ManpowerGroup's Singapore 3Q26 survey confirms the trend, with seasonally adjusted net employment outlook is set to fall both q-o-q and y-o-y, dragged by large organisations and the information sector, even as manufacturing, construction, real estate, and SMEs hold up better.
"We believe this domestic softness could be partly offset by resilience elsewhere in the region: China, Taiwan and Vietnam continue to post robust hiring intentions, according to ManpowerGroup's APME survey," state Tan and Lim.
Nonetheless, HRnet, according to the analysts, offers a "compelling" defensive dividend profile with a yield of between 5 and 6%.
The company maintains a cash moat of $336 million, comprising a $263 million net cash position plus short-term investments such as T-bills and gold, against working capital needs of $130 million per year.
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From the perspective of Tan and Lim, capital returns remain a "clear management priority", with payout ratios near 80% over the past two years and FY2025 dividends raised to 4.2 cents, up from four cents each paid in the previous four years.
"We believe this balance sheet strength matters more as Singapore's hiring cycle softens: it underpins the resilient and largely recurring flexible staffing business and should let HRnetGroup continue to outpace peers on profit growth during challenging economic cycles.
"Cyclical softness in permanent recruitment may cap near-term growth, but the strong balance sheet and resilient earnings mix should provide meaningful downside protection, in our view," add the analysts.
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Given how Singapore, which contributes just over half of HRnetGroup's gross profit, will remain "subdued", the analysts have maintained their 14.5x PE valuation, which is in line with the company's historical average between FY2017 to FY2025, thereby deriving the target price of 78 cents.
"That said, valuation will likely be supported by HRnetGroup’s strong net cash position, resilient flexible staffing franchise, and steady dividend profile," add Tan and Lim, noting that it now trades at an "undemanding" ex-cash FY2027 PE of 9x, offering downside support.
For them, upside risks include a rebound in executive hiring and strategic M&As.
On the other hand, downside risks: weakening macro conditions impacting PR volumes and margin from competition.
HRnetGroup shares last traded at 74 cents.
