Investment Rating - The report maintains a "Buy" rating for Beijing Human Resources (600861) with a target price based on the last closing price of 22.32 [1][7]. Core Insights - The company reported a revenue of 430.32 billion yuan for 2024, representing a year-on-year growth of 12.32%, and a net profit attributable to shareholders of 7.91 billion yuan, up 44.42% year-on-year [4][5]. - In Q1 2025, the company achieved a revenue of 108.37 billion yuan, a growth of 2.72% year-on-year, and a net profit of 5.91 billion yuan, which is a significant increase of 180.41% year-on-year [4][5]. - The outsourcing business is identified as the core driver of revenue growth, accounting for 83.77% of total revenue, with a year-on-year growth rate of 13.96% [4][5]. - The company is focusing on digital upgrades to enhance operational efficiency through collaborations with technology firms [6]. Financial Performance Summary - For 2024, the company expects to achieve a revenue of 430.32 billion yuan, with a growth rate of 12.32%, and a net profit of 7.91 billion yuan, reflecting a growth rate of 44.42% [8]. - The projected net profits for 2025, 2026, and 2027 are 10.98 billion yuan, 10.1 billion yuan, and 11.47 billion yuan, with growth rates of 38.69%, -7.94%, and 13.52% respectively [7][8]. - The estimated earnings per share (EPS) for 2025, 2026, and 2027 are 1.94 yuan, 1.78 yuan, and 2.03 yuan, with corresponding price-to-earnings (PE) ratios of 12X, 13X, and 11X [7][8]. Cost Management and Efficiency - The company has shown significant improvement in cost management, with a decrease in selling, administrative, and research expenses as a percentage of revenue [6]. - The overall gross margin for 2024 was 5.89%, down 1.00 percentage point year-on-year, primarily due to the increased proportion of lower-margin outsourcing business [5][6].

Performance Overview - In 2024, the company achieved revenue of 43.032 billion (yoy +12.32%) and a net profit attributable to shareholders of 0.791 billion (yoy +44.42%), with a non-recurring net profit of 0.533 billion (yoy +106.88%) [1] - The significant profit increase in 2024 was mainly due to a low base effect from asset disposals and related tax expenses from asset replacements [1] - In Q1 2025, the company reported revenue of 10.837 billion (yoy +2.72%) and a net profit attributable to shareholders of 0.591 billion (yoy +180.21%), with a non-recurring net profit of 0.145 billion (yoy -22.11%) [1] - The non-recurring gains in Q1 2025 included government subsidies of 0.42 billion and gains from subsidiary equity transfers and financial products totaling 0.36 billion [1] Business Performance - Beijing Foreign Enterprises achieved a net profit of 0.872 billion in 2024 (yoy +5.61%) and a non-recurring net profit of 0.575 billion (yoy +17.45%), fulfilling 146.78% and 102.24% of its annual performance commitments, respectively [2] - Revenue breakdown for 2024 includes: outsourcing services at 36.048 billion (yoy +13.96%), personnel management services at 0.099 billion (yoy -9.06%), compensation and benefits services at 0.12 billion (yoy +4.68%), and recruitment and flexible employment at 4.346 billion (yoy +12.60%) [2] - The company expects to benefit from pro-employment and pro-consumption policies, with a projected non-recurring net profit of no less than 0.662 billion in 2025, indicating a growth rate of no less than 9.66% [2] Long-term Outlook - In 2024, the company signed global cooperation agreements with Adecco Group and Huawei Technologies, which may accelerate the acquisition of large client labor needs overseas [3] - A subsidiary plans to establish a joint venture with Kunlun Wanwei to promote AI in recruitment, aiming to reduce costs and improve efficiency for enterprises [3] - Revenue projections for 2025-2027 are 48.636 billion, 55.477 billion, and 63.878 billion, with corresponding growth rates of 13.02%, 14.07%, and 15.14% [3] - Net profit projections for the same period are 0.898 billion, 1.025 billion, and 1.195 billion, with growth rates of 13.42%, 14.23%, and 16.50% [3] - Earnings per share (EPS) are expected to be 1.59, 1.81, and 2.11 yuan per share for 2025-2027 [3]

Financial Data and Key Metrics Changes - In Q1 2025, revenue was $4.1 billion, down 5% year-over-year in constant currency [12] - Reported EBITDA for the quarter was $36 million, while adjusted EBITDA was $52 million, representing a decrease of 32% in constant currency year-over-year [12][19] - Adjusted earnings per share decreased 51% year-over-year in constant currency, with reported EPS at $0.12 and adjusted EPS at $0.44 [13][20] Business Line Data and Key Metrics Changes - On an organic constant currency basis, the Manpower brand declined 2%, the Experience brand declined 5%, and the Talent Solutions brand declined 2% [22] - The RPO business within Talent Solutions experienced a slight revenue decrease, while the MSP business recorded a strong double-digit revenue increase [22] - Gross profit margin was 17.1%, with staffing margin contributing to a 10 basis point reduction due to mixed shifts and lower bench utilization [23] Market Data and Key Metrics Changes - Revenue in the Americas segment was $1.1 billion, representing a 5% increase year-over-year in constant currency [28] - Southern Europe revenue was $1.8 billion, reflecting a 5% decrease in constant currency [33] - Northern Europe segment revenue decreased 14% in constant currency, with the UK market experiencing a 16% decline [37][39] Company Strategy and Development Direction - The company is focused on diversifying, digitizing, and innovating, with plans to showcase technology advancements at VivaTech in Paris [51] - Emphasis on building tailored solutions with a focus on candidate experience and data privacy [52] - The company aims to manage costs effectively while driving profitable revenue growth through organizational alignment [54] Management's Comments on Operating Environment and Future Outlook - Management noted increased uncertainty due to recent trade policy announcements, leading clients to adopt a wait-and-see approach [9][10] - Despite challenges, there is optimism for growth in specific markets like LATAM and APME, with a focus on skills development as AI adoption accelerates [16] - The forecast for Q2 2025 anticipates continued challenges in Europe and North America, with EPS expected to be in the range of $0.65 to $0.75 [46][47] Other Important Information - Free cash flow represented an outflow of $167 million compared to an inflow of $104 million in the prior year, influenced by timing of payables [43] - The company ended the quarter with cash of $395 million and total debt of $1.07 billion, resulting in a net debt of $677 million [45] Q&A Session Summary Question: Impact of pending tariffs on future performance - Management indicated that a resolution of U.S. tariffs could lead to a quick turnaround in employer confidence and demand [60][65] Question: Signs of layoffs and hiring freezes - Management noted that while there is caution among employers, they are not significantly letting go of workforces, focusing instead on specialized skills [69][71] Question: Client mindset regarding tariff policy - Clients are adopting a wait-and-see approach, anticipating a negotiated settlement rather than a permanent change [82][86] Question: Restructuring actions in Northern Europe - Management discussed restructuring charges and expected payback periods, indicating a focus on improving profitability in challenging markets [91][95] Question: Impact of immigration policy on business - Management stated that current immigration policies have not significantly impacted business performance [135]

Financial Data and Key Metrics Changes - In the first quarter, revenue was $4.1 billion, down 5% year-over-year in constant currency [12] - Reported EBITDA for the quarter was $36 million, while adjusted EBITDA was $52 million, representing a decrease of 32% in constant currency year-over-year [12][19] - Adjusted earnings per share decreased 51% year-over-year in constant currency, with reported EPS at $0.12 and adjusted EPS at $0.44 [13][20] Business Line Data and Key Metrics Changes - On an organic constant currency basis, the Manpower brand declined 2%, the Experience brand declined by 5%, and the Talent Solutions brand declined by 2% [22] - The MSP business recorded a strong double-digit revenue increase, while the RPO business experienced a slight year-over-year revenue decrease [22] - Gross profit margin was 17.1%, with staffing margin contributing to a 10 basis point reduction due to mixed shifts and lower bench utilization [23] Market Data and Key Metrics Changes - Revenue in the Americas segment was $1.1 billion, representing a 5% year-over-year increase on a constant currency basis [28] - Southern Europe revenue was $1.8 billion, representing a 5% decrease in constant currency [33] - The Asia Pacific Middle East segment saw revenues of $476 million, representing a 7% increase in organic constant currency [42] Company Strategy and Development Direction - The company is focused on diversifying, digitizing, and innovating, with plans to showcase technology advancements at VivaTech in Paris [51] - There is an emphasis on building tailored solutions with a focus on candidate experience and data privacy [52] - The company aims to manage costs effectively while driving profitable revenue growth through organizational alignment and centralization of functions [54] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious approach among clients due to recent trade policy announcements, leading to a wait-and-see attitude [9][10] - The company expects employers to continue cautiously hiring select talent, particularly those with in-demand skills [16] - Future guidance anticipates continued challenges in Europe and North America, with a forecasted EPS range of $0.65 to $0.75 for the second quarter [46][47] Other Important Information - Free cash flow represented an outflow of $167 million compared to an inflow of $104 million in the prior year, influenced by timing of payables [43] - The company ended the quarter with cash of $395 million and total debt of $1.07 billion, resulting in a net debt of $677 million [45] Q&A Session Summary Question: Impact of pending tariffs on future performance - Management indicated that a resolution of U.S. tariffs could lead to a quick turnaround in employer confidence and demand [60][65] Question: Signs of layoffs and hiring freezes - Management noted that while there is a pullback on temporary staffing, there are no significant layoffs observed, with demand for specialized skills remaining strong [69][71] Question: Client mindset regarding tariff policy - Clients are adopting a wait-and-see approach, with many believing that current trade policies are part of a negotiation tactic [84][86] Question: Restructuring actions in Northern Europe - Management discussed ongoing restructuring efforts in Northern Europe, with a focus on achieving break-even and profitability [92][96] Question: Permanent recruitment trends - Management highlighted that permanent recruitment weakness is primarily in lower-skilled positions, while specialized skills remain in demand [102][124] Question: Cash flow expectations - Management expressed confidence that cash flow dynamics would improve in the second half of the year, following typical seasonal patterns [127][128]