2023Q3 Scorecard IV: AEM & HRnetGroup

Besides Micro-Mechanics which will announce its full year results at the end of the month, this will be the final scorecard for this quarter. If you have missed the first three parts, the links are at the end of this post.

Based on their previous guidance, I was expecting a much weaker 1H results for both AEM and HRnetGroup. Things turned out much better for HRnetGroup but near term outlook is still challenging. As for AEM, the steep drop is as expected but the good news come from confirmed initial orders from an additional new leading application processor customer.

I am giving both 3.5 stars as I am still positive of their mid and long term prospects. I will hold on to my current holdings and might add on to my holdings if opportunities present themselves.


I was expecting a drop in the range of 30% for HRnetGroup, so I am pleased that the drop is less than that. Credit to them that they are able to contain the cost well such that NPM is still pretty decent at 9.5%. A look a the breakdown shows that the weakness comes from Professional Recruitment, while Flexible Staffing stays resilient. And it’s pretty consistent across the various regions.

During the results announcement webinar, ID Albert Ellis shared that the struggle with permanent staffing is world wide and affected other global peers. The exception is the Japan companies due to the nature of the market. So again credit to the group for achieving this set of results in a tough macro environment.

Sidetrack a bit. If flexible staffing continues to gain traction, then my small holding of Fiverr will benefit from this trend. In their latest Q2 results, Fiverr grew their revenue by 5% and finally reported a profitable quarter. They continue to innovate and if their execution goes according to plan, then they will realise their potential in the future.

Back to HRnetGroup, CEO Adeline highlighted again the co-ownership operating model as their unique strength which I agreed. With the skin in the game, their interest is definitely aligned to the company. I also like that they have now their own job search app “Ease Works”. I took a cursory look and while it is quite intuitive to use, the content/offering is quite limited for the moment. However, with time I am sure it will become better. The most important thing is they will now possess the data and good analysis of it will benefit the company in the long term.

An interim dividend of 1.87 cents was declared. While it is less than the 2.13 cents declared last year, it is the same as last year’s final dividend. That’s better than my expectation of only 1 cent dividend! So I am grateful for that. However, I am unsure if they will maintain their 4 cents dividend for the full year. Looking back over the past 3 years, there isn’t really a clear pattern on how they declare interim/final dividend. I can only say that as long as they are profitable, the group is likely to declare both interim and final dividend, and paying out at least 50% of its net profit after tax (excluding exceptional items).


Scary numbers if you just view them without context. In short, the excessive demand in FY2022 cannot be sustained. With the new guidance of $460 mil to $490 mil revenue for this financial year, that will be even lower than FY2020 top line. Also, with the recognition of the settlement of US$20 million to the complainants, Advantest in Q3, net income would drop to a level not seen since 2017.

(in mil)20192020202120222023 (est)
Revenue$323$519$565$870$460 – $490
Net Income$52.7$97.5$91.9$127$10 – $15

However, imagine if for some reasons the demand in FY2022 and FY2023 is not that skewed and we average the numbers out, then the revenue and net income would be $665 mil and $70 mil respectively for each year. The numbers would look quite decent, especially if we compare that to pre-pandemic value.

Of course, this is not the case and the question to ask is going forward, will the numbers stay at this level or will it be back to growing path from FY2024 onwards?

Since I am not in the industry, I do not have the answer. I do think that technology is here to stay and the demand for faster and greater processing speed will always be there. So if AEM test solution is as good as they claim, then they will definitely benefit from this trend.

During this year’s AGM, they mentioned that the competition is intense and the giants have awakened. It would not be an easy battle but with news of them getting confirmed initial order from a new customer and an expansion of their engagement with a previous customer, there are reasons to be optimistic.

It won’t be a smooth ride but if they deliver, then the outcome will be something to savour.

Related Links

HRnetGroup 1H2023 Presentation Slides
AEM 1H2023 Presentation Slides
Fiverr Q22023 Shareholder Letter

2023Q3 Scorecard I: FCT, MINT, MLT, PLife, iFAST & UOB
2023Q3 Scorecard II: AREIT, DHLT, OCBC, RMG & Venture
2023Q3 Scorecard III: AAPL, ANET, INMD, SHOP & TSCO

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