We have redeployed capital in our online service portal theme into 51Job Inc

PM Capital

PM Capital

We have redeployed capital in our online service portal theme into 51Job Inc. pending the takeover of Jobstreet.com by Seek. 51Job Inc. derives 65% of its revenues from its online job website in China and our investment thesis focuses on the long term transition of employment advertising online. We forecast revenue growth in excess of 15% p.a. over the next 3-5 years driven predominately by volume. There is also significant pricing upside as it charges less than 10% of developed market comparables. Given the business' operating leverage there is also scope to build on its EBIT margin, which was 30% in 2013 (Seek domestically operates with a 50%+ EBIT margin). We believe now is an attractive time to buy as the company has completed the winding down of its print business, which has impacted growth rates. Our DCF values 51Job Inc. at over US$100 per ADS. Kevin Bertoli -Portfolio Manager

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