• Maintain BUY and DCF-backed SGD1.18 Target Price, 36% upside.
• HRnetgroup reported a strong 2Q18, with topline rising 10.8% y-o-y and PATMI surging 77.5% y-o-y to SGD13m. This was contributed by strong performances in North Asia and Singapore, coupled with a rise in GPM to 36.9%.
• 1H18 PATMI formed 54% of our FY18F PATMI estimates. 
• With net cash of SGD271m, we believe HRnetgroup is likely to make more acquisitions in the near future and focus on new markets, as well as building up its presence in North Asia.

HRnetgroup Reported a Strong 2Q18

HRnetgroup reported a strong 2Q18, with topline rising 10.8% y-o-y and PATMI surging 77.5% y-o-y to SGD13m. This was contributed by strong performances in North Asia and Singapore, coupled with a rise in GPM to 36.9% on increased contributions from the professional recruitment segment to 66.6% from 63.9%. This business has much higher gross margins of 99.6%.

Revenue/ per employee was up 15% y-o-y, followed by a 21.6% rise y-o-y for gross profits/employee. Productive sales employees have also increased to 505 from 469.

Source: RHB Invest Research - 10 Aug 2018