CGS-CIMB Research continues to stay upbeat on HRnetGroup following the 1Q2021 "a positive set of labour market data" reported by the Ministry of Manpower on June 17.
CGS-CIMB analysts Darren Ong and Lim Siew Khee highlight that Singapore’s total employment expanded by 12,200 in the 1Q, marking the first positive change after four consecutive quarters of decline, supported by resident employment growth.
Total permanent employee retrenchments declined 28% y-o-y to 2,190 in the 1Q2021.
The analysts also highlight that the ratio of job vacancies to unemployed persons grew to 0.96, representing almost one job vacancy for every unemployed person in Singapore, while recruitment rates grew to 1.9%.
“In our view, we think this set of positive data points reflects the growing strength of the economy which is on a gradual recovery, leading to 1) more job creation in the labour market, and 2) strong hiring intentions among employers for 2021,” Ong and Lim remark.
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To that end, they view that HRnetGroup should see strong recruitment volumes in both flexible staffing and permanent placements, which will support earnings growth.
HRnetGroup is also expected to benefit from its large exposure to sectors leading employment growth, including health and social services, public administration and education, and food and beverage.
Given the positive outlook, Ong and Lim are keeping their ‘add’ call on HRnet with an unchanged target price of 82.1 cents, pegged to FY2022 ending December P/E of 14 times, based on its five-year historical mean.
“We like HRnetGroup as we believe that the company is a good proxy to play the recovery theme across its key markets supported by 1) improving economic fundamentals, 2) continued declines in unemployment rates, and 3) positive hiring sentiment across its key markets,” they say.
Shares in HRnetGroup closed up 0.5 cents or 0.73% higher at 69 cents.
Photo: HRnetGroup
