• HRnetGroup's 1H22 came in line with our estimates. Revenue rose 14.2% y-o-y to S$314.2m while core NPAT rose to 36.2% y-o-y to S$42.6m. A S$0.0213 interim dividend has also been declared.
• Going forward, we see hiring remaining resilient despite the possibility of a slight slowdown.
• We believe that the current share buyback (SBB) programme will also be positive to HRnetGroup's share price.

HRnetGroup's FY22F to Stay Solid

• For 1H22, HRnetGroup (SGX:CHZ)’s flexible and professional recruitment segments grew 13.2% and 18.6% y-o-y, with Singapore remaining its largest market share.
• Going forward, hiring is expected to remain strong from the technology, healthcare and consumer sectors. There is potential for a slowdown in hiring, especially if a recession hits, but signs continue to indicate hiring is healthy.

S$30m Share Buyback Programme to Provide Support to HRnetGroup's Share Price

• HRnetGroup intends to purchase up to S$30m of its shares via the market. The maximum number of shares, which may be purchased by HRnetGroup under the 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 of 16 Aug 2022, HRnetGroup's management has already purchased 0.21% of its total shares outstanding. We expect the Share Buyback (SBB) to continue and likely be a boon to its share price.

Attractive Dividends Expected to Continue

• HRnetGroup's management has declared its first ever interim dividend of S$0.0213. With the positive performance likely to continue, management should keep rewarding shareholders with attractive dividends. As a result, we expect a 5.5% dividend yield for FY22F using a 60% payout ratio.

Outlook Still Healthy

• Management remains bullish for both its recruitment segments across all geographical areas as there is continued strong demand for its services year-to-date. As a result, we believe the positive performance will continue and HRnetGroup should benefit from higher margins as well.

HRnetGroup - ESG & Valuation

• HRnetGroup's share price is also 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. As such, we maintain our BUY call on HRnetGroup, with our target price is pegged to 14x FY22F P/E.
• 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.
• Maintain BUY recommendation on HRnetGroup with S$1.01 target price, 28% upside and ~6% yield.

Source: RHB Invest Research - 20 Sep 2022