HRnetGroup

[dreamybear]

Hmmm, wonder why this thread is so quiet. Nevertheless, many thanks to karlmarx for kicking it off with analysis(pls feel free to share more of your analysis   I benefited alot e.g. I decided not to pursue Hyphens Pharma after wasn't allocated any at IPO - thanks so much   ) .

Hrnet Grp has good cash generating abilities with stable business operations. Personally, I wld view this co as a dividend yield play as I can't think of how the co wld be able to massively scale up its revenue other than embarking on M&A which wld eat up its cash reserve. I think I wld be keen if share price at $0.70 or below.  *a bit cheapskate*  

For buddies who are interested in learning abt the industry, I found the following listed co investor/AR site for reference :
1. https://www.roberthalf.com/investor-center
2. https://www.adeccogroup.com/investors/
3. http://ir.kellyservices.com/annual-reports
4. https://www.ir.randstad.com/results-and-...al-reports
5. https://www.haysplc.com/investors
6. https://investor.manpowergroup.com/investor-overview
7. https://recruit-holdings.com/who/reports/
..... I am sure there are more, but no time.

[karlmarx]

There is not much to say because it has a short listing history, which means less data available on its behaviour and performance over different periods and their accompanying environment.

The company has been growing through M&A, and is likely to continue to do so. The results of such actions are unknown, and there are few past cases with which to judge its acquisition acumen.

The market price suggests that it is expecting the company to grow.

[dreamybear]

FYI - HRnetGrp Investor Presentation dd 01 Mar 2019

https://links.sgx.com/1.0.0/corporate-an...2919621002

Pg5 of second deck(Growth Story) shows the valuation(in terms of PE, ROE, PB, etc) of HRnetGrp vs peers.  

Still waiting... waiting... and waiting for price to drop correct further.   

[karlmarx]

From their presentation, they seem too eager to promote their stock. And of course, they have been very active in buying back their shares.

Perhaps they are planning to make acquisition with their shares instead of cash.

[karlmarx]

There are also blue-collar workers that don't use or can't afford smartphones at all. A nifty "broadcast yourself" feature in Findjobs allows children to quickly help their parents indicate what jobs they are looking for and what experience they have.

Ivan said: "I went to many places - shopping malls, the MRT, washrooms. Whenever I see cleaners in the washroom, I ask them 'Auntie, Uncle, you looking for job?' "

"Everywhere I go, even hawker centres, I will approach these aunties and uncles as I'm a recruiter with customers that have hundreds of cleaner positions available and I couldn't depend on online."

He added that a mobile app means the job postings are always there, and the job seeker can be exposed to more job vacancies.

https://www.businesstimes.com.sg/life-cu...pokemon-go
...

Competition through new technology in the low-skilled employment market has emerged. If Grab can connect drivers with commuters, then a case can also be made for an online broker to connect employers and jobseekers. Of course, whether such apps can gain market share will depend on how successful it is in convincing both employers and jobseekers, to first come on board, and then perform an even better job, compared to the traditional agent, in satisfying their respective needs.

[dreamybear]

HRnet group was heavily oversubscribed during its IPO slightly more than 2 years ago. (Refer to Post#4 of this thread for details). However, the stock price has since been beaten down from the IPO price. Based on the "2 years track record", current price, P/E valuations, 4+% dividend yield, continued cash rich status, etc, I wld not be surprised if this is in the watchlist of many buddies even though the thread is very quiet.

Other than concerns on the slowing economy(both local & global), I am a bit perturbed by the Staffline investment. While I do think HRnet should diversify its earnings base away from SG, Staffline does seem to me an overvalued company(despite Staffline's share price having crashed some 85% since end of last year). Besides having 116 million pounds of goodwill in its balance sheet, I do not find it having a strong balance sheet. 

Any comments, fellow buddies ?

-----------------------------------------------------------------------------------------------------------------------------

Financial Results 1H2019

Highlights :
1. For 1H2019, 1.2% decline in revenue to $212 million, compared to $214 million in 1H2018.
2. For 1H2019, 5.5% growth in net profit to $32 million, compared to $31 million in 1H2018.

3. For 1H2019, EPS is 3.06 cents, compared to 2.9 cents in 1H2018.
4. NAV 33 cents at 30 Jun 2019.

5. Performance Review :
- The Group continues to deliver quarterly revenue in excess of the S$100m mark for the 7th consecutive quarter.  
- Professional Recruitment revenue / profit declined due to SG GDP decline to lowest in decade.
- Flexible Staffing : SG down, HK/TW up

6. Section 10 (pg18) "According to its audited financial statements for the year ended 31 December 2018, Staffline reported that its continuing operations generated underlying revenue of GBP 1,127.5m, gross profit of GBP 121.9m and net profit of GBP 28.8m.  We see this strategic investment as an important step in further strengthening the Group’s network and to tap into opportunities in the UK market which currently has its risks associated with Brexit but at the same time presents good value for us to enter."

HRNetgroup
Results
Financials : http://hrnetgroup.listedcompany.com/news...YVSC.1.pdf  
Presentation : http://hrnetgroup.listedcompany.com/news...YVSC.2.pdf
Press Release : http://hrnetgroup.listedcompany.com/news...YVSC.3.pdf

Additional Acquisition of Staffline at 180 pence
https://links.sgx.com/FileOpen/SGX%20ann...eID=572773

The Hot Seat (Money FM 89.3) 
https://omny.fm/shows/money-fm-893/the-h...ecutive-di

Staffline
News of Concerns
https://www.accountancydaily.co/pwc-quit...line-group
https://www.theguardian.com/business/201...nd-payroll
http://www.stockmarketwire.com/article/6...-rise.html
https://www.sharesmagazine.co.uk/news/sh...it-warning

AR
https://www.stafflinegroupplc.co.uk/medi...-final.pdf

[karlmarx]

The recent acquisitions should cause investors to wonder how much due diligence HRnet has done on them, especially on the largest purchase so far, Staffline.

The other recruitment businesses based in London, such as Harvey Nash and Gattaca -- which HRnet has also been purchasing shares of -- are also not doing well (i.e. poor results, restructuring). As the uncertainty concerning Britain's economic future continue, businesses will think hard about increasing headcount, if they haven't already decided to downsize and move else where.

HRnet may be thinking that once the dust settles, in at least a few years time, businesses will return to London, and with it, the demand for executive recruitment.

At about the same time, HRnet also bought a substantial stake in Bamboo Healthcare. Yet, in 2019 alone, there has been 5 Director resignations, 3 of them IDs.

http://www.bamboos.com.hk/doc/en_announc...071328.pdf

http://www.bamboos.com.hk/doc/en_announc...281604.pdf

http://www.bamboos.com.hk/doc/en_announc...051432.pdf

Certainly, it is too soon to tell if HRnet's share investment in these listed companies will benefit shareholders in the long-term. But for now at least, it looks like HRnet's fund manager has carte blanche on the IPO proceeds.

Given the unstable business circumstances of these shares, a conservative investor should not include these share investments into the calculation of HRnet's value. At least not without applying a generous discount.

Perhaps that is what the market is doing as well.

[dreamybear]

karlmarx's research is, as usual, more superior than mine. *blush*

I am not sure whether HRnet knows the "significant" cultural differences between advanced western countries(UK, Europe) and our part of the world, i.e. Asia.

Speaking from my personal experiences(myself, friends, colleagues), most UK / US / European MNCs do not have the same "squeeze your employee" culture. In fact, some of my ex-bosses automatically offer significant better pay packages and were genuine in conveying that they understand people switch jobs because they wanted to improve their family's standard of living. They treat you more like a "human" than just a productive tool. Unfortunately, some of these companies did not end up well partly because of the cost base(well, at least, they improve the lives for many people). Also, many of these countries have minimum living wages / unions to protect the employees.

On the other hand, in some local companies I worked in, the bosses only want to recruit those who are retrenched and desperately looking for jobs so that they can undercut their last drawn pay, and offer substantial less benefits. In fact, I went for an interview with Venture years ago. From distant memory, roughly, their HR policy is to cut your monthly wage by 40-60%, but promise to pay you more than your last drawn monthly salary by way of at least 6 mths of bonuses(depending on performance review). I think this is one of the most ingenious ways of cost control I have ever seen in my life, and one of the reasons Venture is so successful. Unfortunately, as this goes agst my personal values, I missed out on investing in Venture.(too emotional). Employers here also do not have to deal with unions which help workers demand better working conditions.

During results briefings, HRnet group always emphasizes on "productive" headcount - to me, this carries the connotation of "squeeze the employee" mindset. I am not sure whether the European companies can meet Hrnet's "expectations" of growing the productive headcounts, cost control and profit growth.

[dreamybear]

Interestingly, when re-checking something at the Prospectus, I chanced upon the section "GENERAL AND STATUTORY INFORMATION", and in particular, pg 289 - 293, where incidents of non-compliance were listed, e.g. Incidents of non-compliance involving Recruit Express / Breach of Employment Act, Non-compliance with Tripartite Guidelines on Fair Employment Practices, Non-compliance with licensing requirements by PeopleSearch (Taiwan) Branch, Violation of ESA by HRnet One (Taiwan) Branch.

I guess this is one of the "risks" for recruitment / manpower firms.

http://investor.hrnetgroup.com/misc/hrne...pectus.pdf

[Dividend Warrior]

On the other hand, in some local companies I worked in, the bosses only want to recruit those who are retrenched and desperately looking for jobs so that they can undercut their last drawn pay, and offer substantial less benefits. In fact, I went for an interview with Venture years ago. From distant memory, roughly, their HR policy is to cut your monthly wage by 40-60%, but promise to pay you more than your last drawn monthly salary by way of at least 6 mths of bonuses(depending on performance review). I think this is one of the most ingenious ways of cost control I have ever seen in my life, and one of the reasons Venture is so successful. Unfortunately, as this goes agst my personal values, I missed out on investing in Venture.(too emotional). Employers here also do not have to deal with unions which help workers demand better working conditions.

Now you got me interested in Venture