• Maintain BUY and TP of SGD1.01, 28% upside and c.6% yield. HRnetgroup announced a strong 1H22, in line with our estimates. Revenue rose 14.2% YoY to SGD314.2m, while core NPAT rose to 36.2% YoY to SGD42.6m. Going forward, we see hiring remaining resilient despite the possibility of a slight slowdown. A 2.13 SG cent interim dividend has also been declared. We believe that the current share buyback (SBB) programme will be a positive to its share price.

• FY22F will likely end well. For 1H22, HRNET’s flexible and professional recruitment grew by 13.2% and 18.6% YoY, while Singapore continues to remain its largest market. Going forward, hiring is still expected to be strong from the technology, healthcare and consumer sectors. There is potential for a slowdown in hiring, especially if a recession hits, but for now, signs show hiring is still healthy.

• SGD30m SBB programme. Management intends to buy up to SGD30m of company shares via the open market. The maximum number of shares which may be purchased by the company under the SBB programme is 100,377,338 (amounting to 10% of its issued shares). Depending on the prices at which the shares are purchased, the programme could take more than a year to be completed. As at 16 Aug 2022, management has already purchased 0.21% of the total shares outstanding. We expect the SBB programme to continue and be positive for its share price.

• Attractive dividends likely to continue. Management has declared the first ever interim dividend of 2.13 SG cents. With the positive performance likely to continue, we expect management to reward shareholders with attractive dividends. As a result, we expect a 5.5% dividend yield for FY22F, or a 60% payout ratio.

• Hiring activity still positive; maintain BUY. Management remains bullish for both its recruitment segments across all geographical areas and still see strong demand for the services YTD. As a result, we are optimistic the performance will continue, aided by higher margins as well. This counter is trading at 11x FY22F P/E, which is lower than its global peer average. We believe HRNET is a decent proxy to the global economic recovery, and as such, it will enjoy a solid FY22F. We maintain our BUY call on the stock, while pegging our TP to 14x FY22F P/E.

• ESG. Using our in-house proprietary methodology, we derive an ESG score of 3.0, which is on par with the country median. As a result, we apply a 0% discount or premium to our TP.

Source: RHB Research - 17 Aug 2022