Thursday, November 10, 2011

RHB Research maintains Outperform on SEGi

KUALA LUMPUR (Nov 10): RHB Research Institute is maintaining its Outperform recommendation on SEG International with a fair value of RM2.15, based on unchanged target 17 times FY12 price-to-earnings ratio (PER).

It said on Thursday that recent concerns with regards to the possible PTPTN loan reduction will have a minimal impact on SEGi as only about 27% of its students are under the PTPTN loans.

SEGi's earnings rose 66.3% to RM18.32 million in the third quarter ended Sept 30, 2011 from RM11.01 million a year ago. Revenue increased by 24.1% to RM69.95 million from RM56.36 million while earnings per share were 3.50 sen versus 2.22 sen.

For the nine-month period, its net profit increased by 74.2% to Rm54.57 million from RM31.32 million while revenue saw a 28.8% rise to RM207.65 million from RM161.23 million.

RHB Research said the '' 3Q11 net profit was within expectations. A dividend of 10 sen per share was declared.

' Although sequential performance was flattish, revenue grew by 24.1% on-year due to higher student enrolment that we estimate grew 19-20% on-year. As operating costs are mostly fixed, the improved top line resulted in EBIT growing 70.3% on-year. Effective tax rate increased to 21% in 3Q11 (vs. 18.4% in 3Q10), but the stronger EBIT led to an overall increase in the net profit margin to 26.5% (from 19.5% in 3Q10),' it said.

SEGi also inked an agreement with the Vietnam government to finalise the MoU that was signed in Aug. These collaborations will fall under the SkillsMalaysia INVITE project and SEGi will be responsible for providing skill-based training to the Vietnam vocational instructors and students.

'An initial batch of 600 Vietnam students will commence training in 2011. With average revenue of about RM20,000 per student, we believe that the SkillsMalaysia INVITE programme will contribute about 8% to the top line in the longer term,' said RHB Research.

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