The employment app faces big opportunities, but also challenges, as more people enter the workforce and signs emerge that companies may be ramping up recruitment

Key Takeaways:

• Kanzhun's net profit jumped by 42.6% to 1.57 billion yuan last year
• The operator of the Boss Zhipin recruitment app saw its number of monthly active users grow by 25.3% last year to 53 million

A line from a popular TV drama says that "The choppier the water, the more expensive the fish that live there." The implication is that the tougher the environment, the greater the payoff if you can successfully see your way through it.

China's recruitment industry fits that bill, made choppy by significant growth in recent years that's the direct result of growing unemployment in an economic slowdown after three decades of breakneck growth. That landscape is providing plenty of job applicants for recruitment services, even if these companies will only truly thrive when the broader economy picks up and companies step up their hiring again.

The latest financial report from Kanzhun Ltd. (BZ.US; 2076.HK), operator of China's biggest online recruitment platform, Boss Zhipin, was sending signals that such an economic recovery might be just around the corner.

Kanzhun announced solid gains on both its top and bottom lines last year, with annual revenue up by 23.6% year-on-year to 7.36 billion yuan ($1.02 billion) and net profit up by an even greater 42.6% to 1.57 billion yuan. The company was sitting on 14.7 billion yuan in cash and short-term investments by the end of last year, up by 13.8% from the 12.9 billion yuan at the end of 2023. 

Expanding enterprise-user base

Job seekers are like fish in the sea: The choppier the waves, the more they tend to swim together. Recruitment websites sell resumes of potential employees to employers, and such paid services constitute a large chunk of Kanzhun's revenue.

Enter DeepSeek

In terms of technology, Kanzhun has integrated DeepSeek-R1 into Boss Zhipin and is conducting gray-box testing in some of the app's scenarios. It is also using its self-developed Nanbeige AI model to provide services. The company says the combination of Nanbeige and DeepSeek will allow it to cut costs further while ensuring the same level of service to users.

UBS expressed its positive view on the company in a report, citing reviving recruitment sentiment from companies since the beginning of the year. It raised its first-quarter and full-year revenue projections for the company by 3.5% and 0.4%, respectively, translating to year-on-year growth to 12.2% and 12.1%. It maintained a "neutral" rating for the stock and increased its target price for Kanzhun's U.S.-listed shares from $17 to $19.50.

Kanzhun currently trades at a price-to-earnings (P/E) ratio of around 40 times, higher than the 19 times for Manpower Group (MAN.US), showing investors are fairly optimistic about the company's future growth. The real test now will be whether China's economy will be able to turn a corner, with such hopes already reflected in the recent rallies for Chinese stocks.

The employment challenge has always been a great concern for China, and that focus will be even bigger this year as the economy remains weak. An estimated 12.22 million college graduates are expected to enter the workforce in the summer, and it will quickly become clear if the job market has enough demand to absorb so many newcomers. That represents both a challenge and opportunity for job recruiters.