SEEK Limited (ASX: SEK) is one of the more interesting ASX growth shares in the ASX100.
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.
3 Reasons Why SEEK Is A Good ASX Growth Share
A core component of future profit growth for SEEK relate to its international earnings. In the recent half year result, SEEK disclosed that SEEK ANZ generated less than a third of the company’s overall revenue.
Asia is an integral part of the company. SEEK Asia grew revenue by 18% to $84.7 million and Zhaopin grew revenue by 45% to $319 million. These two segments have a lot of potential due to the enormous populations of the countries they operate in and the increasing digitalisation of employment & HR.
SEEK management understand the opportunity that is presented in Australia and Asia. Zhaopin is investing significant amounts back into itself every year to leverage its market leading position. Some of the items SEEK is focusing on is the actual product, the underlying technology, artificial intelligence, data and a self-service channel.
The employment business also believes there is a significant opportunity in high end recruitment and offline services including campus, assessment and education.
Market Leader In Australia
It is very advantageous to be the market leader in an industry, particularly when it relates to technology. With the most jobs being advertised on SEEK that will attract the most job seekers, which will then attract the most employers. It’s a beneficial circle.
By leveraging the strength of the SEEK brand, management can launch other products for the ANZ market like education, human resource technology and co-ordination of projects.
Is SEEK A Buy?
SEEK is valued at 32 times the estimated earnings for the 2019 financial year, according to CommSec. This looks pretty pricey. A better time to buy an employment business would likely be during an Australian recession, so I think the businesses outlined in the free report below are better investment ideas until then.
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.