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

HELP International Corp Bhd
(Oct 13, RM2.44)
Maintain neutral at RM2.42 with target price of RM2.69: Yesterday, HELP announced that it has entered into a Memorandum of Understanding (MoU) with Seri Alam Properties SB (Seri Alam), a wholly owned subsidiary of United Malayan Land (UMLand). Under the terms of the MoU, Seri Alam will develop and lease to HELP an educational centre to be used as its Johor campus.

This announcement came as no surprise as it is in line with HELP's strategy to expand its presence outside the Klang Valley. The proposed campus marks its first Malaysian campus outside the Klang Valley. Under the MoU, HELP will establish an integrated technology and vocational training college in Bandar Seri Alam that will complement the government's initiative to develop the area into an education hub. The campus will be developed in four phases, with a built-up area of one million sq ft.

Phase 1, which will be completed by 2013, will have a built-up of approximately 250,000 sq ft. It will offer vocational training courses such as tourism and hospitality, culinary entrepreneurship, engineering, and multimedia and animation.

We believe the development of the physical campus infrastructure by UMLand will enable HELP to increase its student capacity without incurring massive capex. This will allow HELP to continue with its ongoing expansion strategy without stretching its balance sheet. To recap, its recent JV in China with AP Land was undertaken under the same mechanism ' AP Land will set up the physical infrastructure while HELP will provide the educational courses and programmes.

With the Phase 1 of the proposed Johor campus expected to be completed by 2013, we maintain our FY10 and FY11 earnings forecast. In addition, with the limited upside following the strong share price appreciation year-to-date, we maintain our 'neutral' recommendation at an unchanged target price (TP) of RM2.69 based on 14 times PER on FY11 EPS plus a net cash value per share of 42.5 sen. The share price and our TP have been adjusted downwards from RM4.30 after the three-for-five bonus issue that went ex on Oct 1. ' OSK Research, Oct 13


This article appeared in The Edge Financial Daily, October 14, 2010.