Tongdao Liepin Group 6100
June 20, 2021 - 3:30pm EST by
2021 2022
Price: 19.90 EPS 0.55 0.76
Shares Out. (in M): 522 P/E 0 0
Market Cap (in $M): 10,409 P/FCF 0 0
Net Debt (in $M): -2,668 EBIT 0 0
TEV (in $M): 7,741 TEV/EBIT 20 14

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Liepin is a leading Chinese online recruitment platform and one of the big 4 of the Chinese online recruitment industry along with Zhaopin, and Zhipin. While Zhaopin and 51job are typical web 1.0 era companies (both commenced operations pre 2000), Liepin and Zhipin were founded in the past decade (2011 and 2014 respectively) and are web 3.0, mobile-first companies.


Currently there’s an extreme valuation gap between Hong-Kong traded Liepin and its 2 US traded peers (JOBS) and Zhipin (BZ). Zhipin has just completed its IPO which was extremely well received and currently trades at about 20x 2021 revs., compared with Liepin which trades at ~2.5x 2021 revs., and closer to 16x 2021 EBITDA. We believe the valuation gap exists mainly because of Liepin’s relative obscurity as the lone Hong-Kong traded industry peer and the low float due to Dei Kebin high ownership stake.

Prospects of the Chinese online recruitment market

I can tell you all about the rapid growth of the Chinese economy and explain how unprecedented the whole thing is, but I'll let Munger carry the load for me: "You take the last 30 years of China. They have had real economic growth at a rate for 30 years that no big country has ever had before in the history of the world. And who did that? A bunch of Chinese communists. Now, that is really remarkable. The Chinese story is the damnedest thing that ever happened to a big country in terms of economics. No other big country ever got ahead that fast for that long."

China’s rapid multi-decade growth, combined with the ongoing transformation of the country to a service based economy, has greatly benefited the recruitment market which has been booming and growing fast from 48B RMB in 2013 to 171B RMB in 2020 (20% CAGR) and is expected to keep growing to 446B RMB by 2025.

Along with the growth of the overall recruitment market, the penetration of online recruitment solutions has been steadily growing, from 26% in 2015 to 32% in 2020, and is expected to reach above 50% penetration by 2025 according to CIC: 

Online penetration in the recruitment market is significantly lagging in China when compared to the west. According to CIC, in 2020, approximately 18% of job seekers in China were using online solutions – up from 11% in 2015 and roughly half of the similar metric in the US.

Chinese online recruitment industry structure

There are basically 5 players in the Chinese market:

· – The Chinese Criagslist. An old school classified website which among other things caters to the job market and focuses on the low end of the market. The company used to publicly trade in the US (WUBA) but was taken out in a management+PE buyout for ~3x revs in 2020.

·   Zhaopin -  part of the old online duopoly (along with Zhaopin held toghether more than 60% of the market as recent as 2017. Focused on the mid-market, Zhaopin went public in the US in 2014 and was later acquired for 3.7x revs in 2017.

· – Very similar to Zhaopin. IPO’d back in 2004 and has recently announced plans to go private in a management+PE buyout for 6x revs.

·   Kanzhun / Boss Zhipin – a fellow web 3.0 company that was founded in 2014 and is backed by Tencent. Boss Zhipin focuses on the same segment as Zhaopin and and is growing rapidly. 

·   Liepin – Uniquely positioned as it’s the only online player who focuses on the mid to high end market


Interestingly enough, the four recruitment focused players (Excluding are of similar size with all four recording about 2B RMB of revenue in the online recruitment segment in 2020. While they are all of similar size, the growth trajectories are distinct with the growth for the web 1.0 companies stagnating (online revenue for both Zhaopin and 51job.con grew low single digits in 2019 and fell double digits in 2020) while the web 3.0 companies has shown accelerated growth with Liepin growing 24% and Zhipin growing explosive 95% in 2020. Both further accelerated in 1Q21 with Liepin growing 53% and Zhipin a blistering 180%.

Liepin distinctive niche – the headhunters

Liepin is the only online player with specific focus on the mid to high end market, and by doing so is relatively insulated from the heating competition in the other segments.

In China, recruiting and finding high end jobs usually involves using an intermediary - "headhunters". Headhunters come in all sizes and shapes from giants like Manpower China to small mom and pop operations. The headhunters' market structure bears some resemblance to the US realtor market and is extremely fragmented with no player commanding more than 1% market share. 

The headhunter industry is traditionally an offline industry that has been around for decades with little innovation until Liepin came along. Liepin's founder, Dai Kebin, realized that the headhunters were under-served and he started offering them a SAAS solution specifically designed and tailored to their needs free of charge.



The Headhunter SaaS solution is called Chenglietong and acts as a one stop shop online platform. It enables the headhunters to manage their entire operations via the cloud under their account. Individual headhunters can post jobs, download, manage CVs and initiate contacts with potential candidates via the platform. In addition they are incentivized to provide quality service by the credit system. Headhunters can download CVs by using credit. There are 2 ways to get credit: 1. Pay cash 2. Earn positive feedback from candidates and business users.

By offering the platform for free and incentivizing good behavior, Liepin simultaneously creates lock-in and feedback loop that improves the quality of the services over-time.


3-sided market place

The 3 sided marketplace is completed by the users (job seekers) on one side and the employers on the other.



Individuals get to use the product for free as well. The service is app-centric with users creating a profile (which in contrast to Linkedin, is completely private), and then gaining access to a personalized AI based recommendation for jobs. They may also reach out to selected headhunters confidentially and seek more tailored recruiting services. In addition to that, Liepin also offers paid value-added services for job seekers such as premium membership and CV advisory.



The Liepin business model primarily revolves around the business users (the employers). Verified business users get access to a free one-stop online SaaS interface called Liepintong. Through Liepintong, they can post jobs and search CVs for free.

 In addition to that, Liepin offers  a subscription based premium service which enables the business user to download CVs, communicate with candidates, get recommendation for candidates, etc. in addition to that premium users can purchase a suite of services from headhunters through the platform.  For a fixed price, Liepin will match the best suited headhunter to the business user and facilitate the transaction between the business and the headhunter.


The company has been growing rapidly for years with a 40% CAGR between 2015 and 2020. Growth has decelerated in 2019 due to overall slowing hiring market in China (due primarily to the US China tensions of the late Trump era) and at the beginning of 2020 due to COVID. But over the last 2 quarters this trend reversed sharply and Liepin posted ~50% growth for both 4Q20 and 1Q21, accompanied by strong growth in its operating metrics.  


Price action

Despite strong business results since its 2018 IPO, the stock has done quite poorly, and at 20 HKD sits almost 40% below the IPO price. This translates to an EV of 6.7B RMB and 2.7x/2.2x 2021/2022E revenue multiples – screamingly cheap for a profitable, rapidly growing, 3-sided marketplace with an entrenched competitive position. Add to that an inferior industry peer ( getting bought out by its CEO at 6x revenue, and Zhipin stratospheric revenue multiple (Zhipin is not yet profitable), and the price dislocation seems pretty apparent.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


  • M&A activity in the sector – 51Job buyout, Zhipin’s IPO, and probably more to come
  • Closing of the unsustainable valuation gap with Zhipin and 51Jobs.
  • Strategic investment into Liepin from one of the tech industry’s giants (Tencent / BABA / Bytedance).
  • Re-acceleration of rev growth in FY21 after somewhat slower growth (in Chinese terms) during 2019-2020.



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