New Businesses Emerging as Share Price Catalysts
The authors are analysts of KB Securities. They can be reached at kelee@kbfg.com and hdsung@kbfg.com, respectively. -- Ed.
Maintain BUY; Revise down TP by 9.5% to KRW42,000
We maintain BUY on SaraminHR, but revise down target price by 9.5% to KRW42,000. We have revised down 2022E, 2023E, and 2024E NP by 10%, 16%, and 5%, respectively. We had initially expected earnings to improve in 2022 on the back of: (1) growth in the number of job advertisement postings amid increases in ad hoc recruitment and number of people changing jobs; (2) rise in ASP for recruitment consulting; and (3) growth in earnings upon the addition of new growth businesses. We now expect 2022E EPS growth at 5.6% YoY (down from 17.5%) given limited growth in public-sector hiring and an increase in equity-method losses. However, we expect OPM at 32.2% (up from 30.2%), given an increase in revenue proportion of the profitable recruiting platform (website) business. We forecast 2022E consolidated revenue of KRW153.7bn (+19.1% YoY) and OP of KRW49.4bn (+26.4% YoY).
3Q22E revenue of KRW34.4bn (+8.8% YoY), OP of KRW11.8bn (8.3% YoY)
For 3Q22, we forecast consolidated revenue of KRW34.4bn (+8.8% YoY) and OP of KRW11.8bn (8.3% YoY); our revenue estimate is 6% below the market consensus, while OP is in line. We expect the recruiting platform (website) business to grow 10% YoY, with top-line growth allowing for operating leverage, boosting company-wide margins. As for the company’s offline business, despite the rise in ASP for recruitment consulting, revenue growth should remain in the 5% range amid limited growth in public-sector hiring.
Focus on growth of new businesses (i.e., Jumpit, Hapgyeok)
We see new businesses Jumpit (job platform for IT developers) and Hapgyeok (general job matching platform) emerging as share price catalysts in the long run. With Jumpit and Hapgyeok, SaraminHR screens applicants for suitable candidates and recommends them to corporations; SaraminHR receives a percentage of the annual salary of every hire as commission. As such, the two services should offer greater profitability than the existing recruiting platform business, which is more ad-based. Moreover, as the dominant player in the recruiting platform market, SaraminHR boasts a comprehensive database for talent, encompassing a wide range of functions and industries. SaraminHR is therefore likely to maintain an edge over its rivals, especially in providing job matching platform services across all types of job functions (i.e., Hapgyeok).