JOBST (0058) : JobStreet Corp - No jobs on this street
Target RM0.30 (Stock Rating: Reduce)
The Edge weekly reported that the recent rally in Jobstreet’s share price is attributable to expectations of a possible venture in a new core business, given its management’s successful track record in founding tech start-ups. We are not surprised by the news given the decent value in Jobstreet’s remaining assets. Nevertheless, we see the recent surge in share price as unsustainable due to the near-term overhang from business transition activities with SEEK Asia. Despite Jobstreet’s net cash balance of over RM44m, we think it would need to seek funding to grow its remaining assets or invest in a new core business. Hence, we cut our rating from Hold to Reduce, with an unchanged target price still based on 16.8x CY16 P/E, a 30% discount to the IT services sector P/E of 24x. Switch to GHL Systems for tech sector exposure.
What Happened
The Edge weekly reported that the recent surge in Jobstreet’s share price is attributable to expectations of a potential venture in a new core business, given its management’s successful track record in founding tech start-ups. Nevertheless, Jobstreet’s CEO and founder Mark Chang was reported as saying the company is not planning any immediate announcements related to its future growth. Meanwhile, Jobstreet has a one-year commitment to help SEEK Asia Investment (SEEK) manage the transition of Jobstreet’s employment portal.
What We Think
We are not surprised by the news given the compelling value in Jobstreet’s remaining assets. However, we see a potential near-term overhang from the business transition activities with SEEK, given that management still needs to assist in managing the portal. Apart from that, Jobstreet needs to find a new core business aside from the employment segment given that it already agreed with SEEK not to compete in the recruiting business in the coming two years and marketing and selling of vocational training and education courses through online channels in Malaysia, Singapore, Philippines, Thailand, Indonesia and Vietnam for one year. Separately, Jobstreet could grow its remaining assets by raising its associate stake in the Taiwan-listed employment service provider, 104 Corp (3130 TT, Not Rated), but it may need to raise more than RM460m to buy the remaining stake in 104 Corp. Overall, Jobstreet will need to raise funds to finance its next core business or grow its remaining assets at a faster rate.
What You Should Do
We see the recent surge in share prices as not sustainable. Hence, this provides a good opportunity for investors to trim positions. Switch to GHL Systems.
Source: CIMB Daybreak - 05 January 2015
Target RM0.30 (Stock Rating: Reduce)
The Edge weekly reported that the recent rally in Jobstreet’s share price is attributable to expectations of a possible venture in a new core business, given its management’s successful track record in founding tech start-ups. We are not surprised by the news given the decent value in Jobstreet’s remaining assets. Nevertheless, we see the recent surge in share price as unsustainable due to the near-term overhang from business transition activities with SEEK Asia. Despite Jobstreet’s net cash balance of over RM44m, we think it would need to seek funding to grow its remaining assets or invest in a new core business. Hence, we cut our rating from Hold to Reduce, with an unchanged target price still based on 16.8x CY16 P/E, a 30% discount to the IT services sector P/E of 24x. Switch to GHL Systems for tech sector exposure.
What Happened
The Edge weekly reported that the recent surge in Jobstreet’s share price is attributable to expectations of a potential venture in a new core business, given its management’s successful track record in founding tech start-ups. Nevertheless, Jobstreet’s CEO and founder Mark Chang was reported as saying the company is not planning any immediate announcements related to its future growth. Meanwhile, Jobstreet has a one-year commitment to help SEEK Asia Investment (SEEK) manage the transition of Jobstreet’s employment portal.
What We Think
We are not surprised by the news given the compelling value in Jobstreet’s remaining assets. However, we see a potential near-term overhang from the business transition activities with SEEK, given that management still needs to assist in managing the portal. Apart from that, Jobstreet needs to find a new core business aside from the employment segment given that it already agreed with SEEK not to compete in the recruiting business in the coming two years and marketing and selling of vocational training and education courses through online channels in Malaysia, Singapore, Philippines, Thailand, Indonesia and Vietnam for one year. Separately, Jobstreet could grow its remaining assets by raising its associate stake in the Taiwan-listed employment service provider, 104 Corp (3130 TT, Not Rated), but it may need to raise more than RM460m to buy the remaining stake in 104 Corp. Overall, Jobstreet will need to raise funds to finance its next core business or grow its remaining assets at a faster rate.
What You Should Do
We see the recent surge in share prices as not sustainable. Hence, this provides a good opportunity for investors to trim positions. Switch to GHL Systems.
Source: CIMB Daybreak - 05 January 2015
