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2 Charts to Show Why HRnetGroup Ltd Is Well-Positioned for Long-Term Success

HRnetGroup Ltd (SGX: CHZ) is the largest recruitment firm in Asia, excluding Japan. It was listed two years ago on the Singapore stock exchange. The company appeared on my radar lately as it was trading close to its 52-week low price. Hence, I decided to do a quick overview of the company’s fundamentals. Here are two charts that I found useful during my research.

Revenue

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Source: HRnet Investor Presentation

There are a few interesting things to note here.

At a glance, there have been only three times when HRnet reported lower revenue on a year-on-year basis. Those years were 1999, 2002, and 2009.

In the last decade, revenue has grown at a compound annual growth rate (CAGR) of 9%. Such a growth rate may not be exciting, but the growth translates to a doubling of HRnet’s revenue every eight years. What’s more, in the last five years, the growth rate has accelerated at a CAGR of 9.3%.

Profitability

Source: HRnet Investor Presentation

The other chart that’s worth paying attention to is the corresponding net profit growth.

Overall, we can see that net profit has been more volatile over the years when compared to revenue. Though the long-term trend is upwards, HRnet’s net profit has fluctuated by a larger magnitude over the years. This is likely driven by the high operating leverage (high fixed cost) within its cost structure.

In other words, investors will need to stomach short-term volatility in profitability in order to benefit from the long-term growth in its business.

Conclusion

Overall, HRnet has demonstrated that it can grow over the long-term, evident from the two charts above. Yet, investors should be mindful that the ride will not entirely smooth since its performance, especially its profitability, can be affected by economic and business cycles.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended the shares of HRnetgroup Ltd.