RHB Bank Singapore analyst Alfie Yeo has maintained a “buy” on HRnetGroup CHZ with a target price of 91 cents on the back of a more compelling valuation.
Citing Ministry of Manpower’s Labour Market Advance Release for the quarter, Yeo points out that total employment numbers continued to increase while retrenchment and unemployed residents rose, dragged mainly by the wholesale trade sector.
Nonetheless, overall unemployment remained low at 2%, Yeo adds. Resident employment growth was driven by financial services and professional services as well as the health and social services sectors; while non-resident employment growth was led by retail trade, food and beverage services; administration and support services; and construction.
That said, Yeo describes the latest data as a mixed bag. This year, overall unemployment remained stable at 1.8% to 2%, well below the 2013-2022 average of 2.4%. Overall unemployment of 2% was also consistent with July and August, Yeo notes.
“Even though retrenchment trended higher, total employment increased, albeit slightly lower than 2Q2023’s numbers. Our economists expect Singapore’s GDP growth to accelerate from 1.5% this year before posting a 3% GDP growth in 2024, with China’s GDP forecast to accelerate from 2022’s 3% to 4% and 4.5% in 2023 and 2024,”
As RHB is neutral on the latest data, Yeo is not making changes to his earnings estimates. His two year FY2023 to FY2025 earnings growth CAGR estimate remains at 5% as RHB is positive on a hiring recovery from next year onwards on the back of accelerating economic growth.
As at 9.30am, shares in HRnetGroup are trading 0.5 cents higher or 0.71% up at 70 cents.
