CGS-CIMB Research analysts Darren Ong and Lim Siew Khee have maintained their ‘buy’ rating and target price of 63.5 cents for recruitment firm HRnetGroup Limited. 

Ong and Lim noted that Singapore reported its strongest net employment outlook in six years at 15% compared to Taiwan’s figure of 23%, Japan’s 6% and China’s 5%, according to the ManpowerGroup’s global employment outlook survey for 1Q2021 involving over 37,500 employers.

The net employment outlook is derived by taking the percentage of employers anticipating total employment to rise and subtracting from this the percentage expecting a decrease at their location in the next quarter. 

The survey also found that despite expecting a conservative hiring climate for China in 1Q2021,
Tier 1 cities continue to expect job gains. 


SEE:Tencent, ByteDance, Alibaba expansion here could bode well for HRnetGroup: CGS-CIMB


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“The strengthening hiring outlook across HRnet’s key markets reflects employers’ increasing business confidence, in our view and we believe it is on track for earnings growth in FY2021.”

Furthermore, the analysts said that with their conversations with recruiters and headhunters in Singapore and China, they infer that plans are in the pipeline to add headcount post-restructuring activities in 2020.

Recruiters in Singapore the analysts talked to generally believe that hiring activities in 2021 will be stronger than pre-Covid-19 levels in 2019. 

“We understand that the technology, finance, healthcare and retail sectors are seeing strong hiring prospects in Singapore and Tier 1 cities in China; this should drive recruitment volume for HRnet which has a large concentration in those sectors,” note the analysts in a Jan 18 report.

For HRnet itself, Ong and Lim expect it to post a revenue of $210 million, 0.5% lower y-o-y and 0.4% lower h-o-h for 2HFY2020. Gross profit is expected to come in $63 million, which is 12% lower y-o-y but 1.3% higher h-o-h, driven by flexible staffing as employers adopt a lean business model in 2HFY2020.


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The analysts conclude their note by saying they like HRnet for its large exposure to
Singapore and North Asia, which accounted for 56% and 40% of its 1HFY2020 gross profit, respectively.  

“Given that the pandemic has been kept largely under control in these markets, the hiring activities here should accelerate in FY2021, in our view.” they said.

As at 3.34pm, shares of HRnetgroup traded at 56 cents, with a price to book ratio of 1.68 and dividend yield of 3.93%.