HRnetGroup Ltd’s 2017 Earnings: What Investors Need to Know

HRnetGroup Ltd (SGX: CHZ), which went public in June 2017, is the biggest Asia-based recruitment agency in the Asia-Pacific region, excluding Japan. The company announced its financial results for the full-year ended 31 December 2017 today.

Here’s a quick rundown of the financial figures for the year:

1. Revenue rose 7.4% to S$391.9 million largely due to strong growth from the flexible staffing business in Singapore.

2. Gross profit grew 2.4% to S$136 million. Gross profit margin for 2017 was 34.7%, down from 36.4% a year ago.

3. 2017 net profit inched up 0.6% to S$41.3 million. Net profit margin stood at 10.5% for 2017, down from 11.3% in 2016.

4. Diluted earnings per share for the year was 4.56 Singapore cents, an increase from 2016’s 4.53 Singapore cents.

5. The firm had a robust balance sheet. As at 31 December 2017, HRnetGroup had S$289.1 million in cash and cash equivalents, with no debt. This is an improvement from the end of 2016 where it had S$106 million in cash hoard with zero borrowings.

6. In 2017, cash flow from operations was S$35.2 million and S$0.9 million was spent on capital expenditure. Therefore, the recruitment firm brought in S$34.3 million in free cash flow, a decline from S$52.7 million raked in a year ago.

HRnetGroup achieved four straight quarters of revenue growth for 2017 as seen from the chart below:

Source: HRnetGroup Ltd’s Earnings Presentation

The bulk of 2017’s revenue came from the IT & Telecommunications sector, followed by Financial Institutions.

Source: HRnetGroup Ltd’s Earnings Presentation

In terms of gross profit by geography, Singapore contributed to 58% of total gross profit, North Asia chipped in 38%, and the remaining were from Rest of Asia. In 2016, the contributions were 57%, 39% and 4% respectively.

The company has declared a maiden dividend of 2.3 Singapore cents per share for the fourth quarter.

In the eight months since going public, the company announced signing some agreements with various parties to grow its business. Looking ahead, it added that it would “continue to source for other related opportunities to enhance the group’s value”.

At the closing price of S$0.785 on Friday, HRnetGroup is trading at a trailing price-to-earnings ratio of 17.2 and a price-to-free-cash-flow ratio of around 23. In addition, it sports a trailing dividend yield of 2.9%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.