Monday, November 26, 2012

What I see in Jobstreet...

Besides the worry in Linkedin as a competitor which to me is overdone, this is what I see in Jobstreet - its contributions from its oversea's operations particularly Philippines. From this year onward, revenue from Philippines will probably exceed its Singapore's revenue - all the while its second largest market.

Look at the table above as compared to its FY2011's geographical contributions below. From this, we know that Jobstreet is not a "jaguh kampung". It has found secret formula for success in Philippines, hence telling that this is not a one-hit wonder. Revenue in Philippines has grown at high double digits percentage and it seems that it could have still continued to do so. Apparently, Indonesia is a high double digit growth market as well although it is categorised under "Others" for now.

This is important. Another factor, despite Linkedin having a representative sales office in Singapore, revenue in Singapore for Jobstreet nevertheless continues to grow - although slower than Philippines. Hence, all the fear of loss in revenue in the job advertisement space should be concentrated on the print media rather than online jobs posting companies such as Jobstreet and SEEK.

Low assets

What are Jobstreet's assets? The jobseekers who posted their resumes in the company's database as well as the employers that are looking for employees. These, you can't see in the balance sheet. Unlike the traditional print media companies, there are no printing presses as owned by Star, huge factories like those owned by F&N etc.  Hence, if you look at the balance sheet of these companies, they basically are just cash, some receivables as well as some intangibles. However, as in previous post, I have mentioned of Jobstreet expensing off all their R&D expenses - which is a good thing looking forward. The free cash flow that are received, a huge sum are actually redundant if they do not use them wisely.

There is no need for building huge factories or distribution channels except for office for staffs. The more successful or the larger the databases, the more job-seekers and employers are going to use them. That's the beauty, as in a way you can say that it is almost free marketing for Jobstreet.

This is also why Jobstreet is able to pay out higher dividends and keep a very lean balance sheet. In fact, for Jobstreet, what you want to see is how efficient they use their equity as in ROE overtime. As an investor though as it has proven to me successful, I am willing to let them build the market they intend to target such as the Philippines and Indonesia as well as Vietnam.

Similar to Linkedin's as well as Facebook's or even Jobsdb or any of the competitors per se, these are never heavy assets companies.

Is Linkedin a threat? Yes, but I still think that both of them can co-exists - the earlier generation jobs seeking websites such as Jobstreet or even Monster as well as the social media typed such as Linkedin. This is because Linkedin has yet to prove to me how it is going to fill some of the gaps such as the lower management, executives jobs etc. I, in fact see Linkedin as a threat to the employment agencies or head hunters as some companies or people may just go direct - although if you notice employment agencies use Linkedin to a large extent currently.

Why do I not buy Linkedin then? Yes, I believe Linkedin is here to stay, but notice the 700x PE albeit the higher growth.

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