4Q FY Oct 2012 final results

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: ASIA ANALYTICA

Price Call: HOLD

Target Price: 1.91

RHB Research cuts Help target price

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: RHB

Price Call: HOLD

Target Price: 1.65

RHB Research revises its target price on Malaysian education firm Help International Corp Bhd down to RM1.65 per share from RM1.80 on lower net profit recorded in the first quarter.

"Net profit missed estimates, at only 8-9 percent of our and consensus estimates," the broker said in a research note on Friday.

Maintaining "market perform" on the counter, RHB Research also revised down its earnings per share estimates for Help's fiscal year ending Oct. 31 2012 (FY12) to FY14 by 5-10 percent after fine-tuning student growth assumptions and factoring in higher costs.

By 9.20am in Kuala Lumpur trading, Help dropped 3.03 percent, underperforming Malaysia's benchmark stock index, which rose 0.29 percent. -- Reuters

HELP (FV RM1.55 - NEUTRAL) 1QFY12 Results Review: Poor Score in 1Q

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: OSK

Price Call: HOLD

Target Price: 1.55

HELP's  1QFY12 resultswere below  our expectations. Coreearnings  came in at RM1.7m, at <10%of our full-year estimates due to higher personnel costs incurred on staffrecruitment.  We  are thus  revisiting  our model and tweaking our EPS forecastslower by some 9.2% for FY12 and 4.1% for FY13. This brings our FV  to RM1.55, taking into account its  target net cash per share of RM0.46 by Oct2012. Maintain NEUTRAL.

Not making the grade.HELP's 1QFY12 revenue of RM26.9m was down by a marginal 5.6% q-o-q onseasonality but up by a decent 10.5% y-o-y on higher student enrolment. Grossprofit, however, sank  more than  34%  both y-o-y  and q-o-q  to RM2.3m due to higher personnel costsincurred in recruiting lecturers with doctorate degrees as part of therequirements for its upgrade to full university status. Correspondingly, bothEBIT and PBT closed lower at RM3.5m and RM3.2m respectively.  All in, HELP's 1QFY12 core earnings dwindledto RM1.7m (-53.0% q-o-q; -38.2% y-o-y), exacerbated by a marginal increase ineffective tax rate.

Downgradingforecasts. Given the disappointing results, we revise upwards our opex assumptionsfor both FY12 and FY13, which translate into an earnings cut of some 9.2% forFY12 to RM17.3m, and 4.1% for FY13 to RM18.8m. On the other hand, we  are lowering  our capex estimates from RM50m to RM20m  for FY12 and from RM40m to RM30m for FY13 as we now expect a delay incompleting its proposed flagship Subang 2 campus in Sungai Buloh. From ourrecent conversation with management, there were some changes in the proposedarchitecture, with piling works now expected to start next month.  The first phase of the flagship campus, with an estimated capacity of 8k students,is expected to be completed by 2014. Subsequently, HELP's net cash balance isexpected to improve to more than RM60m over the next 2 years.

NEUTRAL. While wecontinue to like HELP's clean books, experienced management and its solidreputation, we remain wary of the potential equity dilution due to funding for itsproposed flagship Subang 2 campus, which we understand may involve an outlay ofRM150m-RM200m. We are also cautious on a  possible downside risk toearnings as management ramps up its headcount after obtaining universitystatus. Hence, we maintain our NEUTRAL recommendation for now, with our FV nowat RM1.55, based on an unchanged 9x FY12 PER, plus its target FY12 net cash pershare of RM0.46.   

Source: OSK188

RM20m Investment on International School

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: OSK

Price Call: HOLD

Target Price: 1.63

RHBInvest Research Highlights 16th December 2011

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: RHB

Price Call: HOLD

Target Price: 1.80

16th December 2011

 

Top Story

Media Prima ' Keeping its chin up in 2012                                                               Underperform Visit Note -                  Management believes the current environment looks challenging, given the prevailing debt issues in Europe that have led to advertisers tightening their ad spending. Maintaining margins will be one of the key challenges amid rising staff costs. -                  Maintain earnings forecasts and indicative fair value of RM2.10 based on 12x CY12 EPS of 17.5 sen. Media Prima is vulnerable in the event of an economic downturn from its high exposure to the more expensive broadcasting segment. Maintain Underperform. -                  Related story: Media Prima Results Note ' Festivities And Cost Efficiencies Boost Profits (21 Nov 2011); Media Sector Update ' Adex Recovers In Oct (22 Nov 2011)

Corporate Highlights

HELP ' Expecting a better quarter                                                                          Market Perform Results Preview -          HELP is due to release 4QFY10/11 results on 22 Dec. We are expecting 4QFY11 net profit of RM2m that is a sequential improvement given: 1) historical trends; and 2) lower-than-expected 3Q11. Full-year dividend is anticipated to be minimal, as HELP is conserving its cash for the construction of its Subang 2 campus. -          The key earnings driver for HELP in FY12 would be the contribution from its Frasers Business Park campus, where management is guiding for up to 1,000 new students for the campus in FY12, an almost 10% increase on HELP's current total student numbers. -          No change to forecasts. Maintain Market Perform (after upgrading the stock from Underperform on 1 Dec), with an unchanged fair value of RM1.80. -          Related story: HELP Results Note ' Below Expectations Again (29 Sep 2011); Education Sector Update ' Waning Optimism (29 Sep 2011)   Dialog ' Rights and warrants priced                                                                              Outperform News Update -          Yesterday, Dialog announced that the rights issue has been priced at: 1) RM1.20/share for the new rights; and 2) RM2.40/warrant. The price of the new shares is a discount of 46.5% to the estimated theoretical ex-price of RM2.23/share (based on the five-day volume weighted average market price of Dialog up to 14 Dec). -          We believe the additional discount is mainly to entice shareholders given the volatile market conditions, but the higher exercise price for the warrants suggests that the company is confident on delivering in the longer term. Maintain Outperform. -          Related story: Dialog News Update ' Proposed Fund Raising For Long-Term Projects (19 Aug 2011)

Waning optimism in the coming quarter

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: RHB

Price Call: SELL

Target Price: 1.80

Education sector
Downgraded to neutral: We are turning cautious on prospects for the education sector in the coming quarter given rising macroeconomic headwinds; illiquidity of the stocks in the sector; the relatively small market cap of the education stocks (less than RM1 billion); and high foreign shareholdings for HELP (12.5%) and Masterskill (49%), increasing their susceptibility to volatile portfolio flows. ''

We see few re-rating catalysts for the sector over the coming quarter. Previously, the sector was driven by ETP news flow. However, the excitement is now beginning to recede, as reflected in the uninspiring share price performance of the stocks in the sector. Entry point projects (EPP) involving SEGi such as the establishment of the Early Childhood Care and Education (ECCE) hub and the SkillsMalaysia INVITE programme are already under way, while the announcement of the gradual liberalisation of the education sector under the Strategic Reform Initiatives (SRI) is already priced in.

Risks include further regulatory changes; increase in competition; and slowdown in demand for private higher education as consumers could turn cautious on multi-year commitments to course fees.

Across the board, we are cutting our target FY12 PER for the stocks by one to two times, in line with RHBRI's lower target PER of 13 times (from 14 times).

Our previous valuations look overly optimistic given the more bearish macroeconomic outlook. Given our revised fair value estimates, we downgrade our recommendation on HELP to 'underperform' from 'outperform' and Masterskill to 'underperform' from 'market perform', while SEGi remains an 'outperform'.

We are downgrading the sector to 'neutral' from 'overweight', as the market is no longer excited by the news flow on the education sector with few potential re-rating catalysts for the sector in the immediate term. SEGi is still our pick for the sector due to its good track record and resilience in riding out market uncertainties. SEGi deservedly trades at a premium to its peers at 12.8 times FY12 PER (versus HELP and Masterskill at 12.6 times and 8.8 times respectively), supported by its superior compound annual growth rate (CAGR) of 26.3% (versus HELP and Masterskill at 7.7% and -19.6% respectively). We continue to believe that SEGi is best poised to deliver growth going forward. ' RHB Research, Sept 29


This article appeared in The Edge Financial Daily, September 30, 2011.

OSK Research maintains Neutral on HELP

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: OSK

Price Call: HOLD

Target Price: 1.99

KUALA LUMPUR: OSK Research is maintaining its Neutral call on HELP International Corp Bhd with fair value at RM1.99.

It said on Thursday, Sept 29 that HELP's 9MFY11 core earnings of RM13.5 million (excluding one-off setup cost of RM4.0 million for its new campus) is deemed in line with both consensus and its expectation at 63% and 65% of the estimates respectively given seasonal factors.

'Nonetheless, we slash our core earnings forecasts by 17%-20% based on lower student net-adds as well as average fees as risks of earnings shortfall spike up amidst stiffening competition.

'Having said that, we maintain our NEUTRAL call given the recent weakness in share price, which has slumped 11% over the last week. Our FV now stands at RM1.99 based on an unchanged 12 times FY12 PER plus its net cash per share of 38 sen as of July 2011,' it said.

OSK stays 'neutral' on HELP Intl

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION

Research House: OSK

Price Call: HOLD

Target Price: 2.38

OSK Research is maintaining a neutral
call on HELP International Corporation Bhd, despite its wholly-owned subsidiary,
HELP University College, being upgraded to the status of a full-fledged
university.
"We are not entirely surprised with the announcement as the management had
earlier indicated that it had submitted an application to the Ministry of Higher
Education for an upgrade to university status," the research house said in a
research note today. Nevertheless, OSK Research welcomed the move as the recognition is deemed as
an acknowledgement and mark of the quality of HELP University College. It is also revising its fair value to RM2.38 based on an increasingly
conservative stance in view of the current weakness in the equity markets amid
renewed concerns over an anemic global economic growth. OSK Research also remained wary of a potential equity dilution to fund
the RM150-RM200 million capital expenditure (CAPEX) allocated for HELP's
proposed Subang 2 campus in Sungai Buloh. --Bernama

HELP - HELP's valuations reflect potential

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.

HELP - Education sector poised for growth

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION
Research House: RHB

Education sector
Initiating coverage with overweight rating: The Malaysian government recognises the importance of education as a critical asset of the nation. It was identified as one of the services sub-sectors for further growth and development during the 2006-2020 Industrial Master Plan 3 (IMP3).

Between 2007 and 2011, operating expenditure for education grew at a compound annual growth rate (CAGR) of 5.6%. In the 2011 budget, education accounts for 24.5% and 21.1% of the federal government's operating and development expenditure respectively. The education sector contributed approximately RM27 billion or 4% of gross national income in 2009, with RM23 billion from government-funded education services alone.

Over the years, the enrolment of students in private institutions has outpaced public institutions, with a CAGR of 7% (from 2002 to 2010) against 5.6% for public institutions. In 2010, private tertiary institutions enjoyed a 48% share (versus 41% in public institutions and 11% in polytechnics, community colleges and KTAR respectively) of student enrolments.

Factors that contributed to the growth of private institutions include: (i) Quota system ' while there is no quota system to enter Form Six, under the matriculation system only 10% of the places are open to non-bumiputera students; (ii) Language ' almost all private institutions use English as the principal medium of instruction; (iii) Foreign students ' foreign students are an important element of total enrolment. From 2003 to 2010, the foreign student population rose at a 42% CAGR and 72% of foreign students are in private institutions; (iv) Lack of capacity in public institutions; and (iv) Rising affluence.

Risks include: (i) Change in regulations set by the governing bodies; and (ii) A change in policy by the government might impact the eligibility criteria for students to obtain the loans/scholarships.

We believe the education sector is well poised for growth and remains a critical driver for Malaysia's transformation into a high-income nation due to its impact on productivity and human capital development.

Key growth drivers include: (i) Increasing in number of students in both public and private institutions; (ii) Strong partnerships with leading universities from all over the world; and (iii) Increasing number of foreign students.

We initiate coverage on SEG International Bhd (fair value: RM4.54) and HELP International Corp Bhd (FV: RM2.87). ' RHB Research, April 20


This article appeared in The Edge Financial Daily, April 21, 2011.

HELP - HELP to have better 2Q results

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.

HELP - OSK Research: HELP earnings within expectations

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION
Research House: OSK

KUALA LUMPUR: OSK Research said HELP International's the 1QFY11 earnings were within its expectations although HELP only recorded a net profit of RM2.73 million, or about 11.9% of its full-year forecast.

It said on Monday, March 28 this was due to seasonal factors whereby 1Q typically accounts for about 10%-15% of the company's full-year earnings.

On-year revenue ticked up by 3.3% while net profit rose by some 12.7% on better margins arising from an increase in its home-grown courses.

'We maintain our forecast and BUY call at a higher FV of RM2.82 from RM2.59 previously after rolling over our EPS from FY11 to FY12 at 14x PER, plus its net cash per share of RM0.32 as at end-FY10.

'HELP is a sustainable growth story in defensive sector driven by a strong and focused management team with a proven track record,' it said.

HELP - OSK Research maintains Buy on HELP International

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION
Research House: OSK

KUALA LUMPUR: OSK Research said following its recent meeting with the management od Help International Bhd, it gathers that HELP's on-going local and overseas expansion plans are well in progress.

The research house said on Wednesday, Feb 9 that this year, HELP expects to announce several ventures locally and abroad, largely via joint ventures and potential acquisitions.

'We maintain our BUY recommendation with an unchanged TP of RM2.59, based on 14x PER on FY11 EPS plus the current net cash per share of RM0.32 as at end-FY10. We believe that the company offers a sustainable growth story in a defensive sector that is backed by a strong management team,' it said.