Seek has significantly devalued its investment in Chinese jobs platform Zhaopin, writing down the asset by more than $350 million. The company attributed the decision to the sluggish Chinese economy and increasing competitive pressures impacting Zhaopin’s financial performance. Seek, Australia’s largest employment portal, first invested in Zhaopin in 2006, initially acquiring a 25 per cent stake for approximately $27 million.
As of June last year, Seek valued its Zhaopin holding at around $529 million. However, following a recent review, the company informed shareholders it would revise this valuation down to $182 million. In addition to broader economic challenges, Zhaopin has been working to simplify its complex ownership structure. As part of this process, Seek’s ownership stake will increase to 30 per cent in exchange for cancelling debts.
Seek stated the write-down reflects “current market conditions and Zhaopin’s earnings outlook,” noting the ongoing impact of weak macroeconomic conditions and competitive pressures in China. The Chinese economy has struggled to regain momentum since the pandemic, with a heavily indebted real estate sector creating difficulties for the construction industry. Previous attempts by Chinese authorities to stimulate the economy have had limited success. Seek previously took a $141 million impairment on its Zhaopin stake two years ago, citing similar concerns about Chinese economic growth.
Seek shares experienced a decline following the announcement, dropping 24¢ to $18.07, despite a broader market rally led by technology stocks. Seek is an online employment marketplace that connects job seekers with employers, offering a platform for job listings and recruitment services. Seek will release its first half accounts on February 17.
