Morgan Stanley gives worry stock an overweight 53.9

News and Information http://www.aliyun.com/zixun/aggregation/17197.html "> Beijing time November 9, Morgan Stanley today released a research report on worry. The report said worry's third-quarter results were robust and demand for recruitment activities in recent months had stabilized. Morgan Stanley gave the company an "overweight" stock rating, with the target price raised to 53.9 dollars.

The following are the main elements of the report:

Expected change

Target share price: up from 53.70 dollars to 53.90 dollars

Earnings per share forecast for 2012 and 2013: Up to 3% and 1% respectively

While Chinese employers remain cautious about recruiting, worry notes that hiring has stabilized in the past few months and that its third-quarter customer growth has been healthy. We are optimistic about the long-term prospects of worry, although there is still uncertainty about the recent macroeconomic outlook.

Performance exceeding Expectations

Worry in the third quarter of the total revenue of 374 million yuan, an increase of 9%, exceeding the company's guiding forecast limit, higher than our expectations of 5%, after the diluted earnings per share of 3.82 yuan (about 0.61 U.S. dollars), the year-on-year increase of 10%, than our expectations higher than 10%.

Positive factors

1 online recruitment service revenue rose 13% Year-on-year, mainly benefited from the customer volume of accelerated growth (up 14%, more than the previous two quarters of 10% year-on-year growth). 2 The income of other human resources services grew 26% year-on-year, accounting for 30% of the company's total revenue, up from 26% in the same period last year. 3) Worry estimates that the fourth quarter revenue growth will reach 3% to 7%, in line with our expected 4%.

Bad factors

1 The third quarter of print advertising sales fell 47% Year-on-year, the share of total revenue fell from 12% in the same period last year to 6%, because the company further reduced network coverage. 2 According to non-US GAAP, operating margins fell 2% to 36% per cent year-on-year, due to higher costs but still a 80 basis point higher than our expectations.

We believe that worry is better able to cope with the current slowdown in the economy than during the 2009 financial crisis because it is now more closely linked to more scalable Web services (more than 60% of total revenue) and other human resources services with predictable sales. In addition, the company's share of the online recruiting market has widened to 40% (well above 20% in 2009), and by encroaching on smaller companies its share may be further upgraded in a challenging market where small companies may be marginalized.

Stock Rating: Overweight

Industry prospects: Attractive

Actual per share earnings by Modelware model: 13.09 RMB (December 2011)

Expected earnings per share according to the Modelware model: 15.31 RMB (December 2012), 17.05 RMB (December 2013), 19.24 Yuan (3721.html ">2014 year December)"

Price: USD 46.76 (November 7, 2012)

Target price: 53.90 USD

Market value: 8.638 billion RMB