Monday 18 March 2013

Masterskill Education Group - Branching Out


We caught up with Masterskill’s management recently and gather that its new business and law school will commence in June 2013. Management is also considering various approaches to asset-light strategy, including potential disposals or a sale and leaseback of its assets. All in, we maintain NEUTRAL, with our FV lowered to RM0.61, based on an unchanged 0.7x FY13 P/NTA.

Diversifying its offerings. The group had previously announced that it had acquired the Bangunan Takaful Ikhlas (BTI) in Petaling Jaya to accommodate students of its non-healthcare courses. The new campus in Petaling Jaya will offer foundation and degree courses in business and law, with annual tuition fees averaging RM14k per student, and which will be commencing in June this year. Management has guided for a target intake of 1.2k business students for FY13. The group has also changed its name to Asia Metropolitan University to define its expansion into non-healthcare courses, which we believe would improve its branding and create more awareness among potential students.

Potential cash return. Masterskill announced on 22 Feb that it will adopt an asset-light strategy and is studying options such as disposals or the sale and leaseback of its assets. After meeting with management, we gather that the group would return the excess cash to its existing shareholders upon retiring its outstanding debts. Assuming that all its fixed assets are disposed of at their current book values, this could potentially translate into a cash bumper dividend of 36.6 sen to be paid to existing shareholders after settling all debts.

Maintain NEUTRAL. We like Masterskill’s diversification into non-healthcare courses but remain cautious pending earnings contributions from its business school as well as more clarity on its proposed asset disposal plans, which could potentially unravel the value of its core operating assets. Overall, we are not changing our forecasts at this juncture and remain NEUTRAL, with our FV lowered to RM0.61, pegged to an existing 0.7x FY13 P/NTA.

Source: RHB

No comments:

Post a Comment