Investment Rating - The investment rating for the company is "Outperform the Market" [5][12][13] Core Views - The company's operational efficiency is improving as expected, with a steady pace of subsidy realization. The forecast for net profit attributable to the parent company for 2025-2027 is 1.16 billion, 1.01 billion, and 1.12 billion yuan respectively, corresponding to PE valuations of 9.2, 10.6, and 9.6 times. Excluding the impact of property disposal, the main business net profit is estimated at 0.90 billion, 1.01 billion, and 1.12 billion yuan, with a CAGR of approximately 12% [3][12][14] Financial Performance Summary - In the first three quarters of 2025, the company achieved revenue of 33.807 billion yuan, a year-on-year increase of 1.9%. The net profit attributable to the parent company was 1.007 billion yuan, up 57.0% year-on-year, while the net profit after deducting non-recurring gains was 434 million yuan, an increase of 7.9% year-on-year. The significant growth in net profit is attributed to a one-time investment gain of 360 million yuan from the disposal of a wholly-owned subsidiary and steady growth in government subsidies [1][8][12] - In Q3 2025, the company reported revenue of 11.116 billion yuan, a decrease of 1.7% year-on-year. The net profit attributable to the parent company was 194 million yuan, down 6.6% year-on-year, while the net profit after deducting non-recurring gains was 139 million yuan, an increase of 10.3% year-on-year. The decline in net profit is primarily due to differences in the timing of government subsidy recognition [1][8][12] Business Segment Performance - The core subsidiary, Beijing Foreign Enterprise (FESCO), achieved revenue of 33.81 billion yuan in the first three quarters of 2025, a year-on-year increase of 3.8%. The net profit attributable to the parent company was 756 million yuan, up 16.0% year-on-year, and the net profit after deducting non-recurring gains was 461 million yuan, an increase of 11.6% year-on-year. The performance targets for the year are expected to be met, with the completion rate for net profit after deducting non-recurring gains estimated at 73% [1][8][12] Profitability Metrics - In Q3 2025, the gross profit margin was 2.1%, an increase of 0.2 percentage points year-on-year. The expense ratio was 3.0%, a decrease of 0.4 percentage points year-on-year. The net profit margin attributable to the parent company was 1.7%, down 0.1 percentage points, mainly due to the timing of subsidy recognition [2][9][12] Regulatory Environment - The new social insurance regulations that came into effect on September 1, 2025, require employers to pay "five insurances" for employees, which is expected to benefit the leading human resources company amid a wave of compliance in labor relations [11][12]

Core Viewpoint - The new social security regulations effective from September 2025 will invalidate any agreements to not pay social security, impacting small businesses and individual operators who may struggle to afford these payments [3][4]. Group 1: New Regulations and Compliance - The new regulations are not entirely new, as previous laws have mandated social security contributions for standard labor contract employees since 1993 and 2011 [4]. - All forms of employment will now require social security contributions, and the consequences for non-compliance are clearly defined, including penalties and compensation responsibilities [4][6]. Group 2: Implications for Small Businesses - Small businesses and individual operators cannot legally establish agreements to voluntarily forgo social security contributions, and violations will result in a threefold penalty: back payments, fines, and compensation to employees [6]. - Companies must pay back owed amounts with a daily late fee of 0.05%, and employees can terminate contracts and receive economic compensation based on their tenure [6]. Group 3: Strategies for Compliance - Small businesses facing financial difficulties can consider flexible employment models, such as hiring part-time employees or re-employing retirees [8][10]. - Other strategies include signing labor contracts where employees independently pay their social security, outsourcing non-core tasks, and adjusting employee structures to include part-time or family-managed roles [10]. Group 4: Reasons for New Regulations - The introduction of the new social security regulations is driven by the severe issue of unpaid or underpaid social security, with only over 200 million out of approximately 700 million employed individuals contributing [14]. - There is a growing awareness of rights among employees, necessitating clearer judicial interpretations and measures regarding social security disputes [14]. - The regulations aim to phase out inefficient businesses that exploit employees, pushing industries towards quality and service improvements rather than solely competing on price [14].

Core Viewpoint - The company Romoss is facing unprecedented challenges leading to a formal announcement of a six-month suspension of operations starting from July 7, 2025, due to market changes and business needs [3][6][12]. Group 1: Company Situation - Romoss has been experiencing significant operational difficulties, with rumors of bankruptcy circulating in early July 2023, prompting a response from the CMO highlighting the company's struggles [7][12]. - The internal communication regarding the suspension was abrupt, with employees expressing feelings of confusion and lack of prior notice about the operational changes [8][11]. - The company is attempting to manage its workforce by implementing a rotation system for departments affected by the sales halt, while also engaging in discussions with government and financial stakeholders [6][7]. Group 2: Employee Impact - Employees will receive their regular salaries for the first month of the suspension, but from the second month, payments will be adjusted to 80% of the local minimum wage as per regulations [6][12]. - There is a sense of uncertainty among employees regarding the future of the company, with some expressing doubts about the compliance of the suspension process and the management's communication [8][11]. - Employees have been actively involved in customer service roles during the product recall, leading to increased workloads and stress [11]. Group 3: Future Outlook - The company plans to resume operations as soon as the necessary 3C certification is obtained, indicating a potential timeline for recovery [11][12]. - Legal experts suggest that the company must balance cost-cutting measures with compliance to labor laws, emphasizing the importance of maintaining open communication with employees during this period [12][13]. - The situation serves as a cautionary tale for other companies in the industry, highlighting the need for quality control and risk management to avoid similar operational crises [12][13].