(Report Producer Author: Hua Chuang**, Wang Weina, Wu Xiaochan).
(1) From headhunting to "one body and two wings".
Headhunting: In 1996, the company's predecessor started with the business of high-end talent search (headhunting), at that time, the influx of foreign companies into China, the demand for high-end and professional talents increased significantly, the company seized the dividend of the first wave of foreign enterprise demand, and entered the Johnson & Johnson medical headhunting business in 2003. In 2005, the company took the lead in introducing recruitment process outsourcing (RPO), in 2006 it laid out flexible employment business, and in 2009 it introduced value-added services such as campus recruitment, training, and recruitment consulting.
Rapid expansion: From 2010 to 2017, the company continued to strengthen its offline capabilities, and relied on mergers and acquisitions and the establishment of branches to expand its region, industry and customers. Digitalization & Internationalization: On June 9, 2017, the company was listed on the A-share market and started digital transformation, and in 2018, the company proposed the transformation of "one body and two wings" - "taking the overall solution of human resources as a whole, taking service product innovation as one wing, and taking the technology platform as one wing", and is committed to creating a leading business model of "offline service + online platform", so as to achieve the coverage of the whole career and the whole industry chain services from recruitment, employment, management, retention, transfer to talent consulting, assessment, and development. In 2018, the company acquired the British human resource service company Investigo to officially open the European market, and as of the first half of 23 years, the company's overseas revenue accounted for 260%。
At present, the company has built a model of "technology + platform + service", continued to deepen the traditional offline service products (headhunting, RPO, flexible employment, research and consulting, training and development, payroll and tax services and other businesses), and successively launched a series of technical products such as "Tongdao" series of vertical recruitment platforms, human resources industry interconnection platforms, and human resource management SaaS platforms through independent research and development, investment, mergers and acquisitions, etc., to build an operation model that integrates online products and offline service business.
The company's original controlling shareholder and original business entity, Beijing Yima was founded by Chairman Gao Yong in 1996, after multiple rounds of financing and listing in 2017, Beijing Yima completed the absorption and merger in 2021, and the controlling shareholder was changed to Taiyong Kangda, as of the third quarter report of 2023, Taiyong Kangda holds 30 shares42%。The actual actors of the company are Mr. Gao Yong, chairman of the board of directors, and Mr. Li Yuezhang, vice chairman of the board of directors, and the two persons acting in concert respectively hold 3447% and 2574% equity. Tianjin Qite Consulting*** and Career Search are the company's employee shareholding platforms, which hold 335% and 191% equity.
The management has rich experience and has been deeply involved in the human service industry for many years, and most of them are veterans of the company. At the beginning of the company's establishment, it was a partnership model of alumni of classmates, and the main founders were Chairman Gao Yong, General Manager Li Yuezhang, former Vice Chairman Wang Tianpeng (who left in 21 years), and Yuan Tieyi, former Vice PresidentDeputy General Managers Zeng Cheng and Duan Lixin joined the company's predecessor in the same year, and were promoted to the positions of manager, director and deputy general manager from management consultants. Chen Song, the secretary of the board of directors of the company, joined the company in 2008 and served as the company's CFO, and is now in charge of the company's international business.
The company has carried out employee equity incentives for many times. The core of assets in the traditional human service industry is "people", and the company emphasizes "selection, education and retention" for talent training. After listing, the company launched an equity incentive plan in 2019, and the company's target is set to be based on the financial indicators in 2018, and the growth rate of operating income in 2019 and 2021 will not be less than % or the growth rate of net profit will not be less than % respectivelyExcept for 2020, when the revenue indicators were slightly lower than those affected by the epidemic, the rest of the indicators were exceeded. In addition, the company assesses the individual performance of employees and sets the corresponding lifting coefficient according to the three levels of "excellent", "qualified" and "unqualified".
Stock price review: In 2017, the company's stock price was relatively flat, and the high valuation was mainly due to the premium of the new sharesAfter the end of 2018, the company's stock price rose driven by performance, and the announcement of equity incentives in October 2019 further boosted market confidenceIn September 2020, the private placement plan was announced, and the stock price was in a state of volatility under the executives**After 2022, affected by the epidemic and the employment needs of enterprises, the company's offline recruitment business will be under pressure, resulting in a double kill of EPS and valuation, and the current valuation is at a historical low.
(2) Cree Finance: Rapid growth of flexible employment
Driven by the combination of endogenous and epitaxy, the company's revenue and profit have increased significantly in the past 10 years, and the CAGR of revenue and net profit attributable to the parent company from 2012 to 2022 is about 347% and 250%。Affected by the decline in enterprise employment demand this year, the company's revenue in the first three quarters of 2023 was 71700 million yuan, a year-on-year increase of 52%, net profit attributable to the parent company 1500 million yuan, down 30 million year-on-year2%。
In terms of business separation, the company's flexible staffing business achieved rapid growth, with revenue from 4600 million to 90 million in 2022900 million yuan, corresponding to the proportion of revenue from 391% increase of 493pct to 884%, gross profit accounted for from 150% to 67 in 20228%；The gross profit of headhunting and RPO business accounted for 576% and 259% down to 28 in 20225% and 29%。
Due to the inclusion of expatriate salaries in flexible employment costs, the gross profit margin in the normal years of 2015 and 2021 is between 7% and 9%, which is lower than that of headhunting and RPO business (between 52% respectively). The company's overall gross profit margin showed a downward trend, and in the first three quarters of 2023, the company's gross profit margin was 78%, mainly due to the obvious pressure on the revenue of offline recruitment business with high gross profit margin, and the cost has a certain rigidity.
In recent years, the company's expense ratio has been relatively stable, and under the revenue scale effect, the sales expense rate and management expense ratio have decreased slightly, which are respectively in the first three quarters of 2023. 5%, after the start of digital transformation in 2018, R&D investment began to increase, and the R&D expense ratio in the first three quarters of 2023 was 05%。
In terms of quarters, the company's revenue and profit accounted for a relatively high proportion in the second half of the year, and the average proportion of single-quarter revenue in Q3 and Q4 of 2016 and 2022 for the whole year is. 1%, which corresponds to the traditional Golden Nine and Silver Ten recruitment season.
(1) Pro-cyclicality
The human resource service industry is strongly related to the macro. Human resource service providers match supply and demand, play the role of an intermediate bridge, demand is affected by the recruitment of employers, taking the United States and Japan as an example, the industry as a whole is strongly related to the macro economy and the job market. United States: According to the SIA, the growth rate of the staffing industry in the United States is high in line with the GDP of the United States, and the place & search industry, which is more likely to be more resilient to the economic recovery, is more resilient to the macro impact and more resilient after the economic recovery than the flexible staffing industry, which is biased towards temporary positions. Japan: The flexible staffing industry is in the growth stage against the labor situation, and the maturity stage is pro-cyclical. After 1999, driven by Japan's labor dispatch policy, the industry scale and penetration rate increased rapidly, which was in stark contrast to the decline in Japan's labor force participation rate and the rise in unemployment rate during this period, showing strong growth against the trend. In 2006, Japan's labor dispatch industry had reached a mature stage (20%), fitting Japan's GDP and unemployment rate, Japan's dispatch industry is obviously cyclical, superimposed on policy drivers during the economic upswing, and the elasticity is considerable, such as 2004-2007, 2014-2016, and 2020-2022.
According to iResearch, the size of China's flexible employment market in 2021 will be 894.4 billion yuan, and it is expected that China's growth rate in 23 and 24 years will be 19% and 23% respectively. According to recent data, Career International and Tongdao Liepin maintained a high growth rate before the epidemic, and were greatly affected by the overall macro after the epidemic, and the employment groups of the two are relatively high-end, facing white-collar workers with an annual salary of more than 100,000 yuan, compared with the blue-collar BOSS Zhipin, the recovery is slower, and BOSS Zhipin has shown a trend of recovery quarter by quarter this year, with a revenue growth rate of 36 in 23Q33%, and the employment activity in the blue-collar market has also increased. As a representative of state-owned enterprises, Beijing Human Resources and Foreign Service Holdings Co., Ltd. focuses on stable personnel business, with a relatively stable growth rate.
(2) The industry is scattered, and there is still room for improvement in China's concentration
From a global perspective, the competitive landscape of the human service industry is fragmented. The top three global human service companies in 2022 are Randstad, Adecco and ManpowerGroup, with a combined market share of 12%.According to SIA, in 2021, the CR10 and CR20 were about 21% and the CR20 were around 26% globally. Because the business model of the human service industry is relatively simple, the replicability is strong, and the customers are scattered in various industries, there are many positions that match the demand, and the services provided correspond to various subdivisions, and there are territorial attributes, so the human service institutions can fully enjoy the differentiated competition brought by the subdivision track and regional advantages, and form characteristics. According to Randstad's annual report, its market share of more than 20% in Europe and other countries is extremely dependent on the historical environment and policy development at that time, which is difficult to replicate in China's current pattern.
The flexible employment policy in Europe has changed from tight to loose, and the first-mover enterprises have the franchise right to obtain certain growth dividends during the strict policy period, and the initial accumulation value of the market share is relatively high. At the beginning of the 20th century, the International Labour Organization (ILO), which was dominated by the European Union, banned the operation of private service intermediaries (Article 96 of the 1919 Unemployment Convention) in order to avoid problems such as labor exploitation. After World War II, the industrial structure of European countries began to continue to transfer to the tertiary industry, and at the same time, under the background of the increase in foreign immigrants from various countries, there was a mismatch between the labor demand and actual employment of enterprises in various countries, and private service institutions began to emerge. For example, the Netherlands, a European country that has been relatively leading in policy change, introduced the Waadi in 1998 after the Netherlands introduced the Temporary Employment Act of 1965 to allow the issuance of private service agency licenses for certain industries, and the International Labour Organization (ILO) issued Convention No. 181 in 1997 to break the boundaries of private labor exchange and recommend that the state regulate the flexible employment industry The bill provides that the company is licensed to operate, and at the same time stipulates that flexible employees should enjoy the remuneration and benefits of regular employees.
Taking Japan and the United States as two major representatives, we can look at the market share situation: Japan's flexible employment policy has changed from tight to loose, while the United States has always been relatively loose. Japan's leading contractors have gained more than 8% of the market share in Japan. Recruit and Persol, Japan's second-largest labor dispatch company, each had a market share of 88% and 83%, all of which are mainly engaged in clerical work, of which Persol was founded to advocate for the increase in female labor force participation rate (the company was founded in 1973, and the female labor force participation rate in Japan increased by 5 in 2022 compared to 19739pct）。The rest of the labor dispatch companies are relatively small, while others such as UT Group and Meitec are mainly contractors for the manufacturing and engineering industries.
The U.S. employment market is relatively free, and there are no obvious restrictions on flexible employment industries such as temporary workers, providing a relatively relaxed environment for private service intermediaries, but at the same time relatively full competition. The top five staffing companies in the U.S. in 2022 are Allegis, AYA, Randstad, AMN, and Express, with market shares. 0%；Cr5 is about 169%, the overall market share of the top five leaders is relatively stable, in 2011 and 2022 are between 17 20%, but the internal ranking has changed, and the top five companies in 2011 are Allegis (6.).0%）、adecco（3.8%）、randstad（3.6%）、manpower（3.5%）、kelly services（2.7%）。China's human service industry is more fragmented than the international market. China's Beijing manpower-business outsourcing, foreign service holdings-business outsourcing, and Career International-flexible employment business revenue scale are relatively high, and the domestic market share in 2021 is calculated accordingly. 9% and 07%, compared with the market share of more than 8% of the Japanese leader and the market share of more than 5% of the American leader, there is still a lot of room for improvement.
(3) Overseas companies: the growth path is convergent, and it conforms to job change & acquisition & expansion & improvement of management capabilities
The alternation of the throne of the leading service company is accompanied by mergers and acquisitions and changes in positions. In 1996, ADIA and ECCO, the world's second and third largest service companies, merged to form ADECCO, surpassing Manpower in terms of revenue and becoming the world's top 1 human service company. Around 2000, Adecco grew rapidly through rapid mergers and acquisitions of American service companies and grasping the background of the development of the IT industry, such as the acquisition of the American IT service leader OLSTEN in 1999, the American service company TAD and Seagate Associates, the Australian IT service company Icon Recruitment, and the British computer industry human service company Delphi Group PLC. In contrast, Manpower is relatively slower in IT, causing the gap between the two to widen. Similarly, in 2008, Randstad acquired Vedior, the world's fourth-largest service company at the time, to hedge against the externalities of the financial crisis and jump to the world's TOP2, and since then, with the help of capital mergers and acquisitions, it has surpassed Adecco to become the world's largest human service company in terms of revenue in 2020 with the help of capital mergers and acquisitions and continuous strengthening of its own management capabilities.
Continue to cultivate high-end professional human service companies, with stronger bargaining power and higher profitability. TechnoPro in Japan is mainly engaged in the flexible staffing business of engineers in Japan, and the proportion of IT engineers in FY23 reached 562% against the backdrop of a slowdown in the growth rate of flexible employment in Japan (CAGR of about 6 in 2016 and 2022.)7%), the company's FY2015 FY2023 revenue and net profit CAGR are about. 7%。Robert Half of the United States focused on the accounting and finance sectors, and later expanded to contract employment and recruitment in high-paying industries such as IT, high-tech, and lawyers, compared to the profit margins of the two companies in the range of 6 to 10%, which is higher than the above three companies. Looking at the elongated trend, TechnoPro's market capitalization has increased from 5$600 million turned 38 times to the current 21$500 million;Robert Half has a market capitalization of about $8 billion.
(4) Barriers and advantages: first-mover advantage, efficiency first
Human resource services as a business technology difficulty is relatively no barriers to the industry, the first entrant has a first-mover advantage, which mainly depends on human resource management itself is not difficult but relatively cumbersome business, especially for customers who need to manage tens of millions of employees, in the absence of Internet big data and other perfect infrastructure, the conversion cost of the business is relatively high, including the transfer of employee information, and then adapt to the system of the new business, so when the capacity building of the service business is up to standard, the customer stickiness is correspondingly higher. "Efficiency" is the key capacity building, which we summarize here as "matching efficiency", which can be rapidly expanded through mergers and acquisitions, and "process efficiency", which can be improved mainly through internal process sorting or strengthening digital capabilities.
Matching efficiency: refers to the ability to quickly respond to customer needs, realize the rapid docking of employees and employers, and deliver business. 1) Reflected in the rapid matching of subdivided industries or subdivided positions, such as recruiting talents in related professional fields, contracting outsourcing business in professional fields, matching new positions under the new economic form, etc., the improvement of matching efficiency depends on the accumulation of time and business experience, that is, through the establishment of a detailed talent database to expand the supply side of the reserve, for high-end talent search and other headhunting services or recruitment platform is more important capacity building. In addition, in addition to the priority of its own positioning and technology, the development of online platforms also has a certain first-mover advantage in user accumulation. 2) Geographical coverage: Offline on-site office is indispensable for most industries, and for employers who carry out nationwide business, unified employee management or business outsourcing not only reduces the cost of searching for qualified service providers in the early stage, the cost of contract signing, but also compresses the cost of follow-up docking personnel business. In addition, because the social security system of China's provinces is not opened, the payment base is also different, and the geographical coverage not only affects the customer structure, but also affects the order business volume.
Process efficiency: including procedural efficiency and compliance efficiency. 1) Delivery efficiency Procedural efficiency: refers to the efficiency from receiving customer needs to finally delivering business, which depends on the standardization and implementation of internal processes, as well as the ability to respond to policy changes and even advance layout. 2) Compliance efficiency: The ultimate goal is to reduce employment disputes.
In addition, due to the essence of the service provider is the service fee of the intermediary, the salary and benefits of employees generally need to be paid in full and on time every month (otherwise it is prone to labor disputes and unstable service quality), and the client's receivables are not completely matched with the employee's payable in the flow of funds, such as part of the business outsourcing and other funds are settled after the end of the project, and even some large customers due to high bargaining and there is a pressure behavior;Therefore, the company's capital management ability is also an important part of capacity building.
(1) Solid offline delivery capabilities, and flexible employment drives growth
The consultant team expands and the RPO process iterates. With the expansion of business, the number of consultants of the company has increased from more than 1,000 in 2016 to more than 3,000 in 22 annual reports. In a normal year, the number of mid-to-high-end candidates recommended in 2021 is about 35,000, and the average delivery of mid-to-high-end candidates is 117 years (headhunters in 2022 will be greatly affected by the epidemic), the average unit price of a single position is about 20,000 yuan, according to the general salary of headhunters for 1 month, the company's candidates are relatively high. "Front store and back factory" strong delivery, "thousands of people and thousands of posts" dig deep. Recruitment, especially headhunting business, is a result-oriented business at the enterprise end, and the recruitment positions are open to the white list of ** businessmen, and the company finally recommends the entry on behalf of the "winning bid", and the company builds a model of "front store and back factory" and "thousands of people and thousands of posts" to achieve rapid response and high-quality delivery. The company divides on-site consultants as "front stores" according to regions, deeply understands needs and clear talent portraits, and works with corporate HR and various hiring departments to promote recruitment progressBacked by a large-scale back-end search team as a "back factory", it timely allocates resources, supports large-scale talent search in many places across the country, and helps enterprises analyze external market trends and improve talent competitiveness in the process of cooperation. For example, after the company entered the wind power industry, the positions from the wind power service engineer (hoisting, operation and maintenance, commissioning, maintenance, maintenance) at the beginning of the project to the safety officer, civil engineering, electrical and other engineering and R&D and design positions were continuously extended to the company.
The company's RPO business has successfully served hundreds of large-scale multinational and local recruitment projects, and a large number of RPO customers have served for more than 15 yearsVersion 0, with application tracing system (ATS), candidate relationship management system (CRM), * business and freelance management system (VMS, FMS), artificial intelligence and other technologies.
The scale of flexible employment is rapidly increasing. In the first three quarters of 2023, the company has sent a total of 30 employees80,000 people, the number of registered outsourced employees is 350,000 people, more than twice as many as in 2018, and the company's professional consultants had more than 2,200 in 2018 and nearly 3,000 at the end of 22, reflecting a significant improvement in the company's employee management and delivery capabilities. The company's flexible employment focuses on IT, industry, medicine and other technology research and development positions, and the number of flexible employment technology research and development positions accounted for 60 at the end of September 202330%, an increase of 7 year-on-year6pct, which accounted for 95 percent of the net increase in the third quarter3%。
The gross profit margin of the company's flexible employment has fluctuated in the range of 6 8% in recent years, slightly lower than that of ManpowerGroup (8 12%), higher than that of Renrui Talent (4 9%, the increase in gross profit margin due to the increase in the proportion of ITO business of Renrui Talent in 23 years), Beijing Human Resources (2 3%) and Waifu Holdings (2 3%), demonstrating that the company has a certain service premium ability.
(2) "3 deep": key customers, advantageous industries, and vertical business circles
The company focuses on key account management, and the top five customers accounted for 28 percent of sales in 20163% has been increased by 88pct to 37 in 20221%, of which the largest customer accounted for 77% to 27 in 20220%, in 2020, the company has nearly 500 customers with a million-level revenue scale, and the revenue of the top 50 paid groups accounts for more than 50%. Under the stable delivery quality, the company's customers have a long cooperation period and a stable repurchase rate, of which more than 75% are repeat purchase customers, and most of them have a service period of more than ten years. By serving leading enterprises in all walks of life, the company quickly accumulates industry expertise, cutting-edge trends, and talent data, realizes the rapid understanding of enterprise recruitment needs, and the rapid delivery of talents, and empowers small and medium-sized customers. Adapt to the changes of the enterprise and continue to expand incremental customers. In 2017, the company's revenue from foreign enterprises accounted for 6 percent, the company in recent years to grasp the trend of global development, digital transformation and industrial interconnection of domestic enterprises, and continue to expand domestic customers, 23 years ago in the third quarter of the private enterprise revenue accounted for 64%, state-owned enterprise revenue accounted for 12%, foreign capital decreased to 24%. The number of paying businesses also increased from more than 2,000 at the beginning of 2017 to 6,570 customers at the end of '22 (5,259 paying customers from January to September '23).
Rooted in vertical business circles. The company is mainly engaged in five major urban clusters (Beijing-Tianjin-Hebei, Yangtze River Delta, Greater Bay Area, middle and lower reaches of the Yangtze River, Chengdu-Chongqing), and has strengthened regional vertical management in recent years to obtain growth points through in-depth exploration of vertical business districts. In 2015, the company acquired Beijing Yizhuang International, a flexible employment company, and continued to deepen the Beijing Yizhuang Industrial Park, in addition to large customers, it widely linked "specialized, special and new" and fast-growing enterprises in the business district, and expanded long-tail customers in the vertical region, with revenue and net profit of 8 in 20222.4 billion yuan, 0$7.4 billion at a 6-year CAGR. 5%；In the first half of '23, revenue and profit declined due to the impact of the epidemic.
The company is deeply engaged in the health, high-tech, and consumer goods sectors (the top three sectors, with an industry revenue of about 2% in 2016), and under the empowerment of digitalization, the company has launched a vertical recruitment platform "Tongdao Series" - medical pulse peers, retail peers, and digital science peers, and opens an online + offline full-matrix recruitment model through "WeChat Mini Program + ** Community + ** Channel Alliance + APP". Compared with ordinary recruitment platforms, the Tongdao series aggregates private domain traffic, which can accurately reach talents, such as 1.8 million + private domain users in the big health industry, 1500+ industry vertical communities, and 16 million vertical traffic of cooperation platforms.
(3) Good at using mergers and acquisitions, local and international expansion
Similar to the expansion logic of international leaders, the company is good at using capital to carry out epitaxial expansion, including mergers and acquisitions of professional vertical companies to cut into new industries and positions. Internationally, the company provides global talent attraction and allocation around the "Belt and Road", and establishes or acquires subsidiaries in Hong Kong, Southeast Asia, the United Kingdom and other places to support the needs of domestic overseas customers and overseas local talents. As of the end of June 23, the company has set up 7 branches in Hong Kong, China, the United Kingdom, the United States, the Netherlands, Malaysia, Singapore and other regions.
In July 2018, the company acquired Investigo 52., a British service company focused on accounting, finance, banking, strategy, and more5% equity, overseas revenue accelerated, 2012 2022 revenue CAGR of about 521%。In June '22, the company increased its stake in Investigo by 10%, and in April this year announced its intention to acquire the remaining 37With a 5% stake, Investigo is expected to become a wholly owned subsidiary of the company by the end of the year. 23H1 Company Overseas Revenue 12400 million yuan, a year-on-year increase of 145%, and 260%；Of which Investigo revenue was 120 billion yuan, net profit 0400 million yuan, and the net profit margin fell to 2The 9% was mainly due to the increase in costs due to the addition of consultants due to the company's overseas expansion.
(4) Increase digitalization and incubate technical services
Human resource services are people-centric, customer-oriented and delivery-oriented, and the aforementioned "matching efficiency" and "process efficiency" accompany the whole process. In the context of digitalization, rapid job matching and delivery, and compliant and standardized management services need to rely on digital capacity building, and the average number of flexible employment candidates placed by overseas leader Randstad in 2022 is 6620,000 person-times, 34 regular employees were placed throughout the year30,000 person-times, in addition to relying on standardized process combing, but also relying on the company's strong middle platform system. After the company established the strategy of one body and two wings, it increased its investment in technology, and planned to increase by 7 in 2020600 million yuan to increase digital investment and complete the fixed increase in August 2021, and currently firmly increase investment to improve the whole industry chain ecological model of "technology + service + platform", mainly focusing on internal and external aspects: 1) Internal: Strengthen internal informatization and digital construction, including informatization candidate tracking management system, internal financial management system, human resource management system, human resource outsourcing management system, service platform, label platform, technology platform, Data middle platform, etc., through the digital management of the front, middle and back office to improve the efficiency of offline services;2) External: Build a technology platform, including a vertical recruitment platform (Tongdao series), a human resources industry interconnection platform (Hewa), a human resource management SaaS (Caizhi Cloud) and a regional talent brain platform, etc., to deliver offline in a coordinated manner. At present, the number of R&D personnel in the company has increased to nearly 400 people, and the technology investment in the first three quarters of 23 years is 14.6 billion yuan, a year-on-year increase of 2727%。23H1 Technical Services Revenue 02.3 billion yuan, an increase of 49 percent year-on-year9% and gross margin from 16 in '226% to 21H1 of 268%。
This article is for informational purposes only and does not represent any investment advice from us. To use the information, please refer to the original report. ）
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