Image source: © Gajus | Megapixl.com

Highlights

  • APM Human offers human resource consulting services in over ten countries
  • During the first half of 2023, the company registered 39% increase in revenue and 21% increase in underlying EBITDA
  • During the latest half, the company secured multiple new contracts across all its services

Human resources consulting services provider APM Human Services International Limited (ASX: APM) operates in more than ten countries. The company offers services like work care, employment services, health and wellbeing, aged care support services and several others.

During the first half of the financial year 2023 (1HFY23), the company witnessed a 39% YoY increase in revenue to AUD 853.7 million and 21% YoY growth in underlying EBITDA to AUD 167.4 million. The period saw the company’s global team support from more than 2 million people across 11 countries.

In 1HFY23, the company secured many new contracts across all its services and also continued integrating acquisitions.

Growth prospects for APM

A report by the Reserve Bank of Australia highlighted the unskilled and skilled labour shortage and the increase in underemployment and unemployment rate. The recent labour force data bodes well for APM as it provides an opportunity to the company to bridge this gap and bring momentum in its business.

In July 2023, overseas arrivals are expected to reach 1,749k, compared to 1,358k in the previous month, projecting the potential increase in employment growth.

The labour force data for July 2023, which the Australian Bureau of Statistics released, projected an unemployment rate of 3.6%. The report indicated a 24.2k MoM (month-over-month) fall in full-time employment opportunities and a 9.6k MoM increase in part-time opportunities. During the same period, the monthly working hours increased to 1,956 minutes.

Key risks for APM

The labour market is significantly affected by the higher manufacturing costs in the mining industry because of increased labour costs.

In the March 2023 quarter, the construction industry’s capex fell by 19.1% over the previous quarter and by 29.4% over the previous corresponding period. This is likely to reinforce the labour shortage.

During the stated period, the reduction in recruitment and labour-hire services demand led to a 1.4% QoQ fall in the gross value added of administrative and support services.

Recent business update

On 26 May 2023, the company informed that it has secured an AUD 720 million worth contract in the UK to deliver functional assessment services over five years. Through the same update, the company also informed about changes in the management. Nev Power was appointed as a lead independent non-executive director, and Ben Wyatt as an independent non-executive director.

Outlook

The company expects to register underlying NPATA of AUD 175 million to AUD 180 million in FY23. In 2HFY23, the expected cash conversion is over 80%.

Share performance of APM

APM shares closed flat at AUD 1.78 apiece on 21 August 2023. In the last one year, the APM shares witnessed a drop of 48.4% and on a year-to-date basis, the share price has declined by 25.21%.

The 52-week high of APM is AUD 3.55 apiece, and the 52-week low is AUD 1.735 apiece. The current stock price is almost 49.86% lower than its 52-week high.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, is 21 August 2023. The reference data in this report has been partly sourced from REFINITIV.