HELP reported 1HFY12 core earnings of RM8.7m, which were in line with both our and consensus estimates. These came in at 55.0% and 49.7% of both projections respectively. We make no changes to our forecasts and retain our FV at RM1.93, based on an unchanged 10x FY13 PER, plus our forecast FY13 net cash per share of RM0.45.
Decent quarter. HELP’s 2QFY12 revenue jumped to RM34.7m (+10.7% y-o-y, +29.4% q-o-q) owing to a higher enrolment base, which we estimate at 12k as of April 2012. Correspondingly, EBIT improved 2.3% y-o-y and >100% q-o-q to RM10.7m while margin improved to 30.7% on higher economies of scale. All in, the 2QFY12 core earnings stood at RM7.0m, up 8.1% y-o-y and >100% q-o-q. On a cumulative basis, the 1HFY12 revenue of RM61.6m (+10.6% y-o-y) was within our expectations at 52.5% of our full-year forecast while core earnings came in at RM8.7m (-5.6% y-o-y), comprising 55.0% of our full-year estimates.
Firming up financing for new campus. Management is in the midst of finalizing the financing for its proposed RM150m Subang 2 campus in Sungai Buloh. In view of the magnitude of the capex required, we do not discount the possibility of the company making a cash call in the form of a rights issue. Having said that, our checks with sources indicate that the group could also potentially settle for a sales-and-leaseback arrangement, in adherence to its asset-light operating model. We understand that management is currently in talks with some Real Estate Investment Trusts in town and expect a decision to be made known next month.
NEUTRAL. With the 1HFY12 numbers being within our expectations, we make no changes to our earnings forecasts for now. While we continue to like the company’s solid management team and clean books, we remain cautious on the potential cash call, which we expect to be announced as soon as mid-July. Reiterate NEUTRAL, with our FV unchanged at RM1.93, based on 10x FY13 PER, plus our forecast FY13 net cash per share of RM0.45.
Source: OSK
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