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

HRNETGROUP LIMITED (SGX:CHZ)

HRnetGroup - You're Hired

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.

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).

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.

HRnetGroup’s business is 3x his/her payroll costs).
See
Moreover, HRnetGroup's management is also ramping up its investments in technology such as digital staffing platform to further improve productivity, as well as deliver a better product and enhance the user experience of its clients.
See the 19-page coverage initiation report attached below for complete analysis on HRnetGroup.

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