Human resources specialist 51job
Providing human resource services in China, a country with 1.3 billion potential hires, obviously makes a pretty compelling business opportunity. China's booming economy adds some quality to all that quantity.
51job serves both the old school and new school of the job-listings niche. Its traditional publications serve 24 different markets in mainland China, yet that business grew a mere 6.8% over the past year. 51job's online recruiting services provide headier growth, up 49.8% this past quarter. Over the past year, the company's online business has grown from 25% of total revenues to 31% of total revenues.
51job's online growth compares favorably to stateside leaders like Monster Worldwide
However, 51job's guidance for the current quarter won't win the company an engraving on the Employee of the Month plaque. Even though the company expects revenues to climb sequentially by 14% to 21% -- in line with Wall Street's expectations -- it predicts that profit growth will come in flat. Analysts were holding out for a $0.10-per-ADS showing for the March quarter.
The guidance will likely lead some model-crunchers to scale back their expectations. That could be troublesome, because the stock was already trading at 40 times analysts' 2006 target of $0.47 per ADS in profitability. Given the company's modest growth, investors looking to gain a toehold in China may want to turn to the Chinese online gaming sector, where NetEase
Then again, at the right price, 51job would be an intriguing find, too. The region's potential is too strong, and the company's fast-growing Internet pursuits warrant respect. Maybe you wouldn't want to hire 51job at the moment, but keep its application on file. You just never know when it might be the perfect fit for your portfolio.
Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin companies for a years, but he holds no financial position in any companies mentioned above. He recommended NetEase.com last year to Rule Breakers subscribers. The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.