Stock Name: JOBST
Company Name: JOBSTREET CORPORATION BHD
Research House: OSK
Jobstreet Corporation Bhd
(May 19, RM2.05)
Downgrade to sell at RM2 with a lower target price of RM1.62: JobStreet's 1QFY10 revenue rose 19.3% quarter-on-quarter (q-o-q) and 27% year-on-year (y-o-y) while net profit for the quarter surged 38.6% q-o-q and 55.4% y-o-y.
The growth directly reflected the improvement in economic conditions, which has had a positive impact on sales. Revenue from JobStreet's core products, namely JobStreet Essential (online job posting service) and JobStreet Impact (career website management service), soared 53% and 84.9% y-o-y respectively. However, the increase was partially offset by a decrease in revenue from JobStreet Resource (provision of contract staffing services) by 22.9%.
Net profit grew at a faster pace compared to revenue because JobStreet Essential and JobStreet Impact contributed to better margins. 1QFY10 profit before tax margin came in at 45.8% compared to 41.9% a quarter ago.
JobStreet will benefit from the region's economic recovery and the resumption of hiring by companies. However, the management highlighted that FY10 performance would still very much depend on factors such as continuing uncertainties in the global economy, the ability of JobStreet to gain market share and the performance of JobStreet's investments.
JobStreet's balance sheet remains very strong due to its high free cash flow business. As at March 31, 2010, the company held RM46.6 million in net cash and another RM131.5 million in short-term and long-term investments.
JobStreet declared a first tax-exempt interim dividend of 1.25 sen. It also announced on Tuesday that it has revised its dividend policy, with its dividend payout ratio now at 50% of net profit compared to a third previously.
We downgrade JobStreet to sell as we worry that its current share price, which is nearing to its historical five-year average high PER (price-earnings ratio) of 18.4 times, is unsustainable.
Despite its 50% dividend payout policy, JobStreet's current FY10 net dividend yield of 3% is already deemed unattractive. Pegging a fair FY10 PER of 14.5 times (from 18.5 times previously), which is at around its historical five-year average PER, we arrive at a fair value of RM1.62. ' OSK Research, May 19
This article appeared in The Edge Financial Daily, May 20, 2010.
Company Name: JOBSTREET CORPORATION BHD
Research House: OSK
Jobstreet Corporation Bhd
(May 19, RM2.05)
Downgrade to sell at RM2 with a lower target price of RM1.62: JobStreet's 1QFY10 revenue rose 19.3% quarter-on-quarter (q-o-q) and 27% year-on-year (y-o-y) while net profit for the quarter surged 38.6% q-o-q and 55.4% y-o-y.
The growth directly reflected the improvement in economic conditions, which has had a positive impact on sales. Revenue from JobStreet's core products, namely JobStreet Essential (online job posting service) and JobStreet Impact (career website management service), soared 53% and 84.9% y-o-y respectively. However, the increase was partially offset by a decrease in revenue from JobStreet Resource (provision of contract staffing services) by 22.9%.
Net profit grew at a faster pace compared to revenue because JobStreet Essential and JobStreet Impact contributed to better margins. 1QFY10 profit before tax margin came in at 45.8% compared to 41.9% a quarter ago.
JobStreet will benefit from the region's economic recovery and the resumption of hiring by companies. However, the management highlighted that FY10 performance would still very much depend on factors such as continuing uncertainties in the global economy, the ability of JobStreet to gain market share and the performance of JobStreet's investments.
JobStreet's balance sheet remains very strong due to its high free cash flow business. As at March 31, 2010, the company held RM46.6 million in net cash and another RM131.5 million in short-term and long-term investments.
JobStreet declared a first tax-exempt interim dividend of 1.25 sen. It also announced on Tuesday that it has revised its dividend policy, with its dividend payout ratio now at 50% of net profit compared to a third previously.
We downgrade JobStreet to sell as we worry that its current share price, which is nearing to its historical five-year average high PER (price-earnings ratio) of 18.4 times, is unsustainable.
Despite its 50% dividend payout policy, JobStreet's current FY10 net dividend yield of 3% is already deemed unattractive. Pegging a fair FY10 PER of 14.5 times (from 18.5 times previously), which is at around its historical five-year average PER, we arrive at a fair value of RM1.62. ' OSK Research, May 19
This article appeared in The Edge Financial Daily, May 20, 2010.
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