SEEK Limited (ASX: SEK) has reported its half year results to 31 December 2018, is the share price a buy?
SEEK is an online employment business that matches job seekers and employers together. It is also used by hiring agencies to build a portfolio of candidates. SEEK operates in a list of countries including Australia, New Zealand and China. SEEK also offers online education services and volunteering opportunities for not-for-profits.
Here’s What SEEK Reported
SEEK reported that revenue went up by 20.7% to $757.2 million. SEEK ANZ delivered revenue growth of 11% to $221.7 million, SEEK Asia grew revenue by 18% to $84.7 million and Zhaopin grew revenue by 45% to $319 million.
SEEK’s total EBITDA went up 6.2% to $238.5 million (click here to learn what EBITDA means). A detractor from this result was Latin America EBITDA dropped 55% to $7.8 million.
Underlying net profit increased by 6.4% to $123.8 million and reported net profit declined 5% to $99.3 million.
The employment & HR business has been heavily investing for future growth, which resulted in depreciation & amortisation increasing by 23% to $39.8 million and net interest increased by 53% to $19.1 million.
SEEK Dividend and Balance Sheet
The SEEK interim dividend was maintained at 24 cents per share.
SEEK said it had a robust balance sheet at the end of December 2018, with net debt of $660 million. Net debt increased by $87 million over the half year due to the Zhaopin privatisation (and paying out Zhaopin minorities) and increased investments in ‘product & tech’.
SEEK Management Comments
Andrew Basset, Co-Founder and CEO of Seek, said: “Across the medium to long-term, you should expect SEEK to continue allocating capital into high returning areas across AP&A and SEEK Investments. Given the strength of SEEK’s operating businesses and M&A track record, if we execute well and invest appropriately this is expected to lead to strong returns for long-term shareholders.”
Is the SEEK share price a buy?
According to Bell Potter, analysts were expecting a net profit of $101 million, so the reported net profit may have been a little disappointing, but the share price is up 3% in early trade. There is a lot to like about SEEK, particularly its fast-growing investment in the Chinese Zhaopin. However, the company expects FY19 profit to slightly fall.
With the majority of the company’s earnings still generated in Australia and New Zealand, the best time to buy could be during an Australian economic dip when unemployment rises. Until then, if you’re looking for growth it could be better to buy one of the fast-growth shares mentioned in the free report below.