HRnetgroup

Price target:

RHB Group Research’s Jarick Seet has kept his “buy” call and $1.01 target price for professional and flexible staffing firm HRnetgroup. The revised target price is pegged to 14x FY2022 earnings, according to Seet in his April 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 in SGD,” says Seet.

The FLAiR programme provides language assistance to children in the kindergarten 2 grade in around 400 pre-school centres in Singapore. Some 4,000 children been benefitting from this programme annually since its inception in 2018.

Aside from this, Seet reckons that HRnetgroup is likely to have “continued outperformance” in FY2022 ending December.

This follows its strong performance in FY2021, where revenue came in at $590.5 million (up 36.4% y-o-y) and profit after tax 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.

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 FY2022 P/E, which is lower than the average multiple of its global peers and remains as a “decent proxy to the global economic recovery and should enjoy a great FY2022”. —Amala Balakrishner

RHB Group Research“buy” $1.01

Continued outperformance expected in FY2022