JobStreet hits milestone, crosses RM1bil market cap

• Founder Mark Chang sees no reason to get excited, content with company’s ‘kerbau way’ of hard work
• Need to keep reinventing itself to stay relevant, no-one else to blame if it fails to do so, he says

IT was a typical Mark Chang (pic) moment – that is, it passed with minimum fuss, with not even a press release nor a Twitter (@jobstreetmy) update to its 999 followers.
 
JobStreet, the company he founded in 1997 and listed in 2004, had passed RM1 billion in market capitalisation on April 26, 2013 when its share price closed the week at RM3.20. RM1.008 billion was the market cap at the close of that week.
 
Revenue for 2012 was just under RM161 million. This also makes it the most successful Internet company in South-East Asia, with the caveat being that there are very few pure Internet companies listed in the region.
 
[RM1 = US$0.32]
 
Still, the board of directors may have held a quiet celebration. After all, it was a member of the board who first alerted me to the fact that JobStreet was about to hit that milestone.
 
Unfortunately, this was in 2010 when the share price was flirting with RM3 but it then receded and even went below RM2.10 at one point in February 2012. But it’s been a steady climb since then, culminating in the week of April 26.
 
“The concerns over JobStreet’s increase in marketing costs over the past two years and the impact this would have on its margins have been played out now, and that is why you see the strong performance of the stock over the past few months,” says an analyst with a leading brokerage house which covers JobStreet (click chart to enlarge).
 
The analyst also said that JobStreet was “in that good position of being its category leader in the online space” and that once attained, it was a very hard position to be dislodged from by competitors who would have to spend huge amounts with no guarantee of success.
 
Because of this, it is well liked by foreign funds, says the analyst, also pointing out that the global trend is for online category leaders to grab two-thirds of the advertising spend that goes into their space, which in JobStreet’s case is online jobs classifieds.
 
JobStreet also has software targeted at corporations to manage their recruitment process. Yet the analyst says that JobStreet’s financial data does not separate the revenue this product line generates. Nor is management keen to break this down when asked, he says.
 
Still, there is a lot to like about JobStreet and its steady and gradual growth trajectory, or as Mark Chang, its founder and chief executive officer puts to Digital News Asia (DNA), “We only know the ‘kerbau (water buffalo) way,’ that is to work hard and wait for the rain.”
 
No fancy slogans or soaring rhetoric from Chang, who is happy to stay low key. For instance, when asked if he had changed or updated the company vision, he admitted to being part of a “rather boring group of management. We don’t change our vision if it is still relevant.”
 
However, there is also the clear hint of why investors and analysts like JobStreet when Chang responded to a question about the importance of aligning his staff to the company vision.
 
“You will be surprised that almost every week, I personally remind our staff of our vision on how many people we help to get their next job. I sound like a broken record, but I know if I don’t, we will slowly start to do other things not relevant to our business.”
 
The hands-on nature of Chang and his ability to stay true to JobStreet’s strengths come though in his answer. Indeed, the analyst tells DNA that he likes Chang’s single-minded focus and that he is “entrenched in operations,” which is very important for Internet companies.
 
“Product value is key to the ongoing success of Internet companies, and the fact that Chang is still focused in this area is very reassuring,” notes the analyst, who estimates that JobStreet enjoys gross margins of between 40% and 50%.
 
But there are rivals too, with most observers feeling that LinkedIn will eventually pose the main threat to all online classified businesses.
 
However, the analyst is more sanguine about any threat LinkedIn may pose to JobStreet.
 
“LinkedIn really targets the premium segment of the job market while JobStreet goes after the low- to middle-end segment, which is a volume game,” he says. The only downside he sees to JobStreet is that it has become a bit expensive after its recent run-up.

Next page: Q&A with Mark Chang