SINGAPORE (Aug 13): RHB is maintaining “buy” on HRnetGroup with an unchanged target price of $1.18.

This comes after the group posted a strong 2Q18 set of results,with HRnetGroup’s 2Q topline ring 10.8% y-o-y due mainly to strong performances in North Asia and Singapore as well as higher gross profit margin, in line with the research house’s expectations.

In a report last Friday, analyst Jarick Seet says he expects the group’s REForce acquisition in China to contribute positively to 2H18 PATMI going forward. He also foresees the positive growth momentum in North Asia to continue driving HRnetGroup’s profitability going forward.

In particular, Seet is positive on the group’s recent plans to invest 100 million yuan in the CIIC Real Power Human Resource Fund, which is intended to tap into PE deal flows and the human resources investment space in China.

“The deal allows HRnetgroup to ride on the investment expertise of state-owned Shanghai Real Power Capital, as well as the reach and influence of state-owned China International Intellectech Corp, to seek out and evaluate deals that might otherwise be known only to domestic players. This provides HRnetGroup with more acquisition opportunities in China,” explains Seet.

The analyst also believes HRnetGroup is likely to make more acquisition in the near future and focus on new markets, while building up its presence in North Asia.

“We also expect a better FY18 ahead due to stronger growth in North Asia and Singapore across all segments, as well as the effect of the 88GLOW [incentive scheme] plan on PATMI – this is likely to take full effect in 2018,” he adds.

As at 11.30am, shares in HRnetGroup are trading flat at 90 cents or 2.65 times Dec-18F book.