Initiating Kanzhun at USD 16 Fair Value; Recruiting Platform Has Uncertain Path in the Long Term

We initiate coverage on Kanzhun with a fair value estimate of USD 16 (HKD 62.60), which reflects its current leadership position in the industry based on the number of monthly active users, or MAU, but also a lack of differentiation and potential vulnerability to switching costs relative to its competitors. We think that Kanzhun, whose product is the recruiting platform Boss Zhipin, is trying to create a brand for itself from its expensive advertising and recruitment events that could set it apart from competitors. The company has 43.6 million MAU, which is the most among its peers in the online recruitment industry. We also expect robust revenue growth at 25%-30% per year in the near term through differentiated targeting of small and medium-size enterprises, or SMEs, in addition to large key accounts. The company can provide value to SMEs, whose time and resources may be limited, through its algorithm-based screening and hiring services. The company is spending resources to target smaller companies that are overlooked in their demand for labor, which currently sets it apart from its peers and could also generate greater brand awareness.