Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION
Research House: OSK
HELP International Corp Bhd
(May 19, RM2.63)
Downgrade to neutral at RM2.63 with fair value of RM2.82: With 11,000 students registered in its Malaysian campuses and 2,000 scholars under its regional franchises, HELP's student growth came in at more than 10% annually over the last three years. We expect the momentum to persist, with growth from its overseas contribution likely to outshine its domestic operations.
Other than its existing presence in Vietnam, Indonesia, and Maldives, HELP will open its self-owned college in Sydney, Australia, by July and help to operate vocational schools in Phnom Penh and Siem Reap, Cambodia, by mid-2011. Leveraging on its established reputation, we expect more tie-ups to materialise this year as the group is actively in talks with education providers in China and the Middle East to assist in management or to establish its franchise models.
To expand its presence in the increasingly competitive landscape on the local front, HELP is diversifying away from its conventional strong foothold in commerce, law and psychology courses into technical or vocational offerings. Recall that HELP has recently signed an MoU with Naza Group to set up an automotive college offering comprehensive courses from car design to business development. Its HICT Fraser campus (due for official opening in June) and the proposed HELP Iskandar campus (ready by 2015) will also focus on technical and vocational training courses. We remain adamant that the move will prove fruitful in the long run as this will allow HELP to capture different market segments and demographies based on its locations as well as to diversify its student profile.
We understand that HELP is considering various sources of financing to fund its budgeted RM150 million to RM200 million capital expenditure allocated for Phase 1 of its Subang 2 campus in Sungai Buloh. Judging from its balance sheet strength and the magnitude required, we believe it could involve a hybrid of equity issuance and debt drawdown and also potentially a sales-and-leaseback arrangement. We expect a decision to be made at the latest by 3QCY11.
We maintain our forecasts and reiterate our fair value of RM2.82 based on 14 times FY12 price-earnings ratio plus its net cash of 32 sen per share as at end-FY10. Its share price has since caught up with our valuation and given the potential dilution impact arising from equity issuance, we take a more conservative stance for now and downgrade our call to 'neutral'. ' OSK Research, May 19
This article appeared in The Edge Financial Daily, May 20, 2011.
Company Name: HELP INTERNATIONAL CORPORATION
Research House: OSK
HELP International Corp Bhd
(May 19, RM2.63)
Downgrade to neutral at RM2.63 with fair value of RM2.82: With 11,000 students registered in its Malaysian campuses and 2,000 scholars under its regional franchises, HELP's student growth came in at more than 10% annually over the last three years. We expect the momentum to persist, with growth from its overseas contribution likely to outshine its domestic operations.
Other than its existing presence in Vietnam, Indonesia, and Maldives, HELP will open its self-owned college in Sydney, Australia, by July and help to operate vocational schools in Phnom Penh and Siem Reap, Cambodia, by mid-2011. Leveraging on its established reputation, we expect more tie-ups to materialise this year as the group is actively in talks with education providers in China and the Middle East to assist in management or to establish its franchise models.
To expand its presence in the increasingly competitive landscape on the local front, HELP is diversifying away from its conventional strong foothold in commerce, law and psychology courses into technical or vocational offerings. Recall that HELP has recently signed an MoU with Naza Group to set up an automotive college offering comprehensive courses from car design to business development. Its HICT Fraser campus (due for official opening in June) and the proposed HELP Iskandar campus (ready by 2015) will also focus on technical and vocational training courses. We remain adamant that the move will prove fruitful in the long run as this will allow HELP to capture different market segments and demographies based on its locations as well as to diversify its student profile.
We understand that HELP is considering various sources of financing to fund its budgeted RM150 million to RM200 million capital expenditure allocated for Phase 1 of its Subang 2 campus in Sungai Buloh. Judging from its balance sheet strength and the magnitude required, we believe it could involve a hybrid of equity issuance and debt drawdown and also potentially a sales-and-leaseback arrangement. We expect a decision to be made at the latest by 3QCY11.
We maintain our forecasts and reiterate our fair value of RM2.82 based on 14 times FY12 price-earnings ratio plus its net cash of 32 sen per share as at end-FY10. Its share price has since caught up with our valuation and given the potential dilution impact arising from equity issuance, we take a more conservative stance for now and downgrade our call to 'neutral'. ' OSK Research, May 19
This article appeared in The Edge Financial Daily, May 20, 2011.
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