51job, Inc. (



Q4 2010 Earnings Call

February 28, 2011 8:00 AM ET


Linda Chien – Assistant VP, IR

Rick Yan – Co-founder, President and CEO

Kathleen Chien – Co-founder, COO and Acting CFO


Alicia Yap – Citigroup

Wendy Huang – RBS

Jenny Wu – Morgan Stanley

Ming Zhao – Susquehanna International Group



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Good morning ladies and gentlemen. Thank you for holding. Welcome to the 51job Inc. fourth quarter and fiscal year 2010 conference call. At this time all participants are in a listen-only mode. After the presentation there will be an opportunity to ask questions (Operator Instructions)

I will now hand the conference over to Ms. Linda Chien, Assistant Vice President of Investor Relations. Thank you, Madam. Please go ahead.

Linda Chien

Thank you operator and thank you all for attending this teleconference to discuss un-audited financial results for the fourth quarter and fiscal year ended December 31, 2010. With me for today’s call are Rick Yan, Chief Executive Officer and Kathleen Chien, Chief Operating Officer and Acting Chief Financial Officer. A press release containing fourth quarter and full-year 2010 results was issued earlier today and a copy may be obtained through our website at ir.51job.com.

Before we begin, I would like to remind you that during this call, statements regarding targets for the first quarter of 2011, future business and operating results constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the Private Securities Litigation Reform Act of 1995.

These statements are based upon management’s current expectation and actual results could differ materially. Among the factors that could cause actual results to differ are the number of recruitment advertisements placed, sales orders received and customer contracts executed during the remaining weeks of the first quarter of 2011, any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the Renminbi against the U.S. dollar and other currency; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic and political changes in China as well as stock market volatilities; introduction by competitors of new or enhanced products or services; price competition in the market for the various human resource services that the company provides in China; acceptance of new products and services developed or introduced by the company outside of the human resources industry and fluctuations in general economic conditions.

For additional information on these and other factors that may affect the company’s financial results, please refer to the risk factor section of the company’s filings with the Securities and Exchange Commission. 51job undertakes no obligation to update targets prior to announcing final results for the first quarter of 2011 or as a result of new information, future events or otherwise.

Now I’ll turn the call over to Rick.

Rick Yan

Thank you, Linda. And welcome to today’s call. I will begin with highlights of the fourth quarter and full-year 2010, followed by Kathleen with her detailed review of our financial results. I will then discuss our observations of current market conditions, as well as our objectives going forward. Finally, we’ll open the call to your questions.

2010 was a memorable year for 51job with record revenues, margins and profits. As market conditions improved and demand rebound, we achieved progressively better financial results during the year through consistent execution of our strategic initiatives. We closed out the year with an outstanding fourth quarter with revenues of RMB302 million, or approximately $46 million, well ahead of forecast.

Operating income increased 86% year-over-year to RMB78 million and operating margin reached over 27%. Non-GAAP earnings per common share came in at RMB1.27 or $0.38 per ADS. Again well ahead of our forecast. For the full-year 2010, revenues grew more than 33% to RMB1.09 billion or $165 million. We have most profitable year with operating income of RMB272 million and operating margin of 26%. Non-GAAP fully diluted earnings per common share in 2010 increased 86% to RMB4.67 or $1.42 per ADS.

This strong performance in the fourth quarter and the full-year 2010 was driven by the online business and growing contribution of our other HR services area. Our online business continued to experience a high growth to tax rate with the number of unique employers growing by nearly 47% year-over-year in the fourth quarter and 49% in 2010. During the past year, we have observed a significant increase in the usage of our online services as the acceptance of the internet as a recruitment channel by employers has improved.

Spending per customer has also trended upwards with employers purchasing more services to differentiate themselves and attract candidates to meet their hiring targets. In 2010, we also resumed geographical expansion utilizing our new online sales and operations center in Wuhan to cover five new cities. We have the largest sales footprint in China to serve employers and further penetrate this rapidly growing market. At the same time that we are capturing the online opportunity we are identifying and developing future revenues and streams.

From inception, our goal has been to become the largest integrated HR services provider in China, not just a leading job board. As the market evolve and HR departments become more sophisticated, we believe that the service components of our value proposition for the employers is becoming increasingly important. Our outsourcing business saw significant customer traction and our training services make solid progress in 2010. Other services such as campus recruitment, compensation benchmark and reports and placement services are also seeing stronger demand.

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