KUALA LUMPUR (Jan 5): CIMB Research has downgraded Jobstreet Corporation Bhd to “Reduce” (from Hold) at 50 sen with an unchanged target price of 30 sen after the Edge weekly reported that the recent rally in Jobstreet’s share price is attributable to expectations of a possible venture in a new core business, given its management’s successful track record in founding tech start-ups.
In a note Jan 4, CIMB Research said it was not surprised by the news given the decent value in Jobstreet’s remaining assets.
Nevertheless, the research said it views the recent surge in share price as unsustainable due to the near-term overhang from business transition activities with SEEK Asia.
“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.
“Hence, we cut our rating from Hold to Reduce, with an unchanged target price still based on 16.8x CY16 P/E, a 30% discount to the IT services sector P/E of 24x.
“Switch to GHL Systems Bhd for tech sector exposure,” it said.