Written by Surin Murugiah of theedgemalaysia.com
Friday, 02 September 2011 11:18
KUALA LUMPUR: Masterskill Education Group Bhd extended its losses on Friday, Sept 2 after its disappointing second quarter financial results and weaker outlook.
At 11.15am, Masterskill was down eight sen to RM1.24 with 3.2 million shares done.
Last week, the education group reported that its second quarter earnings, for the period ended June 30, fell 48% to RM11.57 million from RM22.43 million a year ago. It 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 Equities Research had downgraded the stock from Outperform to Neutral, reducing its target price and also slashing its earnings per share (EPS) forecast.
The research house said Masterskill’s annualised 1H11 core net profit was 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 said
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