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Summary

  • ZPIN, a leading Chinese online career platform, plans to raise $75.7 million in its upcoming IPO.
  • ZPIN’s lead site, zhaopin.com, received the most average daily unique visitors of any career-oriented website in China for each month of 2013.
  • Given ZPIN’s profitability and scale, along with the favorable environment for Chinese IPOs lately, we recommend investors buy into ZPIN in the proposed range.

Zhaopin Ltd. (NYSE:ZPIN), a leading Chinese online career platform, plans to raise $75.7 million in its upcoming IPO.

The Beijing, China-based firm will offer 5.6 million shares at an expected price range of $12.50-$14.50 per share. If the IPO can hit the midpoint of that range at $13.50 per share, ZPIN will command a market value of $746 million.

ZPIN filed for the IPO on May 5, 2014.

Lead Underwriters: Credit Suisse Securities (USA) LLC; UBS Investment Bank

Overview of ZPIN Business

ZPIN is a Chinese career platform operating through its website, zhaopin.com, which received the most average daily unique visitors of any career-oriented website in China for each month of 2013.

(click to enlarge)

(Overview of options via http://zhaopin.com/)

The firm was also the second largest online recruiter in terms of revenues in 2013. For the nine months ended March 31, 2014, ZPIN hosted over 11.4 million job postings from some 274,450 employers, focusing primarily on skilled and educated users. ZPIN was an early entrant in the Chinese online career market, having marked its inception in 1994, allowing it to become a well known brand in China.

For the nine months ended March 31, 2014, the firm had averaged over 1.9 million daily unique visitors to its websites and mobile apps. As of the same date, the firm had 77.1 million registered users and 56.9 million completed resumes available on its database.

ZPIN derives revenue from fees assessed to employers for making job postings and downloading resumes. It also derives revenue from display advertisements placed on its site. Job seekers are not charged for their use of the website, encouraging a large pool to submit resumes and thereby attracting employers.

Valuation

ZPIN offers the following figures in its F-1 balance sheet for the nine months ended March 31, 2014:

  • Revenue: $121,729,000.00
  • Net Income: $20,927,000.00
  • Total Assets: $167,537,000.00
  • Total Liabilities: $154,444,000.00
  • Stockholders' Equity: $12,872,000.00

Competitors In China's Online Career Recruitment Industry

ZPIN must compete with other firms that either focus on online recruitment or offer recruitment as an element of their services, and must continue to upgrade its products and capabilities in order to retain customers.

Major competitors include the likes of 51job.com and 58.com, as well as large internet companies and social networking sites, seeking to enter the market for online recruitment services.

(click to enlarge)

(51job.com/)

(click to enlarge)

(58.com)

ZPIN hopes to present significant barriers to entry for new competitors through its large existing quantities of registered users and job posters, which make the firm's website attractive to new users and posters.

Solid Management

CEO Evan Sheng Guo has served in his current position since November 2010; he will become a director upon the SEC's declaration of effectiveness of ZPIN's registration statement.

He previously served as CEO of Sinotrans Air Transportation Development Co., Inc. and as CEO of Pusi Technology. He also worked as a consultant at McKinsey & Co. and as an associate with Bear Stearns.

He holds an MBA from the Kellogg School of Management at Northwestern University and a double bachelor's degree in English and Computer Science from Shanghai Jiaotong University.

Conclusion

We rate this IPO a buy in the proposed range. We are hearing the deal is oversubscribed and shaping up nicely.

American investors have shown renewed interest in Chinese IPOs over the past year, partly due to a rise in Chinese discretionary spending.

Given the profitability and scale of ZPIN, we believe that they will show similar interest in the career site.

ZPIN should be able to continue to benefit from its brand recognition in China, and its established bases of both job seekers and job posters will reinforce its popularity with both categories of user.

A solid leadership team rounds out a firm that looks to be a solid buy.

Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in ZPIN over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Advance Your Career With Zhaopin Ltd. IPO