Wednesday, November 2, 2011

MEGB advances despite caution over rising competition

KUALA LUMPUR (Nov 2): Shares of Masterskill Education Group Bhd (MEGB) bucked the overall cautious market sentiment to climb 13 sen to RM1.42 at the midday break on Wednesday.

The FBM KLCI was down 11.08 points to 1,464.56. Turnover was 652.31 million shares valued at RM750.32 million. Losers beat gainers three to one with 470 decliners to 151 advancers and 245 stocks unchanged.

However, OSK Research was cautious about the outlook for MEGB and reduced its recommendation from Trading Buy to Neutral due to rising downside risks to earnings.

The research house said there could be a potential shortfall in the student enrolment. It believed the risks to earnings were likely to sap investors' sentiment and trading interest in the near term.

'Following our earnings revision, our FV now stands at RM1.30 based on a more conservative 9.0 times FY12 price-to-earnings ratio (from 10 times FY12 PER previously),' it said.

OSK Research was concerned about the possible increasing competition in the healthcare education universe and expected a bumpy ride ahead, especially with its peers ramping up capacity.

'We are also becoming increasingly cautious on the stock maintaining its dividend yield of over 7% given that high capex on the proposed RM150 million Bangi campus is likely to cap payout in the near term,' it said.



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