Masterskill hits fresh 52-wk low, stock downgraded

KUALA LUMPUR: Masterskill Education Group Bhd (MEGB) shares fell on Monday, Aug 29 to a fresh 52-week low after its disappointing financial results saw CIMB Equities Research downgrading the stock from Outperform to Neutral, reducing its target price and also slashing its earnings per share (EPS) forecast.

At 11.45am, Masterskill lost 20 sen to RM1.33 with 5.48 million shares done.

Its second quarter results fell 48% to RM11.57 million from RM22,430 a year ago while its revenue declined 14.7% to RM65.78 million from RM77.11 million. For the first half, its earnings declined by 30.4% to RM34.16 million from RM49.11 million.

CIMB Reseach said Masterskill’s annualised 1H11 core net profit was a letdown, coming in at 43% below its forecast and 40% below consensus because of poor student numbers and a 10.8 percentage points shortfall in EBITDA margin due to surprisingly high operating costs.

“The 44% year-on-year plunge in net student intake was a negative surprise and should be equally weak in 2H. In the medium term, student intake prospects are unexciting and margins will be under pressure,” it said.

CIMB Research also slashed its FY11-FY13 EPS forecasts by 43%-45% and dividends per share (DPS) forecasts by 53%-54%.

The research house also said it had cut the target price from RM3.48 to RM1.71 as it raised its discount to the 14.5 times market P/E from 30% to 40%, which lowered its target CY12 price-to-earnings from 10.2 times to 8.7 times.

“Our rating is downgraded from Outperform to NEUTRAL. The stock’s sole attraction is its dividend yield of 5%-7%,” it sa