Proxy to Tight Labour Market in Singapore

• We see HRnetGroup (SGX:CHZ) as a beneficiary of the current tight labour market as Singapore eases its border restrictions and reopens the economy. In particular, we expect the professional recruitment (PR) segment to drive core EPS growth in FY22 along with rising wages and placement volumes, while the flexible staffing (FS) business should continue to do reasonably well.
• Backed by its strong balance sheet, HRnetGroup just announced it will establish a S$30m share buyback programme.

Professional Recruitment to Drive Growth

• A 5-14% pay rise for civil servants scheduled for Aug 2022 could have a knock-on effect on private-sector salaries. According to channel checks, there is a widespread talent shortage, especially in IT and life sciences (which accounts for 15% and 26% of FY21 revenue).
• As the Group’s fees are based on a percentage of salaries offered to successful candidates, HRnetGroup will be able to ride on this increase in salary levels across geographies. This may potentially provide some upside surprise to our PR revenue forecast (FY22E: +11% y-o-y).

Source: Maybank Research - 13 Jun 2022