The number of paying enterprise customers declined to rise throughout the year, reaching 72,000, an increase of 1.9% over the previous year. By the end of 2023, the cumulative number of verified enterprise users for recruitment reached 1.294 million, an increase of 14.5% over the previous year.

Furthermore, for individual users, recruitment continues to improve users' job search experience and job search efficiency, thereby promoting the active use of more users. Thanks to personalized user operation strategies and smarter matching algorithms, the number of individual user registrations and activity on the recruitment platform has reached a new high. By the end of 2023, the total number of registered individual users for recruitment had reached 95 million, an increase of 12.6% over the previous year. At the same time, the quality of talents had also improved.

In the long run, the increase in the number of registered users of the platform will effectively expand the talent resource pool of the recruitment platform and lay the foundation for providing better talents to enterprises in the future.

Understanding 3: R&D drives job matching efficiency, AI empowers high enterprise stickiness

The core barriers to recruitment are not limited to scale effects; it is also necessary to improve the efficiency of job matching. Peer recruitment has always attached importance to product development and R&D upgrading, and actively embraces cutting-edge technology to improve accurate matching efficiency and user experience.

As AI technology continues to mature, companies' talent screening criteria have changed. In the future, the creativity of talents and their proficiency in mastering tools will become more critical criteria to consider. In recent years, Hiring has actively explored the application and implementation of AI technology in the field of recruitment, continuously refining the underlying technical capabilities and matching advantages, and continuously providing users with an efficient, accurate and personalized recruitment and job search experience.

In the third quarter of 2023, Hunting and Recruiting officially released the key incubation Multi-Hunting Headhunting Cooperation Network Platform (Multi-Hunting RCN), which uses the strong cooperation model of Multi-Hunting SaaS+RCN to help hunting enterprises improve efficiency in multiple dimensions. This also further enhances the company's comprehensive recruitment service capabilities, and also lays the foundation for exploring new business opportunities. As of December 31, 2023, Duo Hunting has established cooperative relationships with more than 50 hunting companies, covering more than 1,500 headhunters, of which 70% have participated in order delivery. Duo Hunting RCN has not only received unanimous recognition from the market, but also provided substantial business support to hunting companies participating in the collaboration.

In 2023, Multifaceted Doris, a subsidiary of Peer Hunting, introduced a large language model and launched a second-generation AI interview product. Multi-faceted Doris is an intelligent interview product based on artificial intelligence and advanced assessment technology, which can provide enterprises with comprehensive and in-depth talent selection solutions.

Multifaceted Doris makes online talent selection more systematic and intelligent, reducing costs and increasing efficiency. In terms of efficiency, the multi-faceted DorisAI interview can complete the evaluation of 40,000 people in 8 hours. In addition, multifaceted Doris helps companies improve recruitment efficiency while reducing recruitment costs by 80%.

It is worth mentioning that Doris's application is currently not limited to the recruitment process, but Doris also plays an important role in corporate talent evaluation. Currently, Doris can help enterprises conduct talent inventory, promotion evaluations, etc., and provide scientific and objective data support for enterprises to make key talent decisions.

In summary, Peer Hunting is a niche market leader driven by early headhunters. It has grown into a comprehensive enterprise SAAS service platform, and has accumulated strength in the development process and continues to deepen enterprise services. With the continuous advancement of products and R&D, it is expected to further increase the stickiness and willingness of business owners to pay.

Overall, the driving force for the company's growth comes from two aspects: one is to expand the number and size of paying companies and increase the recruitment categories; the other is to expand the entire recruitment industry chain vertically and improve the diversified product matrix. The company has now formed a certain brand influence among middle and high-end income groups. Coupled with abundant cash on book, it is expected to continue to broaden development boundaries through first-mover advantages and network effects, consolidate competitive barriers, and have sufficient momentum for long-term growth.

Back in the capital market, peer-hunting valuations are very attractive. As of the close of trading on March 22, the company's PB was only 0.65, with a total market value of about HK$2,034 billion. The company's performance is restorative, the attributes of high-quality assets are prominent, and the valuation is at a low level. I believe the future will be the focus of market capital.