Broker's take: DBS initiates coverage on HRnet, issues 'buy' on labour market recovery

ANALYSTS from DBS Group Research have initiated coverage on HRnetGroup with a "buy" call and target price of S$0.96, representing a 21 per cent upside on its 2 Jan share close of S$0.79, saying the recruitment firm is poised to ride the wave of labour market recovery.

"Going by the uptick in growth in Singapore's services sector, we believe the labour market has bottomed; and, a recovery should bode well for HRnet being the largest player in Singapore," the brokers said in a research note on Wednesday.

The brokers noted that HRnet's co-ownership model could aid in the overall productivity for the group, align employee interests, and drive better operating performance.

However, DBS cautioned that the downturn in economic and business cycles, increased competition, departure of key personnel and relatively low liquidity of stock, which was possibly due to its short listing history, were key risks to HRnet's price upside.

Established in Singapore in 1992 and listed on the SGX since June 2017, HRnet has a presence in 10 Asian cities and is among the largest recruitment firms in the Asia Pacific region.

HRnet shares were trading up S$0.015 or 1.9 per cent at S$0.805 as of 9.34 am on Wednesday.