Period
1Q13/3M13 

 

Actual vs. Expectations  
The group’s 3M13 net profit of RM1.9m was deemed to be within expectations (in line with the historical trend, as HELP’s largest student intakes traditionally fall in the 2Q and 4Q of each financial year), accounted for 11.2% and 10.0% of ours and the street’s full-year earnings estimates respectively. 

 

Dividends
No dividend declared in 1Q13 as expected. 

 

Key Result Highlights
YoY, the group’s 3M13 revenue of RM28.7m increased by 6.8% mainly driven by a higher student enrolment at both its Damansara and Fraser Business Park campuses. Besides, management noted that its HELP CAT campus, which is located in Fraser Business Park, has continued to show a turnaround and the student enrolment here has improved by 26% YoY to 960 students in contrast to 760 students previously, underpinned by an effective advertising campaign and the various programmes offered. In addition, a lower effective tax rate of 45.3% (3M12: 47.6%) coupled with the higher number of student enrolments also boosted the group’s 3M13 net profit by 10.7% to RM1.9m. Marginwise, the group’s EBIT margin has fallen slightly to 12.6% (3M12: 13.0%) due to higher operating expenses, which mainly consist of staff costs that are usually fixed in nature. 

 

QoQ, the group recorded a lower net profit of RM1.9m (4Q12: RM4.5m) mainly due to: 1) a lower revenue of RM28.7m (4Q12: RM30.1m) due to seasonal factors; 2) a lower other operating income and 3) a higher effective tax rate of 45.3% (4Q12: 26.8%) mainly due to the tax loss of its subsidiary and certain expenses being not deductible for tax purposes. 

 

Outlook
We believe the company’s outlook remains intact in the long term underpinned by: 1) the upcoming first intake of HELP 

International School (HIS) students in Sep-13, which is expected to contribute positively to its 4Q13 earnings (est. registration fees of RM2.4m based on 200 new international students); 2) the commencement of its new JV campus – College of Automotive and Transportation Management in June-13 and 3) the introduction of 10 new home-grown programmes in FY13. 

 

Forecasts
Post-results, our HELP’s FY13E-FY14E earnings have been lowered by 1.2% and 1.0% to RM16.5m and RM19.2m 

respectively after factoring in: 1) a higher effective tax rate assumption of 35% (vs. 30% previously) for FY13E-FY14E as per management guidance; 2) a higher recurring income source from the international school student registration fees of RM2.4m and RM3.6m based on estimated net add of 200 and 300 new international students in FY13E-FY14E respectively; 3) the realigned timeline of the potential international tuition income of RM7.6m now expected to be received in 1Q14 instead of 3Q13 as per management guidance and 4) a lower international school new student intake assumption to 200 and 300 students from 400 and 500 previously in both FY13E-FY14E respectively to err on the conservative side. 

 

Rating   Maintain MARKET PERFORM pending review. 

 

Valuation
In line with our minor earnings revision, we have lowered our HELP’s TP slightly to RM1.85 from RM1.88 previously 

based on an unchanged 4-year average forward PER level of 15.9x. 

 

Risks
A reduction in its student enrolments. 

 

Source: Kenanga