HRnetGroup - Labour Shortage A Boon
- According to the 3Q22 ManpowerGroup employment outlook survey, employers’ hiring intention reached its highest level since 4Q11, with employers from the finance and real estate sectors expressing the highest intent to hire.
- The outlook for talent demand appears robust, based on the outlook commentary from global recruitment services peers (e.g. Adecco, Hays, Heidrick & Struggles, Kelly Services, Page Group, etc). Key takeaways from their latest results include
- 1QCY22 has been an exceptional quarter for many recruitment services firms (especially in Asia Pacific) as labour markets rebounded, and
- wage inflation and shortage of talent are key drivers of rising salaries; these are expected to continue in the near term.
- We expect HRnetGroup (SGX:CHZ)’s permanent placement business to continue benefiting from these trends and reaffirm our expectation of FY22F gross profit margin expansion.
- We understand that HRnetGroup’s China business has not seen much negative impact despite the challenging operating environment; examples of sectors seeing strong demand include semiconductors and luxury retail. Note that HRnetGroup has grown its North Asia gross profit from S$46m in FY14 to S$72m in FY21 (CAGR: 6.7%).
- The start of HRnetGroup’s S$30m share buyback (up to 10% of issued shares) programme in Jun reflects management’s optimism, in our view. HRnetGroup has only repurchased 0.1% of issued shares year-to-date.
- Our target price for HRnetGroup is pegged to ~17x FY23F P/E, based on +1 standard deviation from 4-year historical mean.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
Kenneth TAN CGS-CIMB Research | LIIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2022-07-06 2022-07-06
Previous report by CGS-CIMB:
2022-02-25 HRnetGroup - The Best Is Yet To Come
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