Hungry for jobs
Solid results; maintain Buy and lift TP to SGD1.07
2H21 PATMI of SGD29.6mm (+14.2% YoY) beat MIBG and the street’s estimates on better operating performance for both Flexible Staffing (FS) and Professional Recruitment (PR) segments across key markets. The group declared a final DPS of 3.0 cents, bringing total payout to 4.0 cents (including special DPS of 1.0 cent). We raised our FY22-24E EPS estimates by 16% on higher business volume base and maintain Buy with a new TP of SGD1.07, pegged at a lower P/E of 16x (from 18x previously) due to slower
earnings growth going forward. However, this is still a slight premium to peers’ 15x for its better ROE and balance sheet strength.
All geographies see double-digit growth
Revenue rose 41.6% YoY to SGD315.4m in 2H21, fuelled by an improving labour market especially Healthcare Life Science (Pharma and Medical). This sector accounts for 26% of FY21 topline (14% in FY20), while overall GPM was steady at 29.6% (FY20: 29.9%) with the PR/FS business revenue mix of 16.0%/83.4% on par with FY20’s 16.8%/82.6%. Notably, all key geographies (Singapore: +31.7%, North Asia: +43.2%, Rest of Asia: +103.3%) experienced strong double-digit percentage turnover growth.
Positive hiring sentiment despite rising business costs
On a full year segmental basis, FS turnover rose 37.8% YoY to SGD492.6m as the number of monthly contractors rose to a record high of 19,280 in Dec 2021 (+34.4% YoY). PR revenue also grew by 30.6% to SGD94.8m as the group placed 7,794 (+11% YoY) candidates, chiefly in senior and niche positions that fetched higher salaries. While the employment outlook remains positive, we do not think this growth rate is repeatable in FY22 amid macroeconomic uncertainty and rising business costs.
Accretive M&A could be a catalyst
Management expects business recovery to be more broad-based across sectors/regions as borders begin to reopen. This contrasts with the past 2 years when hiring was mostly driven by the government, healthcare and IT sectors due to disruption caused by Covid-19. Backed by its robust net cash of SGD327m (c.42% of market cap), the group is well-positioned for synergistic M&A opportunity, possibly in Mainland China, in our view.