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Summary

  • Zhaopin had its IPO on June 12, 2014, and has not yet experienced an IPO run.
  • ZPIN provides a convincing argument for potential for growth investors and chart traders alike.
  • The company has been featured on TheStreet.com.
  • ZPIN announced its first quarterly earnings as a publicly traded company.
  • The company currently trades below the low, median, average, and high yearly price targets.

Zhaopin Limited (NYSE:ZPIN) the $684.04M market cap online professional networking company has been called the LinkedIn (NYSE:LNKD) of China.

"Zhaopin Limited, through its subsidiaries, provides online recruitment services in the People’s Republic of China. The company operates zhaopin.com, a career-focused online recruitment platform that offers classified job postings and display advertisements, resume access services, mobile applications, and other online recruitment and career-related services. It also provides complementary human resources related services, such as campus recruitment services, including selecting campuses, organizing recruiting events, collecting and managing resumes, and conducting interviews and assessment tests with potential candidates; and online and offline assessment services to assist customers in evaluating capabilities and dispositions of their job candidates and existing employees. In addition, the company offers executive search services for mid-level professional, managerial, and junior executive positions; and operates highpin.cn for high-end employment positions in industries, such as information technology, financial services, real estate, automotive, and consumer products. Further, it provides other value-added services consisting of print advertising; corporate training; and publishing research reports on salary, compensation, and job search trends, as well as other useful information tailored for human resources professionals. Zhaopin Limited provides its services to multinational corporations, small and medium-sized enterprises, and state-owned entities."

On the day of the IPO, ZPIN gained attention and the share price increased from its initial price of $14.51 to $15.52, but in my opinion, that is not the IPO run that it deserved. The price then fell down and bottomed the low $13 range, and since, has slowly climbed through the $14s, $15s, and $16s, and tested all-time highs. The company is still newly public, and I believe that it will gain more attention as it continues to grow and release earnings, with which will come positive price action. For investors who play IPOs, this stock could provide a valuable opportunity. The IPO market has displayed a flex of strength this summer with breakout offerings like GoPro (NASDAQ:GPRO), El Pollo Loco Holdings, Inc. (NASDAQ:LOCO). Many investors are looking at these chart patterns and anticipating a similar run for Alibaba Group. ZPIN never experienced this IPO craze, and I believe that it eventually could.

Growth investors also would be remiss not to consider investing in ZPIN. China has the largest population on the planet, with a growing economy. The country's GDP is growing at an impressive rate, and I believe that this acutely relates to the creation of jobs and the necessity of an online professional networking website, similar to the function that ZPIN provides for working professionals and people looking for a job. The company is displaying fundamental growth, which will be discussed later in the article, but it is important to note that they are projected by analysts to report higher earnings and revenues again next quarter. With a growing Chinese job market comes a growing need for Zhaopin Limited.

Chart traders and technical analysts also have weighed in on ZPIN's chart. An article published on TheStreet.com by analyst Roberto Pedone featured Zhaopin as one of five companies poised for breakouts. The predictions made through tech analysis on August 4th have largely come true and forecast a continuation of the uptrend in ZPIN's share price and a possible breakout to the $20 range, "If that breakout triggers soon, then ZPIN will set up to re-test or possibly take out its next major overhead resistance levels at $15.73 to its all-time high at $16.70 a share. Any high-volume move above those levels will then give ZPIN a chance to make a run at $20 a share." Secondly, ZPIN has a low float of around 5M shares, which is a positive indicator for me personally when considering a long position in a given security with the potential for a breakout.

ZPIN currently trades at $15.37 per share, which is well below the analyst price target estimates cited by The Wall Street Journal. The price targets per share are as follows: low of $16.00, average of $16.73, median of $17.00, and high of $17.20. As an investor, this is a good indicator, because even if this massive breakout spike does not happen, ZPIN will still provide a safe and steady return on investment for the next several fiscal quarters. Traders should watch the chart closely for a pickup in volume, and growth investors should consider the risk/reward accompanying the possible upside of a breakout spike to $20+ per share in the short term, while remembering the safety net of a median yearly price target of $17.00 per share. It is for this reason primarily, along with the others listed, that I am long ZPIN.

On August 19, 2014, Zhaopin reported 4th-quarter earnings, its first earnings report as a publicly traded security. The following statistics are numbers reported in fiscal Q4 2014 compared to Q4 2013. Total revenues increased 18.1% to RMB283.6 million (US$45.7 million). Online recruitment services revenues increased 17.2% to RMB241.4 million (US$38.9 million). Net income increased 47.6% to RMB55.5 million (US$8.9 million). Gross Profit for Q4 FY14 was RMB258.3 million (US$41.6 million), an increase of 19.8% from RMB215.5 million for Q4 FY13. Net Income for Q4 FY14 was RMB55.5 million (US$8.9 million), representing a 47.6% increase from RMB37.6 million for Q4 FY13. These numbers all indicate positive growth trends, and represent Zhaopin successfully using the IPO financing to grow its operations. There are a few negative trends in the earnings report that are outliers to the otherwise overwhelmingly positive financials. The downsides of the earnings report, in my opinion, are higher operating costs and lower revenue per unique customer. However, the operating costs should not alarm investors, because they increased at a lower rate than the growth of profits and customers. The lower revenue per unique customer comes from a sale which allowed new users to join the website at a discounted fee. Recruiting new members to Zhaopin's website, even if they joined at a discounted fee, will prove to be valuable for future growth.

Source: Zhaopin Limited: An Online Professional Networking Website Worth Buying Into