HrNetGroup - just released its 1Q 2018 result, Net profit increase 45.5% from 11.2m to 16.3m. This is rather outstanding.
Total Revenue increase 12.3% from 95.3m to 107m. Gross profit increase 11.3% from 32.7m to 36.4m. The Net profit was boosted by an increased of 43.5% of 6m from other income.
REVIEW OF GROUP’S PERFORMANCE
Net profit after tax (“NPAT”) increased by 33.5% (S$4.3m) arising from growth in:
a. Revenue by 12.2% (S$11.6m) and gross profit by 11.3% (S$3.7m):
i. Flexible staffing:
Continued business momentum, particularly in Singapore. Revenue grew by 12.8% (S$9.5m)
and gross profit by 15.1% (S$1.7m).
ii. Professional recruitment:
Stellar performance in North Asia, particularly Hong Kong and Mainland China. Revenue
grew by 9.9% (S$2.1m) and gross profit by 9.8% (S$2.0m).
b. Other income by S$2.0m mainly due to S$0.8m gain on revaluation of marketable securities,
S$0.6m increase in interest income and S$0.5m increase in Singapore government subsidies
received.
Offset by other employee benefit expenses that rose by 11.7% (S$2.0m) mainly due to S$1.2m
increase in profit-sharing incentives and bonuses that was in tandem with the increase in pre-tax
profits, and S$0.6m in share-based payment expenses arising from the 123GROW Plan implemented
in June 2017.
REVIEW OF GROUP’S FINANCIAL POSITION
The Group’s current assets increased S$15.7m from S$373.2m to S$388.9m, mainly due to:
a. a net increase in cash and cash equivalents amounting to S$3.0m which was a consequence
of S$12.9m cash generated from operating activities, S$8.1m deployed in investing activities
(mainly in the purchase of quoted marketable securities), and S$1.4m dividends paid out
mainly to non-controlling shareholders;
b. increase in trade receivables amounting to S$3.4m;
c. increase in other receivable and prepayments amounting to S$0.9m; and
d. increase in marketable securities amounting to S$8.4m.
The Group’s liabilities decreased by S$1.3m from S$54.7m to S$53.4m mainly due to:
a. the reduction of other payables and accruals by S$2.9m mainly due to the return of restricted
cash to a client for outsourced payroll services; offset by
b. the increase in income tax payable by S$1.6m.
This is a Net Net Position company whereby its total current assets of 388.9m is greater than its total liabilities of 53.4m..
NAV of 32.9 cents.
EPS of 1.6 cents for 1 Q .
Assuming a full year EPS of 6 cents . PE of 11 x is seems quite under value for the current price of 76 cents.
I think average PE of 16 x should be achievable at 96 cents.
Not a call to buy or sell.
Please do your own due diligence.
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