Saturday, November 17, 2012

Buying Jobstreet

This is a stock I have liked for a long while and have written extensively about. In fact, I have held the stocks via different accounts. Surprisingly, many years ago when I was introduced to this stock during the early listing days, the name of a dotcom company getting listed provides no appetite.

Surprise, surprise. Now I like the Board. I like the way the company is run. I like the management and I like the brand especially in the countries where it is especially strong in. And I like the way it conducts its listed status, fair remuneration, buyback, dividends etc. The only think I do not like is that it is highly illiquid. This is a problem which it can't do much as I see it, many investors are not very familiar with businesses like this and Jobstreet is not one company which is particularly interested to make its stock highly tradeable. In fact, the more it repurchases its stock, the lesser the number of shareholders may end up holding its stocks. I would say, it has done the right thing, hence nothing much can be done.

Jobstreet is particularly strong in Malaysia, Philippines and Singapore although it is the second largest in the latter country. For your information, below is the scenario of competitive strength of online jobs recruitment companies as presented by, the leader in Australia.

Ironically, controls a strategic 22% shareholding in Jobstreet since few years ago. Another investor in the online job recruitment which believes in companies in this space is Fidelity, whom has invested in both SEEK and Jobstreet. To add to the twist, SEEK bought a controlling stake in JobsDB in 2010. Hence, SEEK is the largest player by far in this region.

Although this space is highly fragmented, it is not an easy market to secure with the respective companies having dominated in each of its own space.

One company which could potentially disrupt the dominance of the incumbents is LinkedIN. Obviously, SEEK and Jobstreet are very much aware of it to describe LinkedIN's potential market share grab in their Annual Report. Below, is what Jobstreet has to say about LinkedIN, calling it a company with a social media twist.

As for SEEK, it is doing something to get involve in Social Media itself. See below.

Whatever it is, this is something where Jobstreet has to be really aware of as technology acceptance is something it has thrived from, and technology is something which can replace its dominance. I would not be able to comprehend the dominance of facebook until it is what it is today. Google did not see the importance of social media as well.

Anyway, I have still liked Jobstreet as it continues to grow its business especially in Philippines and it is a market where it can seriously grow in having the No 1 position. So is Indonesia. With its good sense of corporate responsibility, dominance in the market it has presence and its continuing attractiveness, I have bought 4,300 units of Jobstreet at average price of RM2.277.


Jake said...

Considering the potentially large threat of LinkedIN to the businessmodel of Jobstreet, would it make sense to buy shares in LinkedIN also, with the aim to hedge this risk?

Bn911 said...

This share up n down easily, personally feels rather risky under current uncertainty.

keano said...

Hi Felicity,

do you happen to know the important information and ratios to look at when comparing banks? I am currently making a comparison between Maybank, CIMB and Public Bank.

Currently my preference is CIMB due to its vast network and better growth prospect.

Maybank is currently still the biggest bank in Msia but a visit to its branch will turn you off. The documents and forms that they use are photocopies and some of the information on the documents are obsolete!

As for Public Bank, there are still no arrangement for a successor to Tan Sri Teh.

yatteng said...

I am quite cautious on the prospect for Jobstreet and Seek mainly due to Linkedin. The online recruitment firm - Monster Worldwide has impacted adversely by LinkedIn in US. Expect this trend to continue and might happen in developing and emerging market.

felicity said...

I dont think LinkedIN is that easy, but let's see. How many of you have a LinkedIN account and use them religiously?

Jake said...

We use traditional jobsites (Jobstreet, Seek, Monsterboard) only when we are explicitly searching for a new job. These websites need to continously advertise themselves so that their service will be remembered and considered by jobseekers.

In contrast, LinkedIn is used on a continuous (doesn't need to be religiously) basis by all kinds of professionals. The site offers contacts, information, discussions and other career-related content that is also useful when we are not looking for a new job. As a result we get, more or less, involved with LinkedIn as a member of its community and we use it as a tool for our existing job. This means that LinkedIn doesn't have to spend a dime of advertising to attract our attention once we are looking for a new job.

Information related to companies, job openings and candidates are all already existing on LinkedIn. For a job searcher, it makes no sense to open a new profile on another site like Jobstreet or JobsDB. Likewise, for a company it makes no sense to advertise their job-openings there. The connection can be readily made using LinkedIn.

I think this social component to LinkedIn poses the major threat to the business model of existing job boards.

felicity said...

I am definitely listening, but I guess if you look at the expenses incurred by LinkedIN, it is still spending a lot of administrative dollars although the revenue is growing.
LinkedIN is currently trading at 650x PE which makes me unable to evaluate the attractiveness of the company. It is one company that is able to withstand the social media onslaught although recently its price does deteriorate some 20%.
Anyway for the traditional job searching candidates, I think there is a space for them still. LinkedIN as I thought has been mainly for middle management position.
As for Monster, its market its under threat due to the market it serves well which is North America and Europe.
I guess I am still optimistic.

Jake said...

I do believe that LinkedIn is taking some business away from the traditional job portals in the US and Europe. It is very hard to quantify the amount though. In Malaysia, Philippines and Singapore it is probably neglectable right now but it's a development one should keep an eye on.

On a different note, I was wondering why you selected Jobstreet over SEEK. At first sight, the valuations seem comparable, however SEEK seems to have larger growth potential due to it's presence in more markets, most notably China.

paperplaneinc said...

I personally do not like Jobstreet, the market is easy to be penetrate, you see Sinchew, The Star etc are penetrating this market, sooner or later it will lose its market share.

If looking at e-business in Malaysia, I prefer MYEG

K C said...

felicity, I do agree that Jobstreet is a great company with great operating numbers, cash flows and healthy balance sheet. But eventually it is very important if it is selling to you at an attractive price. Great business does not make it a great investment. If you care to do a reversed free cash flows for owner's earnings analysis, you may find that the implied growth may be too high, even higher that its past growth. As you know, as a company gets bigger, it is harder to grow as fast as before, and some more with more and more competition, like LinkIn etc.

felicity said...

I have always liked Jobstreet, ever since I Studied the company quite a few years ago. If you noticed it is not just the business potential, but the management. I treat the management as very important element in any investment.

Sin Chew and Star do pose a small threat, but they just do not have the database which in this business is very important. Hence Star and SinChew are just a bit too late. It is like Olivetti (a strong typewriter company) went into the PC market.

I can give scenarios where there were tonnes of competitors few years ago - names such as Jobsandmore, Monster in Malaysia, jenJobs. Until now, Jobstreet is still growing in revenue and PAT if you notice. hence, the real potential threat is still LinkedIN. Having said that, I think for the moment, the threat from LinkedIN, as I see it is a bit too over-rated. Going to monitor this though.

As for Seek, I have only started looking at it a year ago. I like it, but that is the business I like in Australia (or one I know of). I do not understand the mining business which OZ market is very important in.

Now, I understand why Jobstreet does not possess strong valuation as many do not really like the competitive threat it faces.

felicity said...

Hi keano

Sorry missed your post. I do not keep numbers of banks in detail. There are many ways of looking at banks and the ratios used are much different to other types of companies.
For banks, efficiency, CAR (capital adequacy), P/NA comes into play. Another thing to look at is the cost of capital. The lower obviously the better.
Like what you have done, you looked at potentials of these banks in future. I have the same feeling on those banks. Only thing about CIMB, as it is so connected (you know who), perhaps the stock is a little bit under the weather is due to that, closer to election. Also, I do not know the percentage but a significant percentage of its income is contributed from investment banking as compared to PBB. Hence, that can be riskier.
Having said that, as I am negative on the prospect of consumption loan in the future (as it is already very high to GDP), I am a little bit apprehensive towards banking stocks.
I have made some mistakes as I have been negative banks for a long period of time (you see I do not hold banks in my portfolio although I do hold small numbers of PBB in other holdings). However, if you are asking me to look at the future, yes I am interested in CIMB. Another thing about CIMB is that it is strong Indonesia.

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