Kenanga cautious on Segi outlook

Kenanga Research is cautious on SEG International Bhd's (SEGi) outlook,
saying its first quarter net profit of RM1 million was way below
expectations.

"We believe that the group is still struggling to
recover from the loss of a large number of its graduating students,
which was supposed to be filled by new recruitments of foreign
students, but it has been dragged by the new regulations set by the
government," Kenanga said in a note.

Year-on-year, the company's
2013 first quarter revenue of RM55.8 million was down by 28 per cent
due to the dismal intake coupled with a higher number of graduating
students from its nursing programme.

Going forward, the
escalating competition in the private higher education space will
provide an additional challenge to the group, Kenanga said.

It has downgraded SEGi's rating to 'underperform' with a target price of RM1.45, from RM1.75.

Meanwhile,
another research house, RHB Research, has maintained its 'sell' call on
the company with a lower target price of RM0.96 from RM1.20.

"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 2013 first half financial year due to sub-par student
enrolment numbers, and remain cautious on its near-term earnings
growth," it said.-- Bernama