Q1 2025 Earnings Call M a y 1 3 , 2 0 2 5 Forward-Looking Statements © 2024 Hudson RPO. All rights reserved. 2 Q1 2025: Consolidated Financial Results US$ in Millions, except EPS | | '+ / - (1) | | CC (2) | Q1 2025 | Q1 2024 | | --- | --- | --- | --- | --- | --- | | Revenue | - | 6.0% | | $31.9 | $33.9 | | | - | 3.3% | CC | | | | Adjusted net revenue | + | 0.4% | | $16.4 | $16.3 | | | + | 2.2% | CC | | | | SG&A(3)(4) | - | 4.5% | | $17.1 | $17.9 | | | - | 2.8% | CC | | | | Adjusted EBITDA(5) | + | 56.7% | | ...

Investment Rating - The report maintains a "Buy" rating for the company [8]. Core Views - The company reported a revenue of 11.788 billion yuan in 2024, representing a year-on-year increase of 20.55%. The net profit attributable to shareholders was 205 million yuan, up 2.42% year-on-year. The net profit after deducting non-recurring items was 139 million yuan, an increase of 3.57% year-on-year. For Q1 2025, the revenue was 3.303 billion yuan, a year-on-year increase of 25.13%, with a net profit of 57.78 million yuan, up 42.15% year-on-year, and a net profit after deducting non-recurring items of 46.20 million yuan, a significant increase of 103.24% year-on-year [2][6]. Summary by Sections Financial Performance - In 2024, the company's revenue growth was driven by major clients, particularly in flexible employment services, which saw a year-on-year increase of 22.42%. However, the headhunting and RPO (Recruitment Process Outsourcing) segments faced declines of 11.60% and 18.27%, respectively. The overall revenue from mainland China increased by 28.67%, while revenue from Hong Kong, Macau, and overseas markets declined by 4.39% [6][12]. Profitability - The increase in revenue from major clients has impacted the gross margin of flexible employment services. The overall gross margin for 2024 was 6.36%, a decrease of 0.95 percentage points year-on-year. The company managed to reduce its expense ratios significantly, which helped mitigate some of the pressure on gross margins. The net profit margin decreased by 0.54 percentage points to 1.74% [12][6]. Future Outlook - The report anticipates that the company's net profit attributable to shareholders will reach 287 million yuan in 2025, 399 million yuan in 2026, and 523 million yuan in 2027, corresponding to price-to-earnings ratios of 23, 17, and 13, respectively. The company is expected to benefit from a cyclical recovery in the industry and the integration of AI technologies, which will enhance operational efficiency and revenue generation [2][12].

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [6] Core Views - The company is expected to see a significant improvement in its fundamentals, driven by the growth in flexible employment services, with a projected revenue increase of 22% in 2024 and a net profit growth of 42% in Q1 2025 [3][4] - The company has adjusted its profit forecasts for 2025-2027, expecting net profits of 285 million, 342 million, and 410 million yuan respectively, with corresponding P/E ratios of 24, 20, and 16 [4] Financial Performance Summary - In 2024, the company is projected to achieve a revenue of 11.78 billion yuan, a year-on-year increase of 21%, and a net profit of 205.35 million yuan, a year-on-year increase of 2.42% [5] - The gross profit margin is expected to be 6.4%, reflecting a decrease of 1.0 percentage points year-on-year, primarily due to a decline in the gross margin of flexible employment services [5] - The company reported a significant increase in revenue from its top five clients, contributing 6.3 billion yuan, which is a 46% year-on-year increase [2] Business Segment Analysis - The flexible employment segment is the main growth driver, with a revenue increase of 22% in 2024 compared to 12% in 2023, and an expected growth rate of over 20% in 2025 [3] - The company has seen a net increase of approximately 10,000 outsourced employees in 2024, compared to 2,800 in 2023, indicating a strong demand for its services [3] Regional Performance - Revenue from mainland China is expected to reach 9.5 billion yuan in 2024, a year-on-year increase of 29%, while overseas revenue is projected to decline by 4.4% [2] Shareholder Returns - The company plans to distribute a dividend of 1.6 yuan per 10 shares (including tax), resulting in a dividend payout ratio of 15.33% [2]