Seek sells China stake, wins big on back of booming jobs market

SEEK will shed much of its current shareholding in its Chinese jobs platform Zhaopin in a cash injection that will pay down debts and support payouts from the business.

Current Seek CEO Andrew Bassat, left, with Ian Narev, who will take over as boss in July.

SEEK will shed much of its current shareholding in its Chinese jobs platform Zhaopin in a cash injection that will pay down debts and support payouts from the business.

In its market update SEEK announced it expected to book a net profit of $140m after revenues in the order of $1.58bn.

The jobs platform declared it would pay a 20 cents per share dividend on the back of profits driven largely by SEEK’s Australia and New Zealand and Asia operations.

SEEK will also upgrade its financial year 2021 guidance in line with a better March result, boosting the expected earnings outlook to $510m up from the previous $460m.

The market welcomed SEEK’s announcement, with the stock lifting to close 1.85 per cent higher at $31.3.

The improving fortunes of the jobs site comes as the employment market has boomed as Australia and New Zealand economies reopen.

SEEK CEO and founder Andrew Bassat welcomed the completion of SEEK’s selldown in China.

“A portion of the Zhaopin proceeds will be returned to shareholders as a dividend, which reflects our confidence in SEEK’s outlook and ongoing cash generation,” he said.

“Post the dividend, SEEK will still have significant balance sheet flexibility for ongoing reinvestment and future dividends.”

Mr Bassat said the strength of the jobs market was buoying the business.

“We are pleased to upgrade our FY21 guidance. Our willingness to invest through the cycle has meant our key businesses, in particular SEEK ANZ and SEEK Asia are now capitalising on improving macro conditions,” he said.

“Of note, SEEK ANZ continues to benefit from record high levels of SME hiring activity and increasing usage of our depth products.”

The selldown of Zhaopin by SEEK sees the job site’s holding cut from 61.1 per cent down to 23.5 per cent.

The sale will net SEEK $560m, but net proceeds will be applied against the company’s senior syndicated debt facilities.

Almost $500m has already been banked by SEEK, with the remaining proceed

s expected prior to 30 June.

SEEK said it would record an accounting post-tax profit in the range of $600m as a non recurring “significant item” and deconsolidate Zhaopin from the group’s financial statement.

The remaining stake in Zhaopin is valued at almost $515m.

SEEK had announced in February it would sell much of its stake to Primavera Capital Group and Zhaopin management.

As a result of its sell down SEEK will no longer hold majority shareholder rights and only one of the six board seats at Zhaopin.

The selldown of Zhaopin marks a turning away from China by SEEK which had invested $27m in the business in 2006.

The selldown comes amid a week of tensions between Australia and China and warnings from some corners of “grey war” between the two countries.

The market close was a world away from the lows SEEK sunk to in the wake of a short seller attack in November that accused Zhaopin of faking revenues and site growth.

Short sellers Blue Orca in November last year accused Zhaopin of faking job posts and revenues as well as paying people to submit resumes.

The attack saw SEEK’s share plunge as much to six week lows of $19.78.

Blue Orca suggested SEEK shares could be worth as little as $7.20.

In the wake of the attack Mr Bassat said he would hand the reins at SEEK to former Commonwealth Bank Chief Ian Narev, who is set to assume the role on July 2.