Bumper dividend from Masterskill seen

by **Cals** Thu 18 Apr 2013, 14:43

Bumper dividend from Masterskill seen
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Thursday, 18 April 2013 13:09

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KUALA LUMPUR (April 18): RHB Research Institute Sdn Bhd foresees a bumper dividend from Masterskill Education Group Bhd's potential sale of its fixed assets.

In a note today, RHB said assuming that all of Masterskill's fixed assets are disposed of at current book value, this could translate into a cash bumper dividend of 36.6 sen a share to be paid to existing shareholders after its outstanding debts are settled.

Anticipation of the asset sale came amid possibilities that Masterskill former chief executive officer (CEO) Datuk Seri Santhara Kumar Ramanaidu will divest his 23.8% stake in the education group.

“Rumours have been rife that Santhara was looking to cash out on his 23.8% stake in Masterskill, which will translate into the market value of over RM56 million based on the stock’s last close (of 57.5 sen),” said RHB.

However, RHB said given that nothing concrete has developed thus far and with the appointment of Siva Kumar M Jeyapalan as the new executive director, the research firm believes Masterskill will instead look to unlock the value of some of its fixed assets.

RHB has a "neutral” call for Masterskill with an unchanged target price of 61 sen.

Yesterday, Masterskill said Santhara who is also the group’s single-largest shareholder had resigned from his role as the group’s CEO.

Siva Kumar, a major shareholder of the firm, will be appointed as Masterskill executive director.

RHB said it is positive on Siva Kumar’s appointment.

“(Siva Kumar) could bring in new financial and cultural perspectives and potentially turn around the company and steer it in the black.

"Hence, we see this as a positive move to address the group’s succession issue, which we believe has capped its share price performance over the last year.” RHB said.

In its financial year ended December 31, 2012 (FY12), Masterskill suffered a net loss of RM28.3 million due to lower student enrolment.

Its FY11 net profit was reduced substantially to RM38.14 million from RM102.14 million in FY10 on weak student intake and higher-than-expected staff costs.