Stock Name: JOBST
Company Name: JOBSTREET CORPORATION BHD
JobStreet Corp Bhd
(Oct 4, RM2.38)
Downgrade to hold from buy at RM2.38 with a revised target price of RM2.30 (from RM3.60): During the 2008/09 global financial crisis, JobStreet's job posting volume fell to a low of 7,000 per month in January 2009 from a peak of about 15,000 in July 2008. Its revenue fell for four consecutive quarters (4Q08 to 3Q09) by 4% to 16% year-on-year, trailing weaker GDP growth of between +0.2% and -6.2%. Earnings before interest and tax (Ebit) margin also slipped to 31% in 1Q09 (against 1Q range of 32% to 47%).
JobStreet is on track to meet our FY11F net profit of RM47 million (1H11 profit of RM24.6 million is 52% of our full-year forecast). But FY12/FY13F earnings could see downside risks. Historically, JobStreet's revenue correlated strongly with GDP, with each percentage point growth in GDP raising revenue by 3% to 5%.
Hence, the current monthly average of 23,000 job ads for 3Q11 may not be sustainable in 2012. We cut FY12/FY13F earnings by 20% to 21% as we assume job ads will drop 14% y-o-y (against +15%) and Ebit margin will be squeezed to 41% (from 43%) in FY12.
JobStreet's share price has retreated by 18% to RM2.38 currently (from RM2.90 in mid-August), possibly on concerns over lower job ads. Lacking near term catalysts, we downgrade JobStreet to 'hold' (from 'buy'), with a lower discounted cash flow-based target price of RM2.30 (from RM3.60) after imputing weaker earnings and lower terminal growth rate of 2% (from 3%) on moderate growth prospects. Meanwhile, the shareholding structure of SEEK with JobStreet and JobsDB (22.4% in JobStreet and 55.2% in JobsDB) is unresolved. Our target price implies minus one standard deviation of its price-to-book value multiple against its trough of -2SD during 2008/09. However, the share price could be supported by its RM0.20 per share net cash and prospective 3% net dividend yield for FY12F (50% payout). ' HwangDBS Vickers Research, Oct 4
This article appeared in The Edge Financial Daily, October 5, 2011.
Company Name: JOBSTREET CORPORATION BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 2.30 |
JobStreet Corp Bhd
(Oct 4, RM2.38)
Downgrade to hold from buy at RM2.38 with a revised target price of RM2.30 (from RM3.60): During the 2008/09 global financial crisis, JobStreet's job posting volume fell to a low of 7,000 per month in January 2009 from a peak of about 15,000 in July 2008. Its revenue fell for four consecutive quarters (4Q08 to 3Q09) by 4% to 16% year-on-year, trailing weaker GDP growth of between +0.2% and -6.2%. Earnings before interest and tax (Ebit) margin also slipped to 31% in 1Q09 (against 1Q range of 32% to 47%).
JobStreet is on track to meet our FY11F net profit of RM47 million (1H11 profit of RM24.6 million is 52% of our full-year forecast). But FY12/FY13F earnings could see downside risks. Historically, JobStreet's revenue correlated strongly with GDP, with each percentage point growth in GDP raising revenue by 3% to 5%.
Hence, the current monthly average of 23,000 job ads for 3Q11 may not be sustainable in 2012. We cut FY12/FY13F earnings by 20% to 21% as we assume job ads will drop 14% y-o-y (against +15%) and Ebit margin will be squeezed to 41% (from 43%) in FY12.
JobStreet's share price has retreated by 18% to RM2.38 currently (from RM2.90 in mid-August), possibly on concerns over lower job ads. Lacking near term catalysts, we downgrade JobStreet to 'hold' (from 'buy'), with a lower discounted cash flow-based target price of RM2.30 (from RM3.60) after imputing weaker earnings and lower terminal growth rate of 2% (from 3%) on moderate growth prospects. Meanwhile, the shareholding structure of SEEK with JobStreet and JobsDB (22.4% in JobStreet and 55.2% in JobsDB) is unresolved. Our target price implies minus one standard deviation of its price-to-book value multiple against its trough of -2SD during 2008/09. However, the share price could be supported by its RM0.20 per share net cash and prospective 3% net dividend yield for FY12F (50% payout). ' HwangDBS Vickers Research, Oct 4
This article appeared in The Edge Financial Daily, October 5, 2011.
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