51job (JOBS)

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51job, Inc. (51job), incorporated in 2000, is the leading provider of integrated human resource services in China with a focus on recruitment related services. The company's recruitment related services are delivered in both print and online formats. These two services are integrated to allow it to reach a wide and diverse audience. The Internet, web-based applications, and human resource software are critical aspects of the company's services. In addition to recruitment advertising services, the company also provides executive search and other complementary human resource related services, including training, proprietary software applications, business process outsourcing and salary surveys, for large and small employers. Its nationwide office network spans 26 cities in China. Offering a broad array of products and services, 51job connects millions of job seekers with employment opportunities and streamlines the recruitment process and human resource administration for tens of thousands of companies in China. In 2006, the company generated 55.8% of its revenues from its print advertising business, 31.5% of its revenues from its online recruitment services business, and 2.9% of its revenues from its executive search business. Other human resource related services represented 9.8%.

In 2006, 51job's online recruitment services business increased 37.8%, while its print advertising business only grew 9.3%. Moreover, online recruitment services business has higher margin and less seasonality than print advertising business. In the second quarter of 2007, 51job's online recruitment services business continues to increase quickly at a rate of 26.8%.

51job announce its financial results for the third quarter with declining net income due to higher sales and marketing expenses. Its EPS is in line with market consensus while revenue exceeded market consensus. 51job continues to have the highest brand recognition both in the online and offline recruiting market in China. Moreover, China's prosperous economy will continue to boost the recruiting market. Furthermore, alliance with Recruit can help 51job explore further opportunities within the human resources industry and potentially new information services businesses in China because Recruit is a leading human resource services provider in Japan. Overall, we believe 51job is well positioned to leverage this market opportunity in China. Therefore, we are maintaining the Buy rating for the stock.

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