RHB Research
HELP International Corp - Below Expectations
HELP’s 1QFY13 core earnings of RM1.9m was below our expectation, accounting for only <10% of our full-year forecast, weighed down by higher staffing and operating expenses. Having revisited our model, we tweak our forecasts slightly lower by 3.3% and 2.5% for FY13/FY14, which trims our FV to RM1.88, based on an unchanged 10x FY13 PE. Our target net cash per share stands at RM0.45.
Below expectations. HELP’s 1QFY13 revenue of RM28.7m was down by a marginal 4.6% q-o-q due to seasonality but was 6.8% higher y-o-y, attributed to a higher student enrolment at its Fraser campus. Correspondingly, its PBT rose 6% y-o-y to RM3.6m. All in, HELP’s 1QFY13 core earnings shrank 58.2% q-o-q but expanded by 10.7% y-o-y to RM1.9m.
Toning down estimates. Given the disappointing numbers, we are tweaking our net profit forecasts slightly lower - by 3.3% to RM20.2m for FY13 and 2.5% to RM24.0m for FY14 as we raise our opex assumptions as well as lower our student growth estimates. Our revised forecasts for HELP’s enrolment now stand at 11k and 11.6k for FY13 and FY14 respectively.
Flagship campus on track. Management has cut down on capex from RM160m to RM60m for its Subang 2 flagship campus to avoid stretching its balance sheet. Even though funding has yet to be finalized, we believe that the new campus may potentially be fully funded via debt rather than an equity issuance. We expect the building to be completed by 3QCY14 and be ready for its maiden intake possibly by 1QCY15.
NEUTRAL. While we continue to like the company’s clean books and solid management, we remain cautious pending a more affirmative earnings growth trend and improvements at its Fraser campus. We are also keeping an eye on the group finalizing the financing for its proposed Subang 2 campus. We reiterate our NEUTRAL call, with our FV now lower at RM1.88, based on an unchanged 10x FY13 PE. We are projecting for a FY13 net cash per share of RM0.45.
Source: RHB
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