The recruitment firm reported a 15.4% increase in gross profit at constant currency to £211.1mln for the fourth quarter. gross profit growth in France eased to 10% from 21% in the third quarter while China slowed to 12% from 31%.
HSBC remains positive on the stock but cut its target price to 685p from 700p and nudged down its earnings per share estimate for 2019 by 2.7% to 38.40p to reflect easing growth in China and France.
The bank also reduced its forecast for 2019 gross profit constant currency growth to 8.7% from 13.1%.
“In aggregate, we have increased our FY18 estimate by +0.7% but have reduced FY19e and FY20 EPS estimates by -2.7% and -0.4%, respectively,” HSBC said.
The slowdown in France in the fourth quarter reflected a tough comparator and the impact of the disruption from the 'gilet jaunes' protests over the rising price of fuel and cost of living. China has been affected by uncertainty over a trade despite with the US.
“It is early in the year and fresh corporate budgets are unlikely to be evident in order intake until February, but there appears to be little or no sign of slowdown outside of France and mainland China,” HSBC said.
HSBC added that PageGroup operates at a higher wage rate band that other general recruitment firms, so may benefit more directly from white collar labour scarcity.
“If there is continued wage inflation, we believe Page is the most likely beneficiary,” the bank said.