Three Stocks: A turnaround, a profitable net-net with massive buybacks and a new pick.

Updates on an old pick, a net-net that’s now profitable, and a brand-new idea

Tongdao Liepin

Recently I wrote an article about Tongdao Liepin as an investment idea. Since then, things have been quietly moving in that direction—just as predicted.

The recent meeting between the Chinese President Xi and tech entrepreneurs is still vastly underestimated by the market. Joe Tsai made some comments about the impact, and the hiring freeze at Alibaba has officially ended.

I think we have seen a very clear sign of businesses entrepreneurs becoming more confident since January, since President Xi met with private businesses.

And that was a very, very clear signal to the business community that, go ahead, reinvest in your business and also go out and hire people.

So I think we've reached the bottom, and we're going to start to reboot and rehire so once you hire people, that gives people job security.

Joe Tsai at the HSBC'S Global Investment Summit in Hong Kong

Not just Alibaba—hiring is picking up across the board. HR departments are stretching again after a long hibernation.

This is where Liepin comes in. The AI boom is no longer confined to tech firms. Everyone wants in—property developers, tutoring firms, cement mixers—name a sector, and you’ll find someone proudly announcing they’re “implementing AI,” preferably DeepSeek. Naturally, they’ll need people to actually do that work. That’s where Liepin sits: right at the source of high-quality talent, handing out engineers like hot dumplings.

Meanwhile, with the advancement of industrial transformation, new productive forces represented by artificial intelligence (“AI”), big data, and cloud computing were continuously emerging. These developments has not only promoted the optimization and upgrading of the economic structure but also created more high-quality employment opportunities.

In the past years, the Internet and electronic semiconductor industries had the most concentrated demand for AI talent, while the home appliance industry saw the fastest growth in demand for AI talent, reaching 94%.

Data shows that in the first week after the spring festival holiday, recruitment demand in the IoT and AI sectors recovered significantly, growing by 34.1% and 18.25% year-on-year, respectively. (Boss Zhipin echoed this statement and also reported strong growth in AI-related job postings).

Tongdao Liepin Q4 2024

Q4 2024 and full year 2024 earnings

Let’s also take a quick look at Tongdao Liepin’s earnings from last week. The external environment hasn’t exactly turned into spring yet—enterprises are still cautious about hiring, and that’s showing in the numbers. Revenue declined 8.8% year-over-year, though that’s actually better than the 10% drop they had predicted earlier. Small win, but in this market, you take what you can get.

The company knew it was in for a rough ride. All of 2024, management basically said: we can’t fight the macro, so we’ll focus on what we can control. And to their credit, they did. They got leaner. Headcount dropped from 5,100 to 4,100. Every major cost category—sales and marketing, general and administrative, R&D—declined as a percentage of revenue.

Despite the revenue drop, these efficiency efforts—including internal use of AI—are already paying off. Earnings nearly increased tenfold. And they started returning capital to shareholders with a new special dividend of 42 HK cents, roughly an 8% yield. The company is still trading at 1.5x its net current assets loaded with cash.

What hasn’t changed is that I’m still not a fan of management. I spoke with them when the stock was trading below HK$2, trying to suggest the radical idea of buying back shares—what a rare and ingenious concept of mine. No luck. Apparently, when the stock was HK$9, buybacks made perfect sense. At HK$2? Suddenly, nobody’s home. At this point, I could shout into a paper bag and get more capital allocation sense back.

Recruitment is one of the most natural scenarios for AI applications as it can effectively solve long-standing problems in corporate recruitment such as low efficiency, long duration and high cost, thus creating space for improvement.

Tongdao Liepin, Earnings Call

Their traditional customer base—tech, real estate, and finance—is still struggling. But the torch is being picked up by sectors like new energy vehicles, intelligent logistics, warehousing, and service consumption. These are the areas absorbing talent now. Management also mentioned some early signs of pickup even among their old clients. If hiring in internet and finance recovers—aligned with what Joe Tsai said—that should be a strong tailwind. Or at least a gentle breeze in the right direction.

In short: Liepin weathered the post-crackdown freeze. They tightened operations, embraced AI to improve efficiency, and are likely to emerge stronger. Management told me that they expect further cost cuts (single digits) in 2025. If hiring trends continue to improve, they’re well positioned to benefit disproportionately—thanks to their access to highly qualified talent and a much leaner cost structure. Still not a great company—but this is one of those cases where going from bad to merely less bad can be enough to move the stock.

In the rest of this article, I’ll discuss a stock trading below net cash that has just turned profitable and is aggressively buying back shares. I’ll also introduce a new company, or a new idea, that I haven’t shared before. This content is exclusive to my paying subscribers.