Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>The job openings in the US declined to 8.827m in July 2023, marking the lowest since March 2021, and falling well below projected 9.465m job openings for the month.</li>
<li>On the other hand, web traffic on <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> ’s job platform Indeed has declined in July compared to June 2023 while it has improved slightly on Glassdoor.</li>
<li>HR Tech segment’s top line growth declined 9.1% YoY in 1QFY03/2024 and the company has shifted into a new pricing model which we think would further impact segment’s growth.</li>
</ul>


The job openings in the US declined to 8.827m in July 2023, marking the lowest since March 2021, and falling well below projected 9.465m job openings for the month.
On the other hand, web traffic on Recruit Holdings (6098 JP) ’s job platform Indeed has declined in July compared to June 2023 while it has improved slightly on Glassdoor.
HR Tech segment’s top line growth declined 9.1% YoY in 1QFY03/2024 and the company has shifted into a new pricing model which we think would further impact segment’s growth.


Recruit Holdings: Weakening Job Markets and New Pricing Model to Impact HR Tech Further

Equity Capital Markets

Recruit Holdings / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> reported 1QFY03/2024 results yesterday. Revenue and OP increased 0.9% and 1.9% YoY to ¥850.8bn (vs consensus ¥818.7bn) and ¥121.6bn (vs consensus ¥109.9bn) respectively.</li>
<li>1QFY03/24 revenues of ¥850.8bn and adjusted EBITDA of ¥165.9bn were higher than the company guided revenues and adj. EBITDA of ¥800-830bn and ¥140-160bn respectively.</li>
<li>HR Tech segment’s revenues declined 9.1% and Recruit has shifted to a new pricing model for HR Tech which we think would further impact the segment’s earnings.</li>
</ul>



Recruit Holdings (6098 JP) reported 1QFY03/2024 results yesterday. Revenue and OP increased 0.9% and 1.9% YoY to ¥850.8bn (vs consensus ¥818.7bn) and ¥121.6bn (vs consensus ¥109.9bn) respectively.
1QFY03/24 revenues of ¥850.8bn and adjusted EBITDA of ¥165.9bn were higher than the company guided revenues and adj. EBITDA of ¥800-830bn and ¥140-160bn respectively.
HR Tech segment’s revenues declined 9.1% and Recruit has shifted to a new pricing model for HR Tech which we think would further impact the segment’s earnings.


Recruit 1Q: Earnings Further Slow Down; New Pricing Model Seems to Impact HR Tech Further

<ul>
<li>
<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> reported FQ4 and full-year FY03/2023 results. FQ4 revenue increased 9.0% YoY to ¥827.7bn (vs consensus ¥846.7bn) while OP decreased 57.1% YoY to ¥19.4bn (vs consensus ¥40.0bn).</li>
<li>Excluding restructuring charges and one-time charge on impairment losses on right-of-use assets, OP increased 12.4% YoY to ¥50.9bn resulting in an OPM of 6.1% vs 6.0% in 4QFY03/2023.</li>
<li>Recruit’s FY03/2024E guidance is in line with our expectation where the company expects earnings to weaken as labour markets have begun to slowdown.</li>
</ul>



Recruit Holdings (6098 JP) reported FQ4 and full-year FY03/2023 results. FQ4 revenue increased 9.0% YoY to ¥827.7bn (vs consensus ¥846.7bn) while OP decreased 57.1% YoY to ¥19.4bn (vs consensus ¥40.0bn).
Excluding restructuring charges and one-time charge on impairment losses on right-of-use assets, OP increased 12.4% YoY to ¥50.9bn resulting in an OPM of 6.1% vs 6.0% in 4QFY03/2023.
Recruit’s FY03/2024E guidance is in line with our expectation where the company expects earnings to weaken as labour markets have begun to slowdown.


Recruit 4Q: Earnings Growth to Decline as Labour Markets Begin to Slowdown

<ul>
<li>
<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> ’s share price has been down over the last few days following release of job openings data for May 2023 by the US Department of Labour.</li>
<li>The no. of job openings in the US in May 2023 decreased to 9.8m vs 11.3m in May 2022. It has also declined compared to 10.1m reported in April 2023.</li>
<li>Moreover, web traffic on Recruit’s job platforms Indeed and Glassdoor have also decreased in June 2023 compared to May.</li>
</ul>



Recruit Holdings (6098 JP) ’s share price has been down over the last few days following release of job openings data for May 2023 by the US Department of Labour.
The no. of job openings in the US in May 2023 decreased to 9.8m vs 11.3m in May 2022. It has also declined compared to 10.1m reported in April 2023.
Moreover, web traffic on Recruit’s job platforms Indeed and Glassdoor have also decreased in June 2023 compared to May.


Recruit Holdings: Disappointing Job Data for May; More Downside Ahead

<ul>
<li>Recruit’s share price been up +13% YTD and gained more than 22% over the last 30-days with the US Dept of Labour releasing job data for April 2023.</li>
<li>Job openings were 10.1m in April 2023 vs estimates of c. 9.4m which created positive sentiment over labour market's resilience to economic turmoil. However, April numbers were 13.5% down YoY.</li>
<li>
<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> is currently trading at a lofty FY+2 EV/EBIT multiple of 17.9x despite earnings expectations deteriorating, we are set to benefit nicely on the short side.</li>
</ul>


Recruit’s share price been up +13% YTD and gained more than 22% over the last 30-days with the US Dept of Labour releasing job data for April 2023.
Job openings were 10.1m in April 2023 vs estimates of c. 9.4m which created positive sentiment over labour market's resilience to economic turmoil. However, April numbers were 13.5% down YoY.

Recruit Holdings (6098 JP) is currently trading at a lofty FY+2 EV/EBIT multiple of 17.9x despite earnings expectations deteriorating, we are set to benefit nicely on the short side.


Recruit Holdings: Recent Rally in Share Price Is Unwarranted

Japan

Recruit Holdings Co. Ltd. operates information providing services in human resource, housing, bridal, travel, restaurants, beauty, automobiles, and education and more. The company also operate staffing services and advertising business.

52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Recruit Holdings (6098 JP)

Recruit Holdings: Weakening Job Markets and New Pricing Model to Impact HR Tech Further

US job openings hit a low of 8.827m in July 2023, below the projected 9.465m. Web traffic on Indeed has further dropped. The new pricing plan is...

Shifara Samsudeen, ACMA, CGMA

Recruit 1Q: Earnings Further Slow Down; New Pricing Model Seems to Impact HR Tech Further

As expected, Recruit's earnings have slowed down. HR Tech revenues declined and the shift to a new pricing model will impact the no. of paid job...

Shifara Samsudeen, ACMA, CGMA

Recruit 4Q: Earnings Growth to Decline as Labour Markets Begin to Slowdown

Recruit Holdings is reporting 1QFY03/2024 results tomorrow. This insight will offer readers a quick glance at the company's latest earnings and...

Shifara Samsudeen, ACMA, CGMA

Recruit Holdings: Disappointing Job Data for May; More Downside Ahead

Recruit's share price overreacted to better-than-expected April job openings, however, May numbers have declined YoY and MoM. Web traffic on Indeed...

Shifara Samsudeen, ACMA, CGMA

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Recruit Holdings: Weakening Job Markets and New Pricing Model to Impact HR Tech Further

​US job openings hit a low of 8.827m in July 2023, below the projected 9.465m. Web traffic on Indeed has further dropped. The new pricing plan is...

Shifara Samsudeen, ACMA, CGMA

Recruit 1Q: Earnings Further Slow Down; New Pricing Model Seems to Impact HR Tech Further

As expected, Recruit's earnings have slowed down. HR Tech revenues declined and the shift to a new pricing model will impact the no. of paid job...

Shifara Samsudeen, ACMA, CGMA

Recruit 4Q: Earnings Growth to Decline as Labour Markets Begin to Slowdown

Recruit Holdings is reporting 1QFY03/2024 results tomorrow. This insight will offer readers a quick glance at the company's latest earnings and...

Shifara Samsudeen, ACMA, CGMA

Recruit Holdings: Disappointing Job Data for May; More Downside Ahead

Recruit's share price overreacted to better-than-expected April job openings, however, May numbers have declined YoY and MoM. Web traffic on Indeed...

Shifara Samsudeen, ACMA, CGMA

Recruit Holdings: Recent Rally in Share Price Is Unwarranted

Share price rallied more than 22% over last 30-days driven by better-than-expected US Job data for April. However, April numbers were 13.5% down...

Shifara Samsudeen, ACMA, CGMA

US job openings hit a low of 8.827m in July 2023, below the projected 9.465m. Web traffic on Indeed has further dropped. The new pricing plan is...