Hitech Group Australia (ASX: HIT), a company that both Claude and I have previously covered for arichlife, was founded in 1993 and listed on the ASX in 2000. The main revenue stream for Hitech is in the provision of recruitment services to both the government and private sector. Hitech is focused on the information and communications technology sector, but they also provide recruitment services in both the finance and office support sectors.
Hitech Group Australia was founded and is still currently run by brothers Ray Hazouri and Elias Hazouri, who with George Shad make up the board of directors. Elias (who is the current CEO) together with his brother Ray hold approximately 70% of the company’s 39,000,000 shares on issue.
Late last week Hitech released their 2025 FY accounts to the market, which has been received with little enthusiasm by the market with the share price increasing 1% from $1.90 at open on Friday 15/08/2025, to $1.915 currently.
While the revenue, NPAT and earnings per share numbers reported increased by 6.72%, 5.79% & 5.75% respectively, if you look a little closer, the reported numbers aren’t as impressive as they first appear. While revenue growth continues to trend in the right direction, the 5.79% increase (or $349,000) was made up almost entirely of the increase in recognised ‘other revenue’ (up $250k on 2024 FY other revenue), which ultimately dropped to the bottom line.
Hitech also reported a reduction in gross margin from the surprisingly high result in 2024 FY, with margins dropping from 20.18% to 18.70% in FY 2025. As you can see in the chart below, second-half profit was down slightly, and the net profit margin was also down.
Reported free cash flow (being net operating cash flow less any payments for property, plant and equipment) was also down, going from $6,419,597 in 2024 to $2,413,393 in 2025, a large drop of 62.41%. The majority of this drop can be explained by the large increase in receivables from $6.4m in FY 2024 to $2.4m in FY 2025. This particular part of the result leads me into what interests me most about Hitech at this particular moment in time.
As the company’s major client is the Australian Federal Government, and May 2025 saw the re-election of the Labor government, I believe that Hitech could be the beneficiary of a rebound in government activity after a slowdown leading up to the election.
To test this theory, I have been tracking the job advertisements on the company website for over 2 years now, at the start of each month. As you can see below, directly after the election result, job advertisements increased from under 200 in May, to a brief peak of 341 in June 2025.
As recruitment agencies are typically paid on the placement of the candidate, I believe a significant portion of the increase in receivables can be attributed to the jobs advertised in May and June 2025 being placed late in the period, resulting in a higher-than-usual receivables amount. I also believe this spike in advertisements can provide good momentum for the company as they move into the first half of 2026 and beyond.
This is also backed up by management’s commentary in their outlook section, with statements such as ‘As an increasing number of critical public sector projects accumulate, along with the necessary Defence capability delivery requirements at hand, demand for secure, scalable secure ICT infrastructure and top-tier talent continues to grow. HiTech is well-positioned to meet this demand’.
Hitech maintained their dividend at 5c per share for the half year, 10c for the full year. Which, at today’s price of $1.92 equates to a 5.2% dividend yield, fully franked. On top of this solid dividend, Hitech Group maintains a healthy balance sheet with no debt and $9.6m cash at the end of the FY 2025.
While the 2025 FY results didn’t provide much excitement, I believe the relatively weak headline numbers can be somewhat explained by softer government demand leading into an election period, and as can be seen from the rebound in job advertisements post the election results, this softness should abate as the Labor government settle in to their new term in government providing some good momentum for the company in the near term.
At a trailing yield of 5.2% p.a, and a trailing price to earnings ratio of around 13, I believe Hitech is an interesting proposition at current prices, especially given the protection of the large amount of cash on the balance sheet. I continue to hold shares personally.
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Disclosure: Both the author of this article, Benjamin Sayers, and the editor, Claude Walker own shares in HIT and will not trade HIT shares for at least 2 days following the publication of this article. This article is not intended to form the basis of an investment decision and is not a recommendation. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Ethical Investment Advisers Pty Ltd (ABN 26108175819) (AFSL 276544).
The information contained in this report is not intended as and shall not be understood or construed as personal financial product advice. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement. Nothing in this report should be understood as a solicitation or recommendation to buy or sell any financial products. A Rich Life does not warrant or represent that the information, opinions or conclusions contained in this report are accurate, reliable, complete or current. Future results may materially vary from such opinions, forecasts, projections or forward looking statements. You should be aware that any references to past performance does not indicate or guarantee future performance.