• HRnetGroup announced a strong 1H22, in line with our estimates. Revenue rose 14.2% y-o-y to S$314.2m, while core net profit after tax rose to 36.2% y-o-y to S$42.6m.
• Going forward, we see hiring remaining resilient despite the possibility of a slight slowdown.
• A S$0.0213 interim dividend has also been declared by HRnetGroup. We believe that the current share buyback (SBB) programme will be a positive to HRnetGroup's share price.
• Maintain BUY and target price of S$1.01, 28% upside and ~6% yield.

HRnetGroup's FY22F Will Likely End Well

• For 1H22, HRnetGroup (SGX:CHZ)’s flexible and professional recruitment grew by 13.2% and 18.6% y-o-y, 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.

HRnetGroup Announced S$30mil Share Buyback Programme

• Management intends to buy up to S$30mil of HRnetGroup shares via the open market. The maximum number of shares which may be purchased by the company under the share buyback 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, HRnetGroup's management has already purchased 0.21% of the total shares outstanding. We expect the share buyback programme to continue and be positive for HRnetGroup's share price.

Attractive Dividends Likely to Continue

• HRnetGroup has declared the first ever interim dividend of 2.13 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 HRnetGroup in 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 year-to-date. As a result, we are optimistic the performance will continue, aided by higher margins as well.
• HRnetGroup's share price is trading at 11x FY22F P/E, which is lower than its global peer average. We believe HRnetGroup is a decent proxy to the global economic recovery, and as such, it will enjoy a solid FY22F.
• We maintain our BUY call on HRnetGroup, while pegging our target price 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% premium to our target price.

Source: RHB Invest Research - 17 Aug 2022