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Thursday, February 24, 2011

MEG - Passing marks (CIMB)

In line; maintain OUTPERFORM. Masterskill’s FY10 core net profit was in line, at 98% of our forecast and 94% of consensus. Earnings rose 4%, driven by an 7% growth in student numbers to 18.4k and continued operating efficiency. The group ended the year with a respectable 42% EBITDA margin though it was lower yoy due to delays in new campuses. It has yet to propose a final DPS, which we expect to be 7.5 sen. For the full year, we are looking at an attractive dividend yield of 7.8%. We make no changes to our FY11-12 forecasts and introduce our FY13 numbers. The stock remains an OUTPERFORM with an unchanged target price of RM4.48, based on an unchanged 10% discount to our target market P/E of 14.5x. Factors that could trigger a re-rating include a recovery in investors’ sentiment and investors’ preference for defensive plays.

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