Stock Name: JOBST
Company Name: JOBSTREET CORPORATION BHD
Research House: HWANGDBS
Jobstreet Corporation Bhd
(March 17, RM2.05)
Initiating coverage with buy at RM1.89, target price of RM3.20: Jobstreet operates an asset-light and highly scalable online recruiting business which has strong cash generation. It is poised to ride on the global economic recovery as topline growth should have a leveraged impact on GDP growth. In the past, for every 1% GDP growth, sales revenue grew 3% to 5%.
Jobstreet could gain market share from the traditional print advertising as the market becomes more educated and aware of its more effective cost per ad due to extensive reach of over six million jobseekers in the Asia-Pacific region.
SEEK Ltd upped its stake in Jobstreet recently to 21.3% and paid RM2.05/share in a recent off-market crossing. The price, which was 11.4% premium to the market price reflects SEEK's confidence in Jobstreet's solid growth prospect.
We believe there could be potential synergies from SEEK in terms of product innovation and positioning, and sharing of expertise across Jobstreet's operations.
We initiate coverage on Jobstreet with a buy recommendation and a RM3.20 price target, based on one time price earnings-to-growth (PEG) on its FY09-FY12 net profit compound annual growth rate (CAGR) of 25%.
This implies 19.9 times FY12 price earnings (PE) which is justifiable given its high-growth prospects being in the right industry, over 20% average return on equity (ROE) and 15 sen/share cash as at end-2009.
During the period 2000-2004 when Star Publication was growing by 23% CAGR and gaining market share, it also commanded premium valuations (on average 24% to market). In fact, SEEK's recent acquisition price already implied a ready 14% upside potential to Jobstreet's share price.
During the recession period in 2009, we saw Jobstreet's revenue and net profit decline by 10% and 19% respectively.
We expect the employment rate to recover in 2010 after the Malaysian GDP showed three consecutive improvements in GDP growth recorded in 2Q09 (-3.9%) 3Q09 (-1.2%) and 4Q09 (+4.5%) from its bottom of 6.2% in 1Q09.
There are no comparable listed peers in Malaysia, probably due to its business niche. The closest rival would be JobsDB which is a privately-owned operator.
As a result, we mapped Jobstreet on the comparison horizon with some of the big names listed overseas like SEEK, 51Job Inc, 104 Corp, Monster Worldwide and Dice Holdings Inc. - HwangDBS Vickers Research, March 17 This article appeared in The Edge Financial Daily, March 18, 2010.
Company Name: JOBSTREET CORPORATION BHD
Research House: HWANGDBS
Jobstreet Corporation Bhd
(March 17, RM2.05)
Initiating coverage with buy at RM1.89, target price of RM3.20: Jobstreet operates an asset-light and highly scalable online recruiting business which has strong cash generation. It is poised to ride on the global economic recovery as topline growth should have a leveraged impact on GDP growth. In the past, for every 1% GDP growth, sales revenue grew 3% to 5%.
Jobstreet could gain market share from the traditional print advertising as the market becomes more educated and aware of its more effective cost per ad due to extensive reach of over six million jobseekers in the Asia-Pacific region.
SEEK Ltd upped its stake in Jobstreet recently to 21.3% and paid RM2.05/share in a recent off-market crossing. The price, which was 11.4% premium to the market price reflects SEEK's confidence in Jobstreet's solid growth prospect.
We believe there could be potential synergies from SEEK in terms of product innovation and positioning, and sharing of expertise across Jobstreet's operations.
We initiate coverage on Jobstreet with a buy recommendation and a RM3.20 price target, based on one time price earnings-to-growth (PEG) on its FY09-FY12 net profit compound annual growth rate (CAGR) of 25%.
This implies 19.9 times FY12 price earnings (PE) which is justifiable given its high-growth prospects being in the right industry, over 20% average return on equity (ROE) and 15 sen/share cash as at end-2009.
During the period 2000-2004 when Star Publication was growing by 23% CAGR and gaining market share, it also commanded premium valuations (on average 24% to market). In fact, SEEK's recent acquisition price already implied a ready 14% upside potential to Jobstreet's share price.
During the recession period in 2009, we saw Jobstreet's revenue and net profit decline by 10% and 19% respectively.
We expect the employment rate to recover in 2010 after the Malaysian GDP showed three consecutive improvements in GDP growth recorded in 2Q09 (-3.9%) 3Q09 (-1.2%) and 4Q09 (+4.5%) from its bottom of 6.2% in 1Q09.
There are no comparable listed peers in Malaysia, probably due to its business niche. The closest rival would be JobsDB which is a privately-owned operator.
As a result, we mapped Jobstreet on the comparison horizon with some of the big names listed overseas like SEEK, 51Job Inc, 104 Corp, Monster Worldwide and Dice Holdings Inc. - HwangDBS Vickers Research, March 17 This article appeared in The Edge Financial Daily, March 18, 2010.
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