SEGi  posted  1QFY13  revenue  of  MYR55.8m  (+6%  q-o-q;  -28.3%  y-o-y), way  below  both  our  and  consensus  estimates,  accounting  for  merely 1.4%  and  1%  of  the  respective  full  year  projections.  The  company recorded  weaker  than  expected  1QFY13  results  due  to  lower  student growth as well  as  higher  operating and  distribution  expenses.  Maintain SELL, with our FV now at a lower MYR0.96, pegged to an unchanged 14x FY13 P/E.  
 
- Another  letdown  quarter.  SEGi’s 1QFY13 revenue  came  in  28.3% lower  y-o-y  at  MYR55.8m  owing  to  weak  student  enrolments,  which  we estimate  stood  at 27k as of April 2013. Correspondingly, the company’s core  earnings  plunged  by  95.5%  y-o-y  and  60.9%  q-o-q  to  MYR1.0m, dragged  down  by  higher  operating  and  distribution  expenses  during  the period  under  review.  Despite  the  disappointing  quarterly  performance, the company still declared an interim single tier DPS of 5.0sen.

-  Near-term  outlook  still  hazy.  The  disappointing  results  echo  our concern  that  SEGi  is  breaking  under  the  weight  of  rising  competition given  the  status  upgrades  of  several  existing  tertiary  institutions.  Thus, we  continue  to  anticipate  a  difficult  1HFY13  due  to  subpar  student enrolment  numbers  and  remain  cautious  on  its  near  term  earnings growth.

- Cutting  estimates.  We  revisit  our  model  and  cut  our  FY13  and  FY14 earnings estimates further by 19.7% and 22.4% respectively, factoring in lower  student  growth  as  well  as  higher  opex  assumptions  for  the pcoming two years. We also take this opportunity to introduce our FY15 forecasts.

-  Maintain SELL. Given the lack of re-rating catalysts in the near term and the  potential  downside  risk,  we  are  maintaining  our  SELL  call,  with  a lower  FV  of  MYR0.96  (previously  MYR1.20),  pegged  to  an  unchanged 14x FY13 P/E.

Source: RHB