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Wednesday, May 9, 2018

HrNetGroup

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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