There are plenty of mixed signals flying around when it comes to the state of China's cooling economy, making the quarterly financials put out by 51job (JOBS) -- a Chinese provider of Internet-based recruitment services -- all the more relevant as a bellwether for the world's most populous country. After all, if China's hiring, it's probably going to reflect in an uptick in 51job's metrics.
51job updated its state with financial results for its fourth quarter last night, coming through with robust double-digit percentage growth across its two main businesses with expanding margins, to boot.
Revenue was a record $94.3 million, 16% ahead of the prior year's fourth quarter. It was also at the high end of its earlier guidance. Three months ago, 51job was targeting $91.3 million to $94.4 million in revenue. Its online recruitment services and other human resources services category clocked in with 16% year-over-year growth, a pretty big deal since the two segments account for 99% of its revenue.
The third and final segment -- print -- can be pretty much forgotten at this point. Print publishing was 51job's original business. Its key offering was a 51job Weekly collection of regional job openings that it would insert in regional newspapers. It began shifting to the more logical and lucrative Internet-based model several years ago, reducing its print publishing exposure by choice. Clearly, the segment no longer moves the needle as it accounts for just 1% of the business.
51job's operating profit soared 22% to $28.9 million, eventually resulting in a profit of $0.38 a share -- or $0.52 a share. That dramatically exceeded 51job's earlier outlook as gross, operating, and net profit margins all expanded during the quarter.
At first glance, 51job's guidance can be seen as problematic. It's eyeing an adjusted profit between $0.36 a share and $0.39 a share on $78 million to $81 million in revenue. That would be a notable sequential dip on both ends of the income statement, but seasonality has to be reckoned with here. The Chinese New Year holiday does slow hiring trends in China, and it only came in at $73.9 million in revenue during last year's first quarter. This implies decelerating revenue growth, as its guidance represents a top-line advance of just 6% to 10%. However, that is weighed down by the currency translation of the depreciating yuan relative to the dollar over the past year. In local currency 51job's guidance represents a 10% to 15% gain. That's not too shabby, even if the high end of its earnings outlook matches what it cranked out a year earlier.
The strong fourth quarter and 51job's recently sluggish share price combine to make the stock that much cheaper by traditional measuring sticks. 51job is now trading for less than 16 times trailing earnings, and that's historically at the low end of its valuation range. It's proving that it can grow even as reports of China's slowing economy become more pervasive, and that's just one more way that 51job is getting the job done.
