Stock Name: JOBST
Company Name: JOBSTREET CORPORATION BHD
Research House: OSK
JobStreet Corp Bhd
(April 9, RM1.98)
Maintain neutral at RM2, with a higher target price of RM1.80: Australian Stock Exchange-listed SEEK Ltd, which initially owned only a 10% stake in JobStreet in 2008, started accumulating more shares from February 2010.
Within a short period of about two months, SEEK has raised its shareholdings in JobStreet to 22.4% as at March 31, 2010. The recent strengthening in JobStreet's share price could have been mainly supported by SEEK's accumulation.
In 2008, SEEK purchased 10% equity stake in JobStreet through an off-market transaction for a cash consideration of RM55.1 million, or an average price of RM1.78 per share.
SEEK is the largest e-recruitment company in Australia. Its portal, seek.com.au, hosts approximately 60% of all jobs on Australia's major job sites, equivalent to some 50% of the country's overall Internet and newspaper job advertisements.
According to information provided by SEEK in 2008, in a given month, over 200,000 job advertisements were posted on seek.com.au and approximately 2.9 million job seekers visit its website. In New Zealand, more than 20,000 job advertisements were posted on seek.co.nz, nearly twice that of its nearest competitor.
According to SEEK's CEO in 2008, the online employment classifieds market in Southeast Asia is expected to enjoy significant growth over the next few years due to economic growth and the migration online of classified advertising from print.
The CEO believes that JobStreet has a strong management team which has delivered outstanding results, and SEEK's investment in JobStreet will help the company strengthen its market position in Asia on top of its existing investment in China.
As for the recent shares acquisition, we speculate that SEEK could be averaging down its investment cost in JobStreet and putting itself in a better position to enjoy JobStreet's 33% dividend payout policy.
There have been a few rounds of meetings between JobStreet and SEEK. It is unlikely that a major business tie-up will be announced soon.
As SEEK already owns more than 20% of JobStreet, we believe it is a matter of time the two companies will embark on business ventures together.
In view of JobStreet's rather expensive FY10 price-earnings ratio (PER), we are maintaining our neutral stance. Based on FY10 earnings, we increase our fair value to RM1.80 by pegging the stock's historic high 18.5 times PER compared to 15 times previously as expectations of SEEK buying more shares and a strong equity market are likely to support a higher valuation. - OSK Research, April 9
This article appeared in The Edge Financial Daily, April 12, 2010.
Company Name: JOBSTREET CORPORATION BHD
Research House: OSK
JobStreet Corp Bhd
(April 9, RM1.98)
Maintain neutral at RM2, with a higher target price of RM1.80: Australian Stock Exchange-listed SEEK Ltd, which initially owned only a 10% stake in JobStreet in 2008, started accumulating more shares from February 2010.
Within a short period of about two months, SEEK has raised its shareholdings in JobStreet to 22.4% as at March 31, 2010. The recent strengthening in JobStreet's share price could have been mainly supported by SEEK's accumulation.
In 2008, SEEK purchased 10% equity stake in JobStreet through an off-market transaction for a cash consideration of RM55.1 million, or an average price of RM1.78 per share.
SEEK is the largest e-recruitment company in Australia. Its portal, seek.com.au, hosts approximately 60% of all jobs on Australia's major job sites, equivalent to some 50% of the country's overall Internet and newspaper job advertisements.
According to information provided by SEEK in 2008, in a given month, over 200,000 job advertisements were posted on seek.com.au and approximately 2.9 million job seekers visit its website. In New Zealand, more than 20,000 job advertisements were posted on seek.co.nz, nearly twice that of its nearest competitor.
According to SEEK's CEO in 2008, the online employment classifieds market in Southeast Asia is expected to enjoy significant growth over the next few years due to economic growth and the migration online of classified advertising from print.
The CEO believes that JobStreet has a strong management team which has delivered outstanding results, and SEEK's investment in JobStreet will help the company strengthen its market position in Asia on top of its existing investment in China.
As for the recent shares acquisition, we speculate that SEEK could be averaging down its investment cost in JobStreet and putting itself in a better position to enjoy JobStreet's 33% dividend payout policy.
There have been a few rounds of meetings between JobStreet and SEEK. It is unlikely that a major business tie-up will be announced soon.
As SEEK already owns more than 20% of JobStreet, we believe it is a matter of time the two companies will embark on business ventures together.
In view of JobStreet's rather expensive FY10 price-earnings ratio (PER), we are maintaining our neutral stance. Based on FY10 earnings, we increase our fair value to RM1.80 by pegging the stock's historic high 18.5 times PER compared to 15 times previously as expectations of SEEK buying more shares and a strong equity market are likely to support a higher valuation. - OSK Research, April 9
This article appeared in The Edge Financial Daily, April 12, 2010.
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