Written by Financial Daily
Thursday, 14 April 2011 11:48
Masterskill Education Group Bhd CEO Datuk Seri Edmund Santhara is an avid chess player. And like a game of chess, yesterday’s announcement of Masterskill’s venture into Indonesia is the latest in a series of strategic moves after two earlier major “checkmates” — the threat of lower PTPTN (National Higher Education Fund Corp) funding and persistent selling of its shares by foreign portfolio funds.
Of the two checkmates, analysts believe concerns over the large PTPTN deficit are overblown. Masterskill is appealing against PTPTN’s new ruling that caps loans at RM45,000 for new courses. Analysts believe that the new loan ruling, if implemented, would still cover more than 75% of a typical tertiary course.
Analysts also note that the government was unlikely to stop funding the programme, which was an important initiative to help students finance their higher education. Rather, they note that the fund will tighten the debt collection process.
The other setback was the persistent selling of Masterskill’s shares by two US-based portfolio funds — Smallcap World Fund Inc and Fidelity Management and Research LLC. On a positive note, the selling appears to have ended, given the large amount of shares traded since they ceased to be substantial shareholders in mid-February this year.
Indeed, Masterskill’s stock has rebounded by 36.5% to RM2.28 yesterday, from its mid-March low of RM1.67. Apart from the likely end of foreign selling, there was also positive news flow, including results for 2010 that met analysts’ expectations, generous dividends and the latest Indonesian venture.
The company’s full-year net profit for 2010 rose to RM102.1 million from RM97.4 million, after which it declared a final single-tier dividend of 7.9 sen.
Total single-tier dividends of 14.9 sen for 2010 gave the stock a high net dividend yield of 6.5%.
The latest positive move involves its venture into Indonesia, confirming The Edge Financial Daily’s earlier report on April 7, 2011.
Yesterday, Masterskill announced that it has entered into an MoU with PT Sejahteraraya Anugrahjaya Tbk (PTSA) to develop academic exchange and cooperation in the teaching and training of Masterskill students at the Mayapada Hospital owned by PTSA.
More significantly, the MoU involves forming a joint venture to establish Universitas Masterskill-Mayapada in Indonesia. It added that the university will offer programmes in nursing and allied health education, similar to those offered by Masterskill in Malaysia. This follows an earlier subscription by Masterskill in PTSA’s IPO.
The move into Indonesia will boost Masterskill’s geographical base, which is critical as the company has a relatively narrow, specialised product base.
Indeed, analysts say one major disadvantage that Masterskill has compared with other education peers such as HELP International Corp Bhd and SEG International Bhd is its narrow focus on nursing and healthcare-related courses. The other two listed colleges offer a wider choice of courses, catering for a broader spectrum of society.
An analyst notes that there will come a time when the Malaysian market, with its small population of about 28 million, will become saturated with nurses and healthcare personnel. Masterskill will have to either expand its product offering or market reach.
Given that its niche and branding is largely in healthcare and nursing education, going into new markets will be a better near-term strategy, analysts say, although it can expand into other healthcare-related courses.
Indonesia, with its 230 million population, annual GDP growth of over 5% and a rising middle class, serves as a good diversification platform for Masterskill.
Indeed, Malaysia’s small size does have limitations. Even HELP, which is already diversifying its courses and market reach locally, is expanding abroad — to Indonesia, Vietnam, China and elsewhere — mostly through twinning affiliations with small local colleges. Masterskill’s setting up of a full-fledged university is on a far more ambitious scale, and is a calculated strategic move by Santhara.
Many Malaysian companies have made it big in Indonesia, especially those in the banking and finance, plantations and telecommunications sectors. Only time will tell if Masterskill will be the next success story there.
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