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HRNetGroup and Yangzijiang Financial in active share buybacks

The Edge Singapore
The Edge Singapore9/22/2022 11:43 AM GMT+08  • 3 min read
HRNetGroup and Yangzijiang Financial in active share buybacks
Adeline Sim, executive director and chief corporate office of HRNetGroup, one of the region’s leading recruitment firm that is actively buying back shares / Photo: Albert Chua
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Recruitment agency HRNetGroup has been steadily buying back shares, amid a slew of positive broker’s recommendations premised on an active job market across the region.

On Sept 22, the company, which has in place a $30 million share buyback programme, acquired 108,400 shares on the open market at 78.73 cents each. This brings the total number of shares bought back under the current mandate to around 3.7 million shares or 0.37% of the total share base.

On Sept 15, Andy Sim of DBS Group Research reinitiated coverage of the stock with a “buy” call and $1.08 target price, citing how HRNetGroup, even as the largest recruitment group in Asia outside Japan, still has room to grow in new and existing markets. “Despite the relatively mature market in Singapore, management has also indicated that there are still further areas of growth, particularly in large contracts with government agencies,” he says.

Sim also points out that the cashed-up company, with a cash balance equivalent to 40% of its market cap, is trading at just 11.5x estimated earnings for FY2023.

On Sept 20, RHB’s Jarick Seet says he expects the company to continue performing positively and enjoy higher margins given the scale of its operations. Seet, who has a”‘buy” call and $1.01 target price, observes that its management should continue to keep shareholders rewarded. It recently declared its first-ever interim dividend of 2.13 cents per share, equivalent to 50% of its underlying earnings.

Seet expects a FY2022 yield of 5.5% assuming a 60% payout ratio for the full year. “We expect the share buybacks to continue and likely be a boon to its share price,” he adds.

See also: StarHub, Singapore Exchange in steady share buybacks

Directors buying shares of financial spinoff

Chew Sutat, lead independent director of Yangzijiang Financial Holding (YFH), has yet again raised his stake in the company. On Sept 20, he acquired 188,000 shares on the open market for 39 cents each. This brings his total holdings to 888,000 shares, equivalent to 0.023% of the total share base.

The company has been buying back shares regularly too, as part of its $200 million share buyback programme. The most recent acquisition was on Sept 22, when it acquired nearly 3.3 million shares on the open market at between 38.5 cents and 39.5 cents each. This brings the total share buyback volume to nearly 167.4 million shares, equivalent to 4.237% of the company.

See also: Kingsmen co-founder Ong raises stake; Japfa in buybacks ahead of subsidiary's planned IPO

YFH was listed just five months ago, when it was spun off shipbuilder Yangzijiang Shipbuilding (Holdings) to focus on lending, investment and other financial services activities. YFH started trading at 67.5 cents but its share price has steadily dropped since then, despite having a net asset value of $1.07 as at June 30.

Chew was not the only director buying shares of the company. Another independent director Chua Kim Leng, had earlier bought shares too, as had CEO Vincent Toe, who doubles up as chief investment officer. The company is controlled by executive chairman Ren Yuanlin, who used to chair Yangzijiang Shipbuilding. At present, YFH holds the bulk of its assets in debt investments in China, making short-term loans to local SMEs and other companies in need of credit.

With the listing, the company is now actively diversifying its investments outside China by either managing its own funds or partnering with other managers to create new funds for different industry sectors.

One recent example was the setting up of a maritime fund to capture ship financing opportunities such as in sale-and-leaseback transactions. The fund has an initial size of US$250 million ($353 million), out of which YFH will contribute US$10 million and raise another US$150 million from other investors

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