HeadHunter Group Company Review (HHRU - on the Moscow Exchange, HHR - Nasdaq Exchange).
In the portfolio - 2 pieces of HHR (purchase at $21) + 8 pieces of HHRU (purchase at 1901.3 RUB).
Capitalization is currently ~90 billion RUB, the cost of paper HHRU is 1794 RUB, HHR is $23. Current PE ~57, PEG = 1.7.
According to financial indicators - revenue over 4.5 years has grown 2.5 times, profit dynamics: 2015 - 1.22 billion RUB, 2016 - -86.37 million RUB, 2017 - 400 million RUB, 2018 - 949 million RUB, 2019 - 1.448 billion RUB.
Headhunter has positive growth forecasts, with current profits over the last 12 months of 1.58 billion. Expected income by year: 2020 = 1.779 billion, 2021 = 2.907 billion, 2022 = 4.269 billion, 2023 = 5.94 billion, which gives an increase of +200% over the next 3 years. (Profit and forecast data here and earlier in my articles are taken from SimplyWallStreet and GuruFocus).
Profit on shareis now 31.57 RUB, the lower threshold of the forecast for 2023 is 62.8 RUB, which is 2 times more than the current value. I am often skeptical about analysts’ forecasts and I advise you to do the same, but according to HH it is noteworthy that
📍 4-5 analysts give a forecast in a fairly narrow range, which may indicate about the high accuracy of target indicators
📍 Over the past 2 years, the forecast values exactly coincided with the company's actual results
In total, we have an expected increase in the company's profitability by 2 times over the next 2 year. The current P/E is quite high even by the standards of the American market, not to mention ours. Despite the presence of nominal competitors, I personally consider HeadHunter to be practically a monopolist in the recruiting market. Risks - like all Russian companies that earn in RUB and operate in our market - devaluation of the ruble + geopolitics.
My conservative forecast for HHRU = 4000 RUB for the horizon of 10.2023 = +122% for 3 years ~30% per annum in RUB. The forecast (as always) is only a guide; once a year I review each stock in the portfolio regarding its prospects and % weight. In the current portfolio, the company’s share is about 2.5%, and I will approximately increase it to 5-6%. I also recommend reading the company review from Seekingalpha.
Attached are traditional graphics -
1⃣ Revenue and profit 2015-2019
2⃣ Profit, 2020 and beyond - forecast values
3⃣ Earnings per share, 2020 and beyond - forecast values
Ideas
October 20, 2020