Tongdao Liepin has reported 1H26 revenue of RMB989mn (+5.6% YoY), a gross profit of RMB781mn (+7.4% YoY), a gross margin of 79.0% (+1.4pp YoY), and a non-GAAP profit from operations of RMB136mn (+8.8% YoY). The net profit arrived at RMB96mn (-6.9% YoY), weighed down by higher foreign exchange losses, while the attributable NP rose by +9.6% YoY to RMB88mn. Key highlights for the period include a return to revenue growth on the enterprise side, rising AI product penetration, and gross margin expansion. Looking ahead, the transmission from recovering recruitment demand to paying customer growth warrants continued attention. Maintain BUY.
Enterprise revenue back to growth mainly driven by ARPU
For 1H26, revenue from talent acquisition and other HR services to business customers grew by +6.7% YoY to RMB820mn, accounting for 82.9% of total revenue as growth underwent a positive inflection. Paying business customers reached ~63.2k (+0.4% YoY), while verified business users rose by +5.4% YoY to 1.51mn. Valid job postings and verified headhunters both increased by +6.0% YoY, signaling a moderate recovery in hiring sentiment. Revenue growth outpaced paying customer additions, primarily driven by product-mix optimization and higher average revenue per user (ARPU).
Earnings forecasts and valuation
While mid-range-to-high-end recruitment demand is still building a base of recovery, factoring in 2H26 macro uncertainties, we maintain our 2026/2027/2028E revenue forecasts of RMB2.00bn/RMB2.01bn/RMB2.03bn, and our adjusted attributable NP forecasts of RMB148mn/RMB193mn/RMB226mn. Comparable peers trade at an average of 11.2x 2026E PE on Wind consensus. Applying a target multiple of 11.2x 2026E adjusted PE (vs 12.1x 2026E PE previously) and an RMB/HKD exchange rate of 1.15 (vs 1.136 previously), we trim our target price to HKD3.71 (previously HKD3.96, primarily driven by lower peer multiples). Maintain BUY.
Risks: slower-than-we-expected recovery in macroeconomic recruitment demand, intensifying competition lifting customer acquisition costs, slower-than-we-expected AI commercialization.