Jobst's net profit on track

Background

Jobstreet Corporation Bhd ('Jobst') is involved in the provision of interactive recruitment services. It operates in Malaysia, Singapore, the Philippines, Bangladesh, Indonesia and Japan. In addition, it also has associates operating in Hong Kong & Singapore as well as operating via a joint-controlled entity in India.

Recent Financial Results

On Monday, the company announced its results for 1Q2008 ending 31/3/2008. Its net profit increased by 56.2% q-o-q or 75.4% y-o-y to RM10.4 million, while turnover increased by 12.2% q-o-q or 41.0% y-o-y to RM25.3 million. The improved net profit was attributable to higher gross profit margin due to higher revenue contribution from JobStreet ESSENTIAL. This compared to a drop in net profit for 4Q2007 ending 31/12/2007, which was due to the following factors:

1. Lower gross profit margins due to higher revenues from contracting staff services from JobStreet Japan and lower JobStreet ESSENTIAL sales;
2. Higher staff costs;
3. Withholding tax on inter-company dividends from JobStreet.com Philippines, Inc;
4. Impairment loss on goodwill related to JobStreet.com India Pvt Limited and Blurbme Holdings Pte Ltd; and
5. Provisions for diminution in value of investment in quoted securities.

Note: Jobstreet had a bonus issue of 2-for-1 & a share consolidation of 2-to-1 in December 2007.

Valuation

Jobst (closed at RM1.72 yesterday) is now trading at a trailing PE of 15.8 times (based on the last 4-quarters' EPS totaling 10.9 sen) or at P/Book of 5.5 times (based on a NTA per share of RM0.31 as at 31/3/2008). At these multiples, Jobst may be deemed fairly priced. However, it is noted that Jobst has a strong growth track record. For example, the last 4-quarters' net profit grew by 43% over the preceding 4-quarters. Based on this growth rate, we can compute Jobst's PEG (or, PE/Annual Growth Rate) to be 0.37. A company with a PEG of 0.37 is considered very attractive. To learn more about PEG ratio, please go here.

Technical Outlook

From the charts below, we can see that Jobst is in a uptrend channel. The stock will have buying supports at RM1.50 & may come under selling pressure at RM1.90-2.00.


Chart 1: Jobst's weekly chart as at May 20, 2008 (source: Quickcharts)


Chart 2: Jobst's monthly chart as at May 20, 2008 (source: Quickcharts)

Conclusion

Jobst is deemed a good investment for long-term. Since my first post in December 2006, the stock has gained 50% (go here) and I believe the best is yet to come.