Kanzhun Ltd (NASDAQ: BZ) 

Kanzhun Ltd (NASDAQ: BZ) is a China-based holding company specializing in online recruitment services. It facilitates connections between job seekers and businesses through its interactive BOSS Zhipin mobile app. Alongside its other apps and mini programs, this platform forms a comprehensive employment network. 

Recommendation Rationale – SELL at USD 17.84 

• Slowing Growth in Revenue and Profitability: Despite showing year-on-year growth, Kanzhun Ltd's revenue increase of 19.0% in Q3 2024 signals a slowdown compared to previous quarters, reflecting a potential deceleration in its growth trajectory. Net income growth was even more modest at 8.9%, while adjusted net income saw only a 3.5% rise. These figures suggest that while the company continues to expand, it is facing challenges in translating revenue growth into significant profitability improvements.
• Rising Operational Costs and Marketing Expenses: The company’s operating costs and expenses surged by 16.8%, outpacing revenue growth in certain areas. A notable rise in general and administrative expenses, up 30.5%, highlights increasing employee-related costs. Additionally, sales and marketing expenses climbed by 14.2%, partly due to high-profile campaigns tied to the Paris 2024 Olympics and UEFA Euro 2024. These increasing expenditures may raise concerns about the company’s cost efficiency and profitability sustainability.
• Limited Growth in Paid Enterprise Users: Although Kanzhun reported a 22.4% increase in paid enterprise customers, its revenue growth from online recruitment services lagged slightly behind at 18.7%, indicating a potential stagnation in monetization per user. The company’s reliance on enterprise customer expansion raises concerns about long-term revenue stability, particularly if user acquisition slows or competitive pressures intensify in the recruitment sector.
• Questionable Effectiveness of Share Buybacks: The company has been aggressively repurchasing shares, authorizing a combined US$350 million in buybacks across two programs in 2024. While this may signal management’s confidence, it also raises concerns about whether Kanzhun is struggling to find more effective ways to reinvest capital for business expansion. Without clear indicators of improved profitability or innovation, share repurchases may not provide long-term value to investors.
• Uncertain Market Conditions and Future Growth: Kanzhun’s outlook for Q4 2024 projects a revenue increase of just 13.6% to 14.6%, a notable slowdown from previous quarters. This reflects not only market headwinds but also potential difficulties in maintaining its current growth pace. The company acknowledges challenges in China’s recruitment landscape, indicating an uncertain operational environment that could further impact its expansion and financial performance.

BZ’s Daily Price Chart 

Valuation Methodology: Price/Earnings Approach

BZ is expected to trade at a discount due to slowing revenue and profit growth, with net income rising just 8.9% in Q3 2024. Increasing operational costs, particularly in marketing and administration, raise efficiency concerns. Slower monetization of enterprise users and heavy reliance on share buybacks add to investor uncertainty. With a weaker Q4 outlook, market conditions further challenge the company’s long-term growth prospects.

Given its current trading levels, downside indicated by valuation, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of USD 17.84, as of March 06,2025 at 7:35 AM PST.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 06,2025 at 7:35 AM PST. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.