Saturday, 25 February 2012

MEGB: Hanging By A Thread

After tumbling down from its high of RM4.30 soon after IPO, Masterskill (MEGB) is currently hanging by a thread - from another free fall off the cliff.

We know that a lot of issues have affected Masterskill for the past one year: tightening of PTPTN funding, heavy selling by foreign funds, fierce competition in health education & increased entry requirement for nursing course etc. This week, Masterskill's share price closes at RM1.08, extremely close to its historical low of RM1.06, and now it is just a week before it announces its earning of 2011Q4 to conclude a disappointing year.

Last quarter, Masterskill said that the delay in the schedule of new student intake from June to September has affected its financial performance. Its net profit is only at RM5.5mil in 2011Q3, a massive drop compared to RM26mil in 2010Q3 and RM12mil in 2011Q2. Now, could the September intake give a little boost to its 2011Q4 earning, at least?

Year Active Student
2007 8718
2008 13500
2009 17165
2010 18399
Sep 2011 14250

From Masterskill's active student count chart, if the new student intake has been delayed from June to September, then we can expect a better result for 2011Q4. However, increased administrative cost has played a major part in the drop of its net profit. The increase in degree programmes offered and the start up cost for MBBS will not come cheap.

Anyway, it is predicted that the forthcoming result will not be a very good one. The question is, could it be worse than the street's expectation. If it is, then we can expect a new low for its share price, which may easily break its psychological support at RM1.

     New Bangi University Campus

Earlier this year, Masterskill has announced that it has obtained approval to acquire a 6-storey building in section 19 Petaling Jaya, probably for its business, law, media and hospitality programmes. Besides, it has also received approval from the ministry of higher education to run a new post grad certificate in teaching methodology in its Cheras campus. (Err.. not a popular programme I guess). Masterskill has added more than 10 new programmes in 2011.

MEGB financial results:

RM mil 2010 2011
Rev Profit Rev Profit
Q1 77 27 74 23
Q2 77 22 66 12
Q3 81 26 61 5.5
Q4 81 27 ? ?

I would expect a net profit of RM6-10mil for its 4th quarter. If it is the case, perhaps the worst of Masterskill has passed and I can reconsider buying its shares?

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