HRnetGroup

[money]

hahaha it took them millions to learn a lesson from the fair value losses. They could have come to the forum here to read up and they will then realize there is a hell of difference in having a controlling stake in a business and running the actual operations versus owning it as an outsider

And it is very much like if i buy some shares in HRnet, hoping for a huge one-time special dividend and the management says NO. At least, they are honest and upfront about it. As an OPMI, i wont have a chance of benefiting form the huge cash pile

[weijian]

As an OPMI, i wont have a chance of benefiting form the huge cash pile

Well, the Sim family has shown us that this may not be true. Historically, the Sim family took home 4-5x more in dividends compared to their salaries.

With poor 1H24 results (and even poorer forecast for the rest of the year), they continue to declare similar dividends YoY. Very good chance that the full year dividends will still be matched (ie. 4 cents/share), all thanks to its prior low payout ratio. So in a way, the huge cash pile is still been shared around.

With Sims owning ~80% of the company and its business co-leaders another 5-10%, they are very well aligned with OPMIs. Even the NEDs get half of their fees in shares.

1H2024 Financial Results

Market conditions look set to get even tougher in Q3 and Q4 as geopolitical tensions continue to intensify and the trade war worsened into a cold war.

We will do what is within our control, including keeping a tight rein to reduce costs, upskilling our consultants to fight even better in this market, and raising delivery standards to lock in trust and confidence in our client relationships.

The Group has strong fundamentals, robust infrastructure and entrepreneurial elements in place to ensure sustainable profitability. We are well positioned to capture growth and seize M&A opportunities.

1H24 results:
https://links.sgx.com/FileOpen/HRnetGrou...eID=815130
1H24 ppt:
https://links.sgx.com/FileOpen/1H2024%20...eID=815131

[weijian]

HRNetGroup declared its SBB program in 2022 and has purchased a considerable amount of shares since then. Most of the repurchased shares have been kept as treasury shares, and then periodically released as share payment for NEDs/business leaders. Therefore, this sale of treasury shares, abeit a small one and the company surely has enough cash (and financial assets) on their BS, is something new.

SALE OF TREASURY SHARES

(a) Date of sale: 30 September 2025
(b) Purpose of sale: To enhance trading liquidity and free float
© Number of treasury shares sold: 156,600

https://links.sgx.com/FileOpen/2025.09.3...eID=860605

[weijian]

HRNetGroup has placed out ~1/3 of its treasury share inventory, with almost half going to Avanda (who are 1 of the 3 asset mgrs selected by MAS in the 1st tranche of the EQDP). The Sims own ~80% of HRNetGroup and this "lack of public float" may explain why it wasn't included in the iEdge Singapore Next 50 index. Nonetheless, this placement of shares isn't going to move much of a needle though.

PLACEMENT OF SHARES

Avanda Investment Management (“Avanda”) 4,200,000 42.9%
Lion Global Investors Limited (“LGI”) 2,100,800 21.5%
ICH Asset Management (“ICHAM”) 1,400,000 14.3%
Mr Lim Chap Huat 1,380,000 14.1%
Dr Chong Weng Chiew 700,000 7.2%

https://links.sgx.com/FileOpen/HRnet_Fol...eID=863079

[weijian]

The SaaS BU (HRMS) of HRNetGroup is a very small portion of its revenue/profit and so the below wins are not going to move the needle a bit. But these contract wins are good (especially one of them is against another 8 competitors) and hopefully the company continues to gain traction.

Octomate Contract Win Sentosa Development Corporation

Octomate will implement an integrated Cloud Services system to streamline HR functions for SDC's operations, which include a headcount of approximately 750 on Sentosa Island. The contract was secured in a competitive tender against eight other bidders. The engagement has an initial term of three years from January 2026 with an option for a two-year extension. The platform will centralize the management of time and attendance, leave and absence, and payroll processing.

https://links.sgx.com/FileOpen/HRnetGrou...eID=872692

Octomate Contract Win Outward Bound Singapore

Octomate has been awarded the project to optimize workforce management for OBS's 250 staff members by centralizing two critical functions: roster scheduling and leave planning. The solution will provide OBS with the following key capabilities:

• Intelligently assign instructors to work events based on certified skills and availability.
• Streamline the management of complex work rotations and leave requests.
• Proactively identify and flag potential scheduling conflicts.
• Offer a mobile-responsive interface for real-time schedule access and updates in the field.

https://links.sgx.com/FileOpen/HRnetGrou...eID=872695

[weijian]

Generally, I have a favorable opinion towards HRnetGroup Mgt but it has changed a little when they calculated that their PE "excluding our S$336m cash moat" is ~7x. A few thoughts:

(1) What is cash moat? I suppose Sims have over-dosed a little on Buffett and Berkshire Hathaway. But since most of us also suffer from same over-dosing, it is fine. Mgt says there is a 336mil "cash moat" but FY25 balance sheet only shows 263mil cash/equivalents. The difference is explained by the 73.7mil worth of current financial assets. These financial assets consist of a mixture of quoted and unquoted debt/equity securities, with at least half of them probably coming from some CLO products where they will earn an interest income (financial assets at amortized cost) when redeemed within 1 year.

(2) It seems like the Sims also like to use "ex cash" for their P/E calculation. I decided to do a quick audit:

- FY25 EPS~5.21
- With P/E=13.86, the share price ~72cents
- 336mil cash on 981.7mil shares = 34cents/share
- P/E (ex-cash moat) = (72cents - 34cents)/5.21cents --> This ends up to P/E~7 and matches their statement.

The calculation is correct but something is missing, isn't it? While Mgt excludes "cash moat" from the numerator (ie. price), they have chosen to leave the denominator (ie. earnings) untouched. HRNetGroup recognizes substantial income from their "cash moat" management. Therefore to be fair, if you want to exclude the cash from the numerator, you will have to exclude your "cash moat" income too. A recalculation below:

- ~9.3mil of other income generated from its "cash moat". On 981.7mil shares, this translates to EPS of 0.95cents.
- EPS (ex cash moat earnings) --> 5.21 - 0.95 = 4.26cents
- PE (ex cash moat and ex cash moat earnings) - --> 38cents/4.26 ~ 9.

So a fair calculation for PE excluding its cash moat, would be 9 instead of 7.

Responses to Questions Pursuant to the Annual Report of 2025 Published on 6 April 2026

Q2. HRnetGroup’s PE is 13.86x. Is superior growth possible to drive share price appreciation?

Ans: The Group’s PE when excluding our S$336m cash moat is approximately 7x. Share price appreciation is driven by various factors including growth. Over time, superior growth relative to peers could come about from a combination of factors such as:

• Pivoting towards senior executive search.
• Increasing international contractor volumes.
• Adding recurring technology revenue through Octomate contract wins.
• Earnings-accretive acquisitions using part of our cash moat.
• Economic recovery of markets we operate in.

AGM Q&A: https://links.sgx.com/FileOpen/HRnetGrou...eID=884423

[BlueKelah]

this q a bit flat and i think maybe AI will affect the biz. accumulating a bit to watch the show. they should be able to maintain at least some of the div if asia eeconomies go into bad times and business down. 

one supeR inteResting thing is they staRted stacking gold instead of tReasuy( i assume the bonds is SG tbills.)

Maybe boss can see the wRiting on the wall, and changing this co. to a holding fund company. 

in any case i think can nibble a bit as value/yield is ok. but capital gain unlikely as business/EPS gRowth quite limited.