This is a summary of the first quarter fiscal 2006 earnings call conducted by 51job Inc. (JOBS) on May 11, 2006
Management:
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Chief Executive Officer: Rick Yan
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Chief Financial Officer: Kathleen Chien,
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Investor Relations Director:Linda Chien,
Key Investor Issues:
- Online recruitment services revenues were RMB48.5 million (US$6.1 million), representing a 52.6% growth from RMB31.8 million for the same quarter last year.
- Fully diluted earnings per common share were RMB0.47 (US$0.06) compared with RMB0.16 for the first quarter of 2005.
- The Company recognized total share-based compensation of RMB5.9 million (US$0.7 million) in 2006.
First Quarter Highlights:
Total revenues were RMB172.5 million (US$21.5 million), an increase of 20.9% from RMB142.7 million for the same quarter in 2005 driven primarily by the growth of the print advertising and online services businesses.
- Print advertising revenues increased 13.8% to RMB106.7 million (US$13.3 million) compared with RMB93.7 million in 2005.
- Online recruitment services revenues were RMB48.5 million (US$6.1 million), representing a 52.6% growth from RMB31.8 million for the same quarter last year.
- Executive search revenues decreased 27.2% to RMB5.1 million (US$0.6 million) from RMB6.9 million in the same quarter last year.
- Other human resource related revenues grew 20.0% to RMB12.3 million (US$1.5 million) from RMB10.3 million last year mainly as a result of increased demand for corporate training and business process outsourcing services.
Operating income was RMB 34 million compared with RMB 8 million for 2005
- Share-based compensation expense included in sales and marketing expenses were RMB 800,000 compared with RMB 300,000 in the first quarter 2005.
- G&A expenses were RMB 27 million, with the increase primarily due to higher professional services fees, additional costs related with operating more offices, staff additions and higher share-based compensation expense.
- Operating margin was 21%, up from 6% in the prior year.
Net income for was RMB 26.5 million versus RMB 9 million in the prior year or RMB 0.47 per common share, which is equivalent to $0.12 per ADS.
- Effective January 1, 2006 the firm adopted FAS123R which requires companies to measure compensation expense for all share-based payments at fair value resulting in an increase in the share-based compensation expense.
-51jobs recognized RMB 6 million in share-based compensation expense in 2006, compared with RMB 4 million in 2005.
- The firm recognized non-cash foreign currency translation losses associated with appreciations in the RMB against USD.
Cash balance at March 31, 2006 was RMB 786 million, a decrease from RMB 831 million at the end of 2005.
- In the first quarter the company made endowment payments toward the purchase of a new office complex in Zhangjiang high technology park that it will begin occupying later this year.
- 51jobs Inc. took title of the property in April and the associate depreciation expenses have been factored into the second quarter guidance.
Second Quarter 2006 Outlook:
- Based on current market and operating conditions, the Company\''s revenue target is in the range of RMB170 to RMB180 million (US$21.2 to US$22.5 million).
- Excluding share-based compensation expense and any foreign currency translation losses or gains that may arise from further Renminbi revaluations, the Company\''s non-GAAP fully diluted earnings target is in the range of RMB0.52 to RMB0.62 per common share (US$0.13 to US$0.15 per ADS).
-The Company expects aggregate share-based compensation expense to be approximately RMB8 million.
Key questions and answers from the first quarter fiscal 2006 earnings call conducted by 51job Inc. on May 29, 2008
Jason Brueschke:
Could you help us understand why you have to focus on profitability where China HR does not?
Rick Yan: We have a much bigger sales force compared to our competitors because we have both print and online. Having the capability to combine online and offline help us to sustain a bigger and higher quantity sales force compared to our competitors.
In addition, having both print and online increases our revenue per customer. Our competitors tend to use more of advertising on the air approach, we are a different company. We are more of an on the ground sales company, working with customers to improve their results. We are less of a marketing company that pumps a ton of money into TV advertising.
Jason Brueschke:
Companies are now competing for employees, which is a reversal of what was happening out here in China just a couple of years ago. Do you think that this trend continues?
