From the words of management, it sure sounds like it. But Monster (ticker: MNST) is extremely excited about ChinaHR's prospects. Here are some key points from today's conference call.
- MNST acquired a 40% stake in ChinaHR.com, with the right to acquire a 51% or more interest in three years or in the event of an initial public offering
Investment makes sense from an economic perspective:
- Growing economy - 9.5% growth in 2004
- Rapid advances in privatization
- Worker movement to urban
- Number of newly employed urban residents recently hit 9.8
- Estimates as high as 70% of urban Chinese
workers changing jobs at least once already
- Per capita net income growth of approximately 6.8% in 2004
- China's dominant and growing position as the factory for the world
- It's one of China's leading and most recognized online recruitment websites
- Sizeable user base - 3.2 million registered users, 280,000 corporate clients
- Similar to MonsterTRAK, they work with 100 colleges and universities in China
- MNST believes ChinaHR is several years ahead of the competition
- ChinaHR did approximately $7 million in revenues in 2004. MNST expects that to possibly double in 2005
Why the high valuation?
- Because of the success of 51Job (ticker: JOBS) and market potential, valuations have increased in China
- MNST wanted ultimate control of ChinaHR
Why ChinaHR over 51Job (ticker: JOBS)?
- ChinaHR has a similar business model to MNST:
- Charges for jobs
- Does not charge slotting fees
- Generates sizeable online revenue
- Campus business similar to MonsterTRAK
Why didnt MNST buy all of ChinaHR?
- ChinaHR wanted to retain control at least for the moment
- They are hoping to do an IPO
Is MNST looking for other China investments / acquisitions?