HRnetGroup

[karlmarx]

I have been causally following HRnetGroup for quite some time.

The statement about investments from Adeline Sim is indeed misleading. She is trying too hard to impress investors and partners. Unfortunately, it will backfire on investors unfamiliar with the company.
The Japanese HR company mentioned is Technopro. HRnetGroup and Technopro has invested in each other since 2017. It is meant to be a strategic investment, not a speculative investment. Till date, I don't think either party has divested their shares in the other company.

In addition, HRnetGroup has tons of cash when they IPO. If I didn't recall wrongly, their market cap was 30-35% cash when they IPO. HRnetGroup was a privately-held family run business for over 20 years, with some shares attributed to employees and partners. What they desire is business growth/expansion and for strategic reasons they IPO. Return cash to shareholders is not their main consideration.
Their growth ambition can be seen from the various investments they made and startups they created. But whether they will be successful overseas remains a question mark. A question that is not easy to solve.

Regarding wage credit subsidies, I have given it some thought before. A substantial portion of their income is indeed from wage credit subsidies. The way I think of it is this: if I am a third-party hiring company, I know the government has given subsidies to contractors' direct hiring company, would I not ask for my share of the subsides, if not 100% of the subsidies? Afterall, I am the hiring company and HRnetGroup is just the middleman.
My guess is, the third-party hiring company will either negotiate a lower fee from HRnetGroup or a cut of the subsidies. If that is the case, when the subsidies expires, the impact may not be as great as we imagine.
Time will tell, or this question can be posed to management.

I don't think it is realistic for a company to truly expect steady/profitable growth through acquisition of a company which is significantly large in relation to its own size. To put it in a different manner, don't swallow more than you can chew.

I think HRnet has done very well to have grown to its present size. Now that the baton has been passed to CEO Sim, it appears that she may have taken it upon herself to deliver the next stage of growth. Obviously, things haven't turned out so well (yet). And so the market may have revalued the company since it is looking less like a 'growth stock.'

As for the wage credit subsidies, I think that is a good point you brought up. I have no idea, but I do suspect that it is shared between the employer and HRnet. It'll be prudent to discount some of it from profit projections, but probably best to get an answer from management, if possible.