This model ensures that HRnetGroup’s managers are incentivised to collaborate, rather than compete, with each other. “This fosters a culture that competitors cannot easily poach or reproduce,” Ong adds, noting that the scalability of the model has been proven by how HRnetGroup was able to expand into new markets like Vietnam and Taiwan.
Unlike most recruitment agencies that focus only on professional recruitment or flexible staffing, HRnetGroup draws its earnings from both business areas.
Ong says this “dual-engine model” has allowed the company to remain profitable since 1993. The flexible staffing business provides a “predominantly recurring base of revenue and gross profit” and helps provide stability, he adds.
“While professional recruitment captures upside during periods of economic expansion, flexible staffing delivers steady volumes, consistent cash flow, and strong client retention,” Ong says.
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Ong says HRnetGroup’s sizable cash pile of over $336 million is “more than just a defensive buffer” but also a “clear valuation disconnect.” In FY 2025, HRnetGroup held $262.9 million in cash and cash equivalents, $62.7 million in credit-linked notes and short-term Singapore Government Securities and gold ($10.7 million).
In addition, the cash pile gives HRnetGroup the ability to pursue any merger and acquisition opportunities that may arise down the line. “This balance sheet strength also provides flexibility to capture market share from weaker competitors during downturns,” Ong writes.
Although HRnetGroup has no directly listed comparables on the SGX, it’s net margin of roughly 8% to 11% puts it ahead of its peers such as Persol and Kelly. This is a reflection of the company’s “disciplined cost management and a strategic focus on professional recruitment over lower-margin temporary staffing,” Ong says.
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Ong’s valuation is pegged to a forward PE multiple of 18 times on estimated FY2026 earnings. The stock continues to trade at an undemanding valuation of less than 9 times its forward PE based on estimated FY2026 earnings, excluding cash, he adds. “This presents a significant arbitrage opportunity compared to some Japanese and Chinese peers, which trade at multiples of over 20x.”
Shares of HRnetGroup are trading down by 0.66% at 75 cents as at 4.15 pm.
