Get a Job, Chinese Edition

March 28, 2011

Supply and demand is very much what 51job (JOBS), the Chinese employment and human resources services company is all about.

When 51job was founded in the 1990s, finding a job (or an employee, for that matter) meant checking the listings in a weekly employment newspaper. The company excelled at getting employment news out and still publishes millions of paper copies of its recruitment newsletter every week in the 16 Chinese cities it covers.

But the real action now is at, the company’s website. The site has over 45 million registered members and a database of 36 million résumés. (It’s definitely worth a click to see the company’s Chinese-language website, which is a starburst of flashing, competing posts that vie for attention.) Online recruitment is now solidly ahead of print as the leading source of revenue.

The big story on 51job is the company’s recovery from the two-year global economic slowdown of the Great Recession. While it remained profitable, never booking a quarter with a loss, revenue fell by 4% in 2009. By contrast, the company rebounded big starting in Q4 2009, the first of three consecutive quarters with triple-digit earnings growth. Revenue growth hit a solid 36% in 2010 with a pretax margin of 31.3%. Analysts are looking for revenue growth to hit 40% in 2011.

Margins are expected to remain high as the company moves into value-added services like executive searches, training, software, salary services and business process outsourcing. Elimination of high-overhead paper publication in some cities will also help.

51job has been through the fire and has come out stronger and more committed to the Web and to providing more profitable services.

JOBS has been trading under resistance at 60 since the middle of January, and the March pullback even pulled it below its previous support at 55. But during the last few days, the stock has caught an updraft and has broken though 60, although volume has not been above average.

This is a solid story with deep roots in the Chinese economy, and I’ll be watching it closely to see if it belongs in the Cabot China & Emerging Markets Report.

To learn more about top emerging markets stocks like JOBS, check out Cabot China & Emerging Markets Report, which Hulbert Financial Digest rated the #1 newsletter for five-year performance in 2009 and 2010.

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