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How Does HRnetGroup Ltd Make Money?

It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business HRnetGroup Ltd (SGX: CHZ) is involved in and how it generates its revenue.

HRnetGroup, which debuted on our stock exchange in June last year, is the biggest Asia-based recruitment agency in the Asia-Pacific region, excluding Japan.

Let’s take a look at the table below for the revenue contribution of each segment for the financial year ended 31 December 2017 (FY2017):Source: HRnetGroup 2017 annual report

Revenue from flexible staffing comprises fees charged to HRnetGroup’s clients to cover the relevant contractor employees’ payroll in full and a portion of their payroll costs. The key brands in this business are Recruit Express and RecruitFirst.

Revenue from professional recruitment consists of fees charged to clients as a percentage of the candidate’s remuneration in the first year of employment. HRnetOne, PeopleSearch and SearchAsia are the main brands in this business.

Last but not the least, revenue from others comprises income from providing services such as payroll processing.

The following shows the breakdown of HRnetGroup’s revenue in terms of sectors:

Source: HRnetGroup 2017 annual report

From the above, it can be seen that the group’s revenue is diversified across many sectors. Furthermore, no single customer accounted for more than 10% of FY2017 revenue, with the top ten customers representing 22% of total revenue.

Now that we know the basics of HRnetGroup’s revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash-generating abilities and so on before deciding to invest in it.

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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.