51job, Inc. (JOBS)

Q1 2012 Earnings Call

May 9, 2012 9:00 p.m. EDT


Linda Chien – Head of IR

Rick Yan – President and CEO

Kathleen Chien – COO and Acting CFO


Philip Wan – Morgan Stanley

Tim McHugh – William Blair & Co.

Alicia Yap – Barclays Capital

Wendy Huang – Royal Bank of Scotland

Justin Diddams – Citigroup

Alex Leung – SAC Capital



Good morning, good afternoon and good evening, ladies and gentlemen. Thank you for holding.

Welcome to the 51job Inc.’s first quarter 2012 conference call.

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At this time all participants are in a listen-only mode. After the presentation there will be an opportunity to ask questions. Instructions will be provided at that time. If any participants require assistance at any time, please press the star followed by zero on your telephone for the operator assistance.

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

Linda Chien

Thank you, [Ming], and thank you all for attending this teleconference to discuss unaudited financial results for the ffirst quarter ended March 31, 2012. With me for today’s call are Rick Yan, President and Chief Executive Officer, and Kathleen Chien, Chief Operating Officer and Acting Chief Financial Officer. A press release containing first quarter 2012 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 second quarter of 2012, future business and operating results constitute forward-looking statements within the meaning of Section 21-E 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 expectations 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 second quarter of 2012; any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the renminbi against the US dollar and other currencies; 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 Factors 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 second quarter of 2012 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 an overview of the first quarter, followed by Kathleen with a detailed presentation of our financial results. Then I will discuss current market conditions in our guidance. Finally, we’ll open the call to your questions.

Our first quarter results were very much as expected. We achieved revenues of RMB381 million, near the midpoint of our guidance, and non-GAAP EPS of RMB2.23, or slightly ahead of our forecast due to improved operating efficiencies.

In line with the initial market assessment we shared on our conference call in February, we have observed healthy customer demand in 2012 but in a more modest level compared to the prior two years. Concerns about global macroeconomic conditions and growth in China are [weighing] on our customers as they navigate through another period of uncertainty. That said, on the bright side, hiring patterns so far this year have been largely within our expectations.

Our online business continued to exhibit solid growth and revenues increased 33% year over year in the first quarter. With the early Chinese New Year, we captured a greater amount of the post-holiday recruitment peak in the first quarter this year compared to 2011. We successfully increased the number of unique employers using our online services to over 170,000 in the quarter.

We have also expanded our geographical reach this year with the addition of several new cities and the sales coverage via Wuhan call center. We are now providing dedicated sales and customer support for our online recruitment services in 91 cities across China.

Reflecting our steady progress and diversifying our revenue sources, we saw a strong performance by our other HR services area in the first quarter. Revenues increased 59%, led by customer demand for our outsourcing and training services. We continue to [de-scale] in these areas and capitalize on cross-selling opportunities into our large recruitment customer base.

Consistent with our strategy to transition away from the prints business, prints revenues declined meaningfully in the first quarter. With the closure of print operations in three cities in March, we have discontinued the 51job weekly publication in half of our print market since the beginning of 2010. We will progressively reduce the number of print cities in the coming quarters. As a result, the loss of prints contribution will affect our total revenue performance in the near term, as we reallocate resources and efforts to our faster-growing business areas, this will benefit our company in the long term.

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