- We continue to like HRnetGroup (SGX:CHZ), as it is poised for a 2H23 recovery despite near-term labour market headwinds. Trading at 11x FY23F P/E or -0.5 standard deviation from its historical mean of 13x, the stock has strong cash flow-generating ability, a net cash balance sheet, and attractive dividend yield.
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A robust 2022 labour market.
- The Ministry of Manpower’s (MOM) labour market report stated that 2022’s average unemployment rate dropped to 2.1% from 2.7% y-o-y. The rate remains below pre-pandemic levels, while the resident long-term unemployment rate also fell below the pre-COVID-19 average. Total employment increased to 3.6m in 2022 – above pre-pandemic levels.
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- The wholesale trade, electronics manufacturing, and information & communications sectors contributed 63% of 4Q22’s resident retrenchments. Of those retrenched, 73.1% found new employment within six months – the highest percentage since 2Q15.
- The job vacancies-to-unemployed person ratio rose to 2.33x – above the 1.4x pre-pandemic high.
Softness expected, but hiring to recover.
- Read more at SGinvestors.io.
