SINGAPORE (Sept 12): Maybank Kim Eng says HRnetGroup, one of the largest Asia Pacific-based recruitment companies outside Japan, is well positioned for growth in the region.
According to independent research firm Frost & Sullivan, Asia Pacific will be the largest labour market in the world and among the fastest growing too with recruitment industry revenues forecast to grow at 9.4% CAGR in 2016-2021.
HRnet provides flexible staffing and professional recruitment solutions with FY16 net profit split down the middle.
In a Tuesday unrated report, Maybank analyst Neel Sinha says HRnet’s professional staffing segment carries higher gross margins but is more prone to economic cycles while flexible staffing provides a resilient revenue stream with a steady growth outlook from prevalent industry trend requiring greater workforce flexibility to improve productivity and efficiency.
Sinha says HRnet’s exposure to jobs in different industries is diversified with the largest segment accounting for just 18% of 1H17 revenues. “But geographic concentration is high with Singapore, where it commands about 20% market share, at 59% of 1H17 gross profits,” adds the analyst.
HRnet has been present in overseas markets ex-Singapore and Malaysia since 1996 and the steady expansion in various geographies since has driven growth in overseas gross profit contribution to close to 4o% levels as at 1H17.
“In short, the company is hardly a novice when it comes to operating in foreign countries. With close to $280 million in net cash after its recent IPO, HRnet is well positioned for the next phase of growth from these markets by tapping M&A and strategic partnership opportunities,” concludes the analyst.
As at 12.47pm, HRnet is trading 1 cent lower at 74 cents or 17.3 times FY17 earnings.
