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HRnetGroup eyes expansion into new markets

Its full-year net profit announced on Friday was a record high, from strong business momentum


MAINBOARD-listed recruitment firm HRnetGroup is eyeing expansion into Vietnam, the United Kingdom (UK) and Australia, after having completed three acquisitions last year that brought it into new cities such as Suzhou and Jakarta.

It has about S$22million earmarked for expansion plans that are already in the pipeline, and another S$100 million for other opportunities that may arise.

Meanwhile, it is also stepping up on introducing its flexible staffing offering into its existing markets such as those in Malaysia and Shanghai. RecruitFirst Malaysia will commence in the first quarter this year, and RecruitFirst Shanghai, in the second quarter. HRnet will also extend its footprint to Shenzhen in the third quarter, with the establishment of HRnet One Shenzhen.

In a media briefing on Friday, Adeline Sim, executive director of HRnetGroup, said: "Vietnam would be a market that we want to look at. Now that we have added Indonesia, Vietnam makes the most sense next.

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"We are also open to looking at the UK and Australia. We are not there, but they could possibly feed us regional contracts. That's really our big draw in being a regional player: We are in 13 cities, which means that when we sign one client in Shanghai, we could be delivering on the project in five or six different cities. Having that regional delivery capability is very important."

In the UK, HRnetGroup currently has a very small stake in recruitment firm Gattaca.

On Friday, the group posted a 16.6 per cent rise in full-year net profit to S$48.2 million, from S$41.3 million a year ago, as revenue grew 9.3 per cent to S$428.5 million.

The revenue figure was a record high for the firm, which listed in June 2017. This came on the back of strong underlying business momentum for both its professional recruitment and flexible staffing business segments.

Growth from China was especially strong, with gross profit jumping by more than 50 per cent, though this was from a lower base.

Ms Sim said: "The recruitment market (in China) was very good. In particular areas where there is high demand, they (the employers) are prepared to pay much better than anything you would see here... If they really want this person who's good at new energy or digital marketing, there's that willingness to pay for what they want, and because of the speed at which everything is moving, they don't want to wait; they want it now."

Pockets of high demand have sprung up in professional services, new energy and automotive, she said. She also expects gross profit from North Asia to surpass 50 per cent of the total in three years.

HRnetGroup's revenue growth was partially also due to acquisitions completed in the second half of the year, including REForce in China, HRnetRimbun in Jakarta and Career Personnel in Hong Kong. Taken together, these new business units contributed S$4.4 million in revenue and S$2.9 million in gross profit.

Earnings per share for the year came in at 4.77 Singapore cents, up from 4.59 cents last year.

The company has recommended a final dividend of 2.8 cents per share for FY2018, up from the 2.3 cents per share paid out last year.

Looking ahead, the group noted that political uncertainties and trade tensions will pose a challenging environment, along with impending slowing economic growth, but this will not deter its expansion efforts.

Shares in HRnetGroup closed a cent higher at S$0.795.

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