Despite the gloomy economic outlook and higher unemployment rate in Singapore, undervalued HRnetGroup could benefit from the expansion of Chinese tech firms here, according to CGS-CIMB Research.

The brokerage notes that Tencent Holdings will be opening a new office in Singapore to support its growing business in Southeast Asia.

According to its hiring site as at Sept 16, Tencent has more than 20 job openings for roles involving cross-border commerce, cloud computing and electronic sports.

CGS-CIMB also points out that ByteDance, which owns video-sharing app TikTok, will be adding hundreds of jobs over the next three years in Singapore.

The company is set to establish a data centre here and has applied for a licence to operate a Singapore digital bank.

Moreover, Alibaba Group Holding, which bought a 50% stake in AXA Tower for US$600 million, could possibly do so for its expansion in Singapore, it adds.

Chinese tech firms aside, the government’s push for more job creation and local employment is an added boost, says CGS-CIMB.

HRnetGroup’s new offices in Jakarta and Shenzhen will also enhance the company’s top line.

“Despite macro uncertainty, we think it is well-positioned to benefit from job creation (relocation of more foreign companies) and overseas expansion,” CGS-CIMB analyst Ngoh Yi Sin writes in a note dated Sept 16.

As such, CGS-CIMB has upgraded the stock to an “add” rating from “hold” previously, coupled with its attractive valuation and 5% dividend yield.

The brokerage notes that HRnetGroup is currently trading below one standard deviation from its historical average and at a 55% discount to its global peers.

However, CGS-CIMB lowered its target price to 52.3 cents from 58.3 cents previously, on lower FY20-22 earnings per share forecasts.

As at 12.51 pm, HRnetGroup was flat at 44.5 cents with 429,600 shares changed hands.