JobStreet Corp - Still looking for a new core biz

Date: 
2015-02-25
Firm: 
CIMB
Stock: 
JCBNEXT
Price Target: 
0.33
Price Call: 
SELL
Last Price: 
1.70
Upside/Downside: 
-1.37 (80.59%)
Target RM0.33 (Stock Rating: REDUCE)

Jobstreet's FY14 core net profit was broadly in line with expectations at 96% of our estimate. However we are positively surprise from the stronger associates and interest income contribution following the completion assets disposal to Seek Asia. Hence, we raise our FY15-16 EPS forecasts by 9-15% to account for higher associates contribution and interest income from the stronger cash balance. Despite this, we see the recent surge in its share prices as unsustainable due to near-term overhang from the transition of its business activities to Seek. We keep our Reduce call, albeit with a higher target price of RM0.33, still based on 16.8x CY16 P/E, 30% discount to IT services sector P/E of 24x. Switch to GHL Systems for better exposure to tech sector.
  
4Q14 review 
Revenue rose to RM15.5m in 4Q14 from RM1.1m last year due to the reclassification of dividend from its investment in Cinderella Media (550 HK, Not rated) amounting RM14.8m. The company recorded a significantly higher interest income of RM5.4m in 4Q14 (vs. RM0.05m in 4Q13) following the completion of the disposal of assets to Seek Asia in Nov 2014. In addition, Jobstreet had also recently announced a 5-to-1 share consolidation exercise as part of its active capital management plan to have better control of its shares and to reduce speculative activities on its shares. Management expects the consolidation exercise to be completed in 2Q15.

Still exploring new core business
Jobstreet is still exploring potential new businesses following its employment assets disposal and it is not expecting to complete any deal soon. The company is in the midst of transferring its business activities to Seek Asia, which it expects to be completed in Nov 2015. Therefore, Jobstreet's earnings in 2015 will be dependent upon the performance of its associated companies in Taiwan and Malaysia, quoted investments in Hong Kong, and the advertising services of Autoworld. Despite the compelling value in its remaining assets, Jobstreet's outlook remains challenging, in our view, due to its now limited market reach in the employment classified ads segment and strong competition in the automotive classified ads segment.

Maintain Reduce 
Switch to GHL Systems for better growth prospects in the tech sector.

Discussions
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Tony Tony

may reach 0.50 tomorrow .

2015-04-16 22:34

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