SINGAPORE (June 17): Adeline Sim, executive director of recruitment consulting firm HRnetGroup, has been buying shares in the company. On June 6, she bought 35,900 shares at 71 cents each, bringing her direct stake in the company to 400,800 shares. Sim is deemed to have interest in another 753.4 million shares via an entity called SIMCO. This brings her total stake in the company to just over 74.9%. Prior to this, she bought 4,600 shares on June 3, and 9,500 shares on June 4 at 71 cents each.
On top of Sim’s open market purchases of the shares, HRnetGroup undertook a series of share buybacks between May and November last year. On May 10, the company bought back 27,100 shares at 1.4 cents each. On Nov 13, it bought back 173,900 shares, ranging between 80.5 cents and 83 cents each.
Year to date, HRnetGroup’s share price has dropped 10.63% to close at 71.5 cents on June 13. This puts the valuation of the company at $719.2 million and implies a price-to-earnings ratio of 14.02 times.
The company launched its $174 million IPO on the Mainboard in June 2017 at 90 cents.
The company runs some 30 entities worldwide, including in Malaysia, Thailand, Indonesia, China, Hong Kong, Taiwan, Japan and South Korea. It is the largest Asia-based recruitment agency in Asia-Pacific excluding Japan. Its brands include HRnetOne, Recruit Express, PeopleSearch and RecruitFirst.
Earlier this year, HRnetGroup began its operations at RecruitFirst Malaysia and RecruitFirst Shanghai. It is in the midst of rebranding its operations in the flexible staffing business in Taipei, which will operate under the RecruitFirst name.
The company plans to venture into Vietnam, a growing market in the Asean region, with a relatively young labour force and economic reforms. Sim has also set her sights on markets such as the UK and Australia, even though both are relatively mature.
In its most recent 1QFY2019 results, the company reported earnings of $20.2 million, up 16.9% y-o-y. This is despite a 2.8% y-o-y contraction in revenue to $103.9 million, owing to a slight dip in the number of jobs placed in Singapore, from 2,063 in 1QFY2018, to 1,994 a year later, as clients turn cautious in their hiring. However, the company’s other markets, such as Thailand, did well in the same period, with the number of placements up by a third.
HRnetGroup engaged 11,920 contracted staff in 1QFY2019, an increase of 320 from the number contracted in the year earlier quarter. While there was an 8.6% drop in revenue contributed by Singapore to the segment, the nearly 90% growth seen in the Hong Kong market propelled the segment.
HRnetGroup has been identified by analysts as a company to watch for. It was featured in RHB Securities’ 20 Jewels 2019 edition. Analysts Jarick Seet and Lee Cai Ling note that the company experienced some weakness in 1Q2019 due to companies’ reservations in hiring amid the ongoing US-China trade war. However, they maintain a “buy” call because of the company’s net cash of $290 million, dividend yield of more than 3% and potential accretive acquisitions.
CIMB, DBS and Credit Suisse also cover the stock. There are three “buy” calls and one “hold” among the four brokerages, with price targets ranging from 85 cents to 1.06 cents.
