HRnetGroup - Maybank Kim Eng 2021-07-24: You're Hired

HRNETGROUP LIMITED (SGX:CHZ) | SGinvestors.io HRNETGROUP LIMITED (SGX:CHZ)

HRnetGroup - You're Hired


HRnetGroup - Leading Asia-based recruitment firm

  • HRnetGroup (SGX:CHZ) is one of the largest Asia Pacific-based recruitment companies outside Japan operating in 13 Asian cities and serving more than 3,000 clients across 23 industry segments.
  • We are initiating coverage on HRnetGroup with a BUY and target price of S$0.99, pegged at 18x FY22E P/E. This implies a slight premium to global peers’ average, which is justifiable given its more superior ROE and a strong net cash position of S$332m (or 42% of its market capitalisation).
  • At current level, HRnetGroup is still trading at an undemanding valuation of 9x (ex-cash) FY21E P/E.



Twin engines of complementary businesses

  • We like HRnetGroup’s synergistic and balanced business model that is supported by two complementary businesses. Its flexible staffing business provides a relatively stable and steady revenue stream during economic downturns, while the professional recruitment business generally performs well during periods of economic expansion.
  • In our view, the provision of both services allows HRnetGroup to be resilient through economic cycles, while offering comprehensive recruitment solutions to its highly-diversified customer base (FY20: top ten customers were 22% of revenues).

Proxy to improving employment outlook

  • We see HRnetGroup as a good proxy for 54.5% of gross profit. We think North Asia could gradually become a bigger contributor going forward, as HRnetGroup builds on its presence there via the expansion of existing brands and potential M&As.


Cash-generative, asset-light business model






Eric Ong Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-07-24
SGX Stock Analyst Report BUY INITIATE BUY 0.99 SAME 0.99



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