RHB Group Research is maintaining its “buy” call and target price of $1.01 on professional and flexible staffing firm HRnetgroup.
This is pegged to 14x FY2022 Price-to-Earnings and is expected to give the counter a 31.2% upside from its 77-cent price, analyst Jarick Seet writes in an Apr 5 note.
His move follows the announcement that the group’s subsidiary RecruitFirst has extended its contract with the Ministry of Education (MOE) for another four years till 2025, to run the Focus Language Assistance in Reading (FLAiR) programme.
“We expect [the programme] to be worth several millions of SGD,” says Seet.
The FLAiR programme provides language assistance to children in the kindergarten 2 grade in around 400 pre-school centers in Singapore. Some 4,000 children been benefitting from this programme annually since its inception in 2018.
Aside from this, Seet reckons that HRnet is likely to have “continued outperformance” in FY2022 ending in December.
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This follows its strong performance in FY2021, where revenue came in at $590.5 million (up 36.4% y-o-y) and PATMI (profits after taxes minus interest) was up by 39.7% to $65.5 million.
Seet’s expectations of a positive FY2022 performance comes as the “management remains bullish that both its recruitment segments across all geographies will continue to see strong demand for their services”.
“As a result, we remain bullish that such strong performance will continue and the continue will benefit from higher margins as well,” he explains.
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Seet adds that HRnetgroup has been an “efficiently run company” compared that its peers around the world, many of whom have been running at a loss.
The counter has also been trading at 10.6x FY022 P/E, which is lower the average multiple of its global peers.
To this end, Seet stresses that the group is a “decent proxy to the global economic recovery and should enjoy a great FY2022”.
As at 1.55pm on Apr 5, shares in HRnet were trading flat at 77.5 cents.
Cover image: file photo