JobStreet shares fall due to lack of earnings visibility

-A +A

KUALA LUMPUR (Jan 5): Shares of JobStreet Corp Bhd dipped 5% due to lack of earnings visibility following the disposal of its online recruitment website and strong share price performance in the recent weeks.

JobStreet’s share price rose to a high of 51.5 sen in early trade today, but eased to 47.5 sen as at 3.18pm, down 5% from Friday's closing price. About 15.8 million shares changed hand.

It was one of the most actively traded counters today.

According to The Edge weekly over the weekend, the counter has gone up tremendously in four trading days from Dec 26 to 31, 2014 after the completion of the disposal of its core business, the online recruitment website to Australia company SEEK Asia Investment and a special dividend of RM2.65 per share was paid to the shareholders.

The report said the rally of the share price was due to anticipation of a new core business would be injected to the company given its management’s successful track record in founding tech start-ups.

In a note today, CIMB Research has downgraded its rating on JobStreet to “reduce” from “hold” at 50 sen, with an unchanged target price of 30 sen.

Its analyst Mohd Shanaz Noor Azman sees the recent surge in JobStreet's share price as “unsustainable” due to the near-term overhang from business transition activities with SEEK Asia.

He added that it would take a considerable amount of time for the company to expand its remaining assets due to its limited market reach in the employment segment and strong competition in other verticals such as the property and automotive segments.

“Despite Jobstreet’s net cash balance of over RM44 million, we think it would need to seek funding to grow its remaining assets or invest in a new core business," said Mohd Shanaz.