51Job Reports In-Line; Guides Below Consensus; Stock Up (JOBS 3Q05 Earnings)

Chinese online jobs site 51Job (ticker: JOBS) reported Q3 2005 earnings results today that were in line with consensus estimates. Key stats from the quarter:

Q3 Results
(all percentage changes and comparisons are year on year, unless stated otherwise, assumes RMB 8.0920 : US $ 1)

• Total revenue rose 21.0% to $19.87 million. Consensus estimate of $19.0 million. Management guidance of $18.0 - $19.0 million.
• Net revenue rose 20.2% to $18.7 million.
• Print advertising revenue 20.2% to $11.5 million.
• Online recruitment services revenue rose 37.5% to $5.5 million.
• Executive search revenue fell 21.5% to $781,808.
• Other human resource related revenue rose 12.6% to $2.1 million.
• Gross margin was 54.7% vs 53.7%.
• Total operating expenses rose 50.6% to $6.55 million.
• Sales and marketing expenses rose 56.1% to $3.4 million.
• General and administrative expenses rose 56.5% to $2.7 million.
• Operating income fell 8.2% to $3.69 million.
• Operating margin was 19.7% vs 25.8%.
• Net income fell 28.6% to $2.1 million.
• Net margin was 11.2% vs 18.9%.
• Fully diluted earnings per ADS of $0.07 vs $0.13, and vs consensus estimate of $0.07.

Balance Sheet (as of September 30, 2005, assumes RMB 8.0920 : US $ 1)

• Cash of $108.0 million.
• Short-term investments of $1.3 million.

Q4 Guidance
(assumes RMB 8.0920 : US $ 1)

• Revenue of $17.3 - $19.5 million. Consensus estimate of $18.25 million.
• Fully diluted earnings of $0.05 - $0.07. Consensus estimate of $0.08.

Rick Yan, President and Chief Executive Officer of 51job, Inc.:

''We are pleased that, led by the performance of our online recruitment services business, third quarter revenues and profitability exceeded expectations. In the third quarter, we continued our growth momentum through solid execution of our targeted sales and customer acquisition strategy. We also saw increased customer interest in and adoption of our newer, value-added HR products including business process outsourcing and corporate training services.''

''Our service platform is designed to take advantage of economies of scale and we are pleased that our combined efforts of driving top line growth and cost efficiency led to improved margins in the third quarter. Although we continue to observe a moderation in the growth of market demand compared to last year, our progress in increasing profitability each quarter in 2005 gives us further confidence in the strength of our business model and market leadership position. With the industry's most visited website, widest geographical footprint, largest direct salesforce and broadest HR product portfolio, we remain a leading choice of HR managers in China.''

JOBS chart.