Boss Zhipin Earnings: Valuation Raised by 25% on Robust Revenue and Margin Guidance; Risks Remain

We are raising our fair value estimate for Boss Zhipin to USD 20 per ADR (HKD 78.20 per share) from USD 16 (HKD 62.60) after the company reported fourth-quarter 2023 revenue of CNY 1.58 billion, beating our estimate of CNY 1.53 billion by 3%. Sales and marketing expenses also declined by 7% year on year as a percentage of revenue, adjusting for one-time seasonality marketing costs from the World Cup. The company also provided first-quarter 2024 revenue guidance of CNY 1.67 billion, or 31% year-on-year growth, and expects a non-GAAP operating margin of 20%, an annual improvement of 1000 basis points. Boss Zhipin expects bookings to increase 12% sequentially in the first quarter to CNY 2 billion, representing a 21% year-on-year increase. Our new fair value estimate reflects upward revisions to our revenue growth and operating margin forecast in the near term. We believe near-term operating margin expansion is viable given the lower marketing costs and higher sequential booking growth in the first quarter, which tends to have the least hiring activity due to the Lunar New Year. The number of users increased 33% year on year to 41.2 million in the fourth quarter, while total paying enterprises increased 44% to 5.2 million. Boss Zhipin also announced a USD 200 million share buyback plan that signals confidence in its outlook. We view Boss Zhipin as fairly valued now.