Stock Name: JOBSTCompany Name: JOBSTREET CORPORATION BHDResearch House: OSK
JobStreet Corp Bhd
(Jan 19, RM2.93)
Maintain sell at RM2.98, target price unchanged at RM2.32: After SEEK Ltd, the largest shareholder of JobStreet, announced its acquisition of 60% equity interest in JobsDB recently, we thought it would be interesting to know where these three companies stand in the worldwide e-recruitment industry.
From our search we found that 4icj.com ' an international employment directory selecting and reviewing worldwide top job site ' ranks SEEK, JobsDB and JobStreet as the 7th, 9th and 12th most popular e-recruitment websites in the world respectively, in its 2010 Jobsite Web Ranking.
4icj.com is a website owned by 4 International Careers & Jobs. The ranking is based on an algorithm including three unbiased and independent web metrics extracted from three different search engines, namely Google Page Rank, Yahoo Inbound Links and Alexa Traffic Rank. 4icj.com claims that the same philosophy is adopted by Google with regard to its search engine ranking algorithm.
The ranking aims to provide an approximate popularity ranking of world employment sites based on the popularity of their websites.
From the poll, JobStreet and JobsDB appear to host the most popular e-recruitment websites in Asean. For websites ranked higher than JobStreet and JobsDB and which are far bigger such as Monster, 51job, SEEK and Naukri, to the best of our knowledge, Asean is not their focus market.
The other Asian companies such as 51job, Zhaopin and ChinaHR mainly focus on the domestic Chinese market.'' Surprisingly, JobStreet's associate company in Taiwan, 104 Corp, was not among those ranked.
4icj.com's ranking affirms the position of JobStreet, alongside JobsDB, as a major e-recruitment company in Asean.
Furthermore, SEEK's investment in JobsDB and JobStreet will make it a formidable e-recruitment company in this part of the world.
The findings of our search are also in line with our view that the Malaysia, Singapore and Philippines markets, which together comprise 95% of JobStreet's 9MFY10 revenue, could potentially become an oligopoly for SEEK, as JobsDB is also a major players in these three countries.
JobStreet normally trades at a discount to the far larger Monster and 51job, but this could be because these two companies are listed on Nasdaq, This is evident from JobStreet's historic PER, which has been peaking at around 18 to 20 times PER every year since its IPO in 2005.
Although JobStreet's annualised 9MFY10 revenue and earnings were within market consensus and our estimates, its share price has appreciated by some 50% over the last few months, making what we thought was an already expensive stock even more expensive.'' At the current 20 times FY11 PER, which is its most expensive valuation since the IPO in 2005, we do not see much more upside for its share price.
Moreover, our 24% earnings growth estimate for FY11 is not conservative. Based on the estimated HK$70 million (RM27 million) cash which JobsDB is expected to end up with on the completion of the SEEK acquisition, SEEK will be buying JobsDB at about 22.1 times CY10 enterprise value/earnings before interest, tax, depreciation and amortisation (EV/Ebitda).
This compares with JobStreet's 16.5 times FY10 EV/Ebitda (including available-for-sale investments and short-term investments), representing a 35% premium.
However, it is difficult to conclude if JobStreet is relatively undervalued from this perspective, simply because we think SEEK would have to pay a higher premium considering it is purchasing a 60% stake. ' OSK Research, Jan 19
This article appeared in The Edge Financial Daily, January 21, 2011.
