Apr 14, 2010

KLSE JOBSTREET TARGET PRICE

JobStreet Corporation (RM1.99; Buy; Price Target: RM3.20; JOBS MK)

Increased stake in 104 Corporation to 20% JobStreet Corporation (JobStreet) announced to Bursa Malaysia yesterday that it has acquired a total of 3.4% or 1,145,000 shares in 104 Corporation between 6 Jan 2010 and 12 Apr 2010. This brings its total equity stake in the Taiwanese online recruitment company to 20%. The average transaction price per share for the 20% stake is estimated to be TWD85.40, implying a price tag of 10.5x PE of FY Dec 10 EPS of TWD8.14. 

We are positive on this development as this will enable JobStreet to tap on 104 Corp’s profitability and its expertise in the Taiwanese and Chinese recruitment markets which 104 Corp has its strength in. 

With the 20% equity stake, JobStreet would be able to equity account for its share of 104 Corp’s earnings in its FY10earnings. Based on 104 Corp’s consensus net profit of TWD262.50 in FY10, JobStreet would be able to account for TWD52.50 or RM5.3m in its FY10 earnings, on a 12-month equity account basis. We have factored in this earlier in our initiation report dated 17 Mar 2010. Hence, we are leaving our forecast earnings unchanged. 

Maintain Buy on JobStreet with target price of RM3.20 based on 1x PEG on its FY09-12 net profit CAGR of 25%. We like JobStreet for its high growth prospects being in the right industry, >20% average ROE and 15 sen/share cash as
at end-09.