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51job Gets the Job Done

They're still hiring in China, and 51job (NASDAQ: JOBS  ) is there to help.

Shares of the employment facilitator opened higher before turning lower Thursday morning after posting better-than-expected financial results.

51job saw its revenue climb 7% to $63.8 million, fueled by a 9% rise in its online recruitment stronghold and even headier growth in its business process outsourcing services. Investors taking on the added risk of buying into Chinese growth stocks may not be impressed by the mere 7% uptick, but 51job's own guidance was calling for just $60.5 million to $62.9 million in revenue.

The path to profitability was even kinder as 51job posted a profit of $0.66 a share or $0.74 a share on an adjusted basis. Analysts were targeting net income to clock in flat with the prior year's $0.61 a share showing.

Landing ahead of the prognosticators is a job interview that 51job routinely aces. This is the fifth straight quarter that the workforce enabler has raced past Wall Street's profit projections.

Yes, 51job's original print business continues to die, but that's by design. The 51job Weekly inserts of local job listings that once went out every week through as many as 30 publications has been halved over the past year to just seven newspapers. Print is old school, and that's true even in China.

This doesn't mean that 51job has cornered the market. Zhaopin is growing in popularity, though its once notable rival -- Monster Worldwide's (NYSE: MWW  ) -- announced that it was laying off more than half of its staff last month in anticipation of a fire sale that was revealed earlier this month. Monster is retaining a 10% stake in ChinaHR after the sale.

Monster is an interesting name to introduce here because a few years ago 51job was often called the of China.

Things haven't been going so well for Monster itself these days. Shares hit an all-time low earlier this month after it came up short in smoking out a buyer for the company itself. Analysts see revenue and earnings slipping this year. It's not that the stateside hiring climate is deteriorating. Employers are simply turning to LinkedIn to drum up worthy candidates for job openings.

Can the same thing happen in China? Will social networking disrupt China's online recruiters? SINA introduced Wei Renmai -- a LinkedIn-esque professional networking -- three months ago. I interviewed the CEO of Ushi, a website with the early lead in being the LinkedIn of China, two years ago.

For now, 51job is having no problem rolling with the changes. 51job hasn't skipped a beat as it transforms its business model from print-based to one that is largely Web-centric in just a few years. The dot-com darling is also no stranger to the smartphone revolution. Its app has been downloaded more than 6 million times.

There are now 183,446 unique employers using 51job to fill up their vacancies, and that's 18% more than the number of companies relying on 51job a year ago. Sure, that also means that the average employer is spending less through 51job, but the point here is that the website operator hasn't lost its relevancy.

Like most of the Chinese Internet companies that have already issued guidance for the current quarter, 51job is expecting a sequential dip this quarter. This is what happens when the sleepy Chinese New Year comes 18 days later than it did a year earlier. However, even the $0.63 a share to $0.71 a share in adjusted earnings and the $61 million to $64.2 million in revenue that 51jobs is forecasting are above Wall Street's targets.

As China's economy continues to grow faster than the world on average, 51job is in the right place at the right time.

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9/23/2016 4:00 PM
JOBS $34.84 Up +0.06 +0.17%
51job CAPS Rating: *****
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