Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION
Research House: OSK
HELP International Corp Bhd
(March 28, RM2.62)
Maintain buy at RM2.54 with revised fair value of RM2.82 (from RM2.59): HELP's 1QFY11 earnings were within our expectations, although accounting for only11.9% of our full-year forecast due to seasonal factors related to its twinning courses conducted with foreign institutions. Revenue grew marginally by 3.3% year-on-year while net profit was up by 12.7%, supported by improved margins.
We believe the better margins were largely attributed to prudent cost management and the increasing number of HELP University College's home-grown courses, which generally command higher margins as the company does not have to pay royalty for them, unlike twinning or foreign courses developed by other institutions. As a result, earnings before interest and taxes margin in 1QFY11 improved to 18.5% from 16% in 1QFY10.
As the company's revenue and net profit were significantly lower quarter-on-quarter (q-o-q) due to seasonality, given that fewer classes were conducted owing to the summer holidays associated with courses conducted in collaboration with institutions in the southern hemisphere, particularly Australia and New Zealand.
Q-o-q, revenue dropped by 11.1% while net profit plunged by 57.9% in 1QFY11. This is due to the nature of the business. The company continues to incur high fixed costs, thus causing a bigger contraction in profitability when revenue falls. Moving forward, we expect the 2QFY11 results to be significantly better q-o-q as more classes are conducted during this period as the new semester for its Australian and New Zealand courses commences.
We maintain our forecast and 'buy' recommendation at a higher fair value of RM2.82 from RM2.59 previously after rolling over our earnings per share from FY11 to FY12 at 14 times price-earnings ratio, plus its net cash of 32 sen per share as at end-FY10.
We believe the company's robust and clean books, as well as solid management will stand it in good stead in expanding comfortably without straining its balance sheet. ' OSK Research, March 28
This article appeared in The Edge Financial Daily, March 29, 2011.
Company Name: HELP INTERNATIONAL CORPORATION
Research House: OSK
HELP International Corp Bhd
(March 28, RM2.62)
Maintain buy at RM2.54 with revised fair value of RM2.82 (from RM2.59): HELP's 1QFY11 earnings were within our expectations, although accounting for only11.9% of our full-year forecast due to seasonal factors related to its twinning courses conducted with foreign institutions. Revenue grew marginally by 3.3% year-on-year while net profit was up by 12.7%, supported by improved margins.
We believe the better margins were largely attributed to prudent cost management and the increasing number of HELP University College's home-grown courses, which generally command higher margins as the company does not have to pay royalty for them, unlike twinning or foreign courses developed by other institutions. As a result, earnings before interest and taxes margin in 1QFY11 improved to 18.5% from 16% in 1QFY10.
As the company's revenue and net profit were significantly lower quarter-on-quarter (q-o-q) due to seasonality, given that fewer classes were conducted owing to the summer holidays associated with courses conducted in collaboration with institutions in the southern hemisphere, particularly Australia and New Zealand.
Q-o-q, revenue dropped by 11.1% while net profit plunged by 57.9% in 1QFY11. This is due to the nature of the business. The company continues to incur high fixed costs, thus causing a bigger contraction in profitability when revenue falls. Moving forward, we expect the 2QFY11 results to be significantly better q-o-q as more classes are conducted during this period as the new semester for its Australian and New Zealand courses commences.
We maintain our forecast and 'buy' recommendation at a higher fair value of RM2.82 from RM2.59 previously after rolling over our earnings per share from FY11 to FY12 at 14 times price-earnings ratio, plus its net cash of 32 sen per share as at end-FY10.
We believe the company's robust and clean books, as well as solid management will stand it in good stead in expanding comfortably without straining its balance sheet. ' OSK Research, March 28
This article appeared in The Edge Financial Daily, March 29, 2011.
No comments:
Post a Comment