SEGi’s  9MFY13  net  profit  of  MYR24.6m  came  in  below  expectations, making  up  only  68.7%  and  69.0%  of  our  and  consensus  estimates. 3QFY13  results  were  weaker  than  expected  across  the  board  due  to sub-par  student  enrolments  as  well  as  regulation  hiccups  in  the education  industry.  Maintain  SELL,  with  our  FV  slightly  lowered  to MYR0.76 (from MYR0.83), based on a 14.0x FY14 P/E.

• Another  letdown.  SEGi’s  9MFY13  earnings  of  MYR24.6m  came  in below expectations,  making up 68.7% and 69.0% of our and consensus FY13 numbers. 9MFY13 revenue fell 24.7% y-o-y to MYR174.9m, owing to  slow  growth  in  student  numbers.  Meanwhile,  its  3QFY13  revenue slipped  17.6%  y-o-y  to  MYR61.2m  on  higher  number  of  graduating students during the quarter. Correspondingly, 3QFY13 net profit slumped 64.8% q-o-q and 61.0% y-o-y  to  MYR6.2m,  dragged down by  weakerthan-expected student enrolment  due to  delays  in  international students arrival.
• Trimming estimates. Given the poor set of results, we are revisiting our model and cutting our FY13 and FY14 net profit forecasts  by 11.2% and 9.3%  respectively,  to  reflect  lower  student  growth  and  higher  opex assumptions.
• Student numbers not recovering.    SEGi’s disappointing results echo our concern that it is adversely affected by delays in foreign student visa approvals,  which  was  slowed  down  by  the  implementation  of  the Education Malaysia Global Services (EMGS) established earlier this year to  streamline  and  control  the  intake  of  foreign  students.  Thus,  we continue  to  remain  cautious  on  SEGi’s  near-term  earnings  growth  and outlook.
• Maintain SELL. All in all, we maintain our SELL call, with our FV slightly lowered to MYR0.76 (from  MYR0.83), based on a 14.0x FY14 P/E. This is  at  a  50%  discount  to  SEGi’s  average  P/E  of  30.0x.  Note  that  its earnings  base  has  shrunk  by  more  than  half  compared  to  that  of  the previous two years. 

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Company Profile
SEGi is one of the largest private tertiary education providers in Malaysia by enrolment, with 28k students onboard as of June 2012.

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Source: RHB