Renrui Human Resources Technology (6919: HKG), a China-based flexible staffing services provider announced its results last week for the year ended 31 December 2022. Total revenue of the group amounted to approximately RMB 3.63 billion (USD 528.1 million), a year-on-year fall of 23.2%. 

The group said 2022 was a challenging year. Affected by the macro-economic environment, the staffing demand from some of the group’s clients declined, and at the same time the group said it has faced difficulty in effectively arranging recruitment and other human resources services for the clients.

Renrui added that a Cooperation Agreement entered into by the company and a major customer relating to information verification and client service representative flexible staffing services had expired in mid-January 2022. This had also impacted Renrui’s financial performance.

Revenue other than that generated from the Cooperation Agreement had increased by approximately 23.0% year-on-year from 2021 to approximately RMB 3.53 billion (USD 512.4 million) in 2022.

During the year, Renrui completed its acquisition of Shanghai Sirui from Dalian Neusoft Holdings Co. Ltd. Shanghai Sirui has nearly 3,900 IT and software development technicians and serves more than 160 customers in China.

The group said it saw a decrease in the number of comprehensive flexible staffing employees during 2022. The decrease was mainly due to the expiry of the Cooperation Agreement which has led to a halt in the demand for the relevant recruitment. The staffing demand from clients was slowing down and the group experienced difficulty in arranging recruitment for the clients in light of the general market condition, it added.

Furthermore, Renrui said it started to further develop digital technology and cloud services according to the strategic direction of the group, of which the unit price and service fee premium per comprehensive flexible staffing employee is much higher than that of general service outsourcing, while the number of employees required per month by a single customer is less than that of general service outsourcing due to difference in business nature.

Within Professional Recruitment, the number of placements saw a decrease which was mainly due to the economic downturn, causing the customers to become more cautious in expanding staff and leading to a fall in the recruitment need.

Within Other HR solutions, labour dispatch services and Other Services reported decreases.

Looking ahead, Renrui said it will actively pursue opportunities in information technology and digital talent services market, expanding its market share and improving margins. It will continue to actively integrate the acquired digital businesses into its organisation, achieving synergies, and increase market share in these fast-growing and high-margin areas. Renrui also said it will also upgrade the integrated HR ecosystem from time to time to better serve customers’ needs and improve efficiency. The directors of Renrui are positive about the long-term sustainable growth potential of the group in the future.

Renrui published its results on Tuesday after markets closed. Shares on 29 March 2023 closed at HKD 3.89 (USD 0.50), up 0.25% on the day. The company has a market cap of HKD 648.74 million (USD 82.6 million).