China's Digital Hiring Shift Will Unlock Expansive Market Growth

Key Takeaways

• Expansion into lower-tier cities and blue-collar segments, alongside rapid user growth and AI-driven innovation, strongly positions Kanzhun for accelerated multi-year revenue gains.
  
• Robust cash reserves and strong liquidity enable aggressive expansion, strategic acquisitions, and continued product innovations, supporting future market leadership and margin growth.
  
• China's shrinking workforce, urban market saturation, regulatory pressures, and intensifying competition threaten Kanzhun's user growth, margins, and sustainability of its AI-driven recruitment platform.

Catalysts

Provides online recruitment services in the People’s Republic of China.

• While analysts broadly agree that Kanzhun's user growth in blue-collar and lower-tier city segments can unlock incremental revenues, the sheer velocity of 30 million+ verified new users in seven months, combined with rapidly rising recruiter demand, points to an addressable market expansion that could decisively accelerate topline growth and send ARPU and active user metrics to new highs.
  
• Analyst consensus sees AI deployments mainly boosting efficiency and user experience, but Kanzhun's deep AI integration-now generating up to 70 percent of code in some R&D centers and driving substantial increases in product iteration speed-raises the prospect of sustainably widening margins and allowing for reinvestment-led innovation cycles, potentially driving net margins well above current records.
  
• Digital adoption in recruitment in China is still at a relatively early stage, and Kanzhun is uniquely positioned to capture the next wave of digital-first hiring as millions of users and employers in urbanizing, increasingly mobile populations transition from traditional methods to its AI-powered marketplace, providing a structural torque to multi-year revenue growth.
  
• The company's robust cash position, consistently strong operating cash flow, and enhanced Hong Kong share liquidity equip it with unmatched flexibility for aggressive expansion, strategic M&A, and sustained shareholder returns, supporting outperformance in earnings and free cash flow metrics versus peers.
  
• Early product innovation in AI-driven recruitment agents and customizable solutions for large state-owned enterprises and SME customers not only unlock new, high-margin revenue streams, but also cement Kanzhun's role as the essential platform in the professional services value chain, implying multiple ARPU expansion levers for future quarters.

Kanzhun Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Kanzhun compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Kanzhun's revenue will grow by 16.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 24.5% today to 35.0% in 3 years time.
• The bullish analysts expect earnings to reach CN¥4.2 billion (and earnings per share of CN¥8.92) by about August 2028, up from CN¥1.9 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 23.6x on those 2028 earnings, down from 37.5x today. This future PE is lower than the current PE for the US Professional Services industry at 27.4x.
• Analysts expect the number of shares outstanding to decline by 1.45% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.52%, as per the Simply Wall St company report.

Kanzhun Future Earnings Per Share Growth

Risks

• China's long-term demographic headwinds, including a declining youth population and shrinking workforce, have already begun to manifest as seen in the more than 20% drop year-on-year in newly added verified graduates, suggesting a shrinking pool of job seekers that could temper user growth and revenue expansion over the coming years.
  
• The emergence of direct employer branding and internal recruiting by Chinese enterprises, as well as the company's reliance on its urban-centric BOSS Zhipin platform, raises the risk of market saturation, reduced engagement in core geographies, and ultimately a ceiling on daily active users and overall revenues.
  
• Intensifying data privacy regulations in China may hamper Kanzhun's ability to collect and harness user data, which is critical for its AI-driven recruitment features, and could result in higher compliance and technology costs, negatively impacting operating margins and profitability.
  
• As AI-powered, automated recruitment tools continue to advance globally, there is a risk that Kanzhun's traditional marketplace approach becomes commoditized, driving down pricing power and increasing the need for costly innovation, which could result in margin compression and slower revenue growth.
  
• The ongoing consolidation in the online recruitment industry, including competition from large ecosystem players and new entrants with advanced matching technology, threatens to erode Kanzhun's market share and increase user acquisition costs, which may adversely affect both top-line growth and net margins.

Valuation

• The assumed bullish price target for Kanzhun is $25.07, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Kanzhun's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $25.07, and the most bearish reporting a price target of just $14.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be CN¥11.9 billion, earnings will come to CN¥4.2 billion, and it would be trading on a PE ratio of 23.6x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of $21.07, the bullish analyst price target of $25.07 is 16.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.