KUALA LUMPUR: Masterskill Education Group Bhd shares surged on high volume yesterday, even as a research house downgraded the stock and the broader market fell.
Shares of the private nursing and healthcare eduction provider ended the day 10 sen or 7.75% higher to RM1.39 and saw 6.64 million shares traded, almost twice the previous day’s volume. The increase came after the stock stayed stagnant for four days at RM1.29.
Masterskill shares have fared poorly since the the company was listed early last year, due to a combination of worries about government loan funding for students and lower student intakes, as well as heavy selling by two foreign funds. From an IPO price of RM3.80, the stock plummeted to an all-time low of RM1.06 on Oct 3, 2011.
Since then, the stock has made a slow and steady recovery, with some attributing it to the emergence of key investors in the group and others to the fact that the stock has been oversold.
On Oct 5, Siva Kumar s/o M Jeyapalan emerged as a substantial shareholder of the education group after acquiring 41.2 million shares or a 10.05% stake. Its shares closed at RM1.09 that day.
Siva Kumar’s optimism, however, is not shared by OSK Research. It downgraded the stock to “neutral” from “trading buy”.
One of the reasons it gave for the downgrade was the decrease in student intake due to increasing competition from other health education providers.
“Our previous concerns of Masterskill potentially succumbing to heightening competition now seem well founded as our ground checks indicate that new enrolments in the supposedly major student intake period from September to mid-October is likely to have fallen to the tune of ‘a few hundreds’”, it said.
“We attribute this to aggressive marketing by some of Masterskill’s peers as industry players strive to fill places arising from capacity expansion.
“We are revisiting our model and slashing our earnings per share forecasts by 25% for both financial years 2011 and 2012 as we see earnings pressure in the next few quarters as competition intensifies”, the report added.
The research house has revised down its fair value to RM1.30 from RM1.91, some 6.5% lower than yesterday’s closing price.
Masterskill will be releasing its 3QFY11 results in mid-November and OSK Research expects some potential negative surprises. However, yesterday’s rally suggests some investors are taking a different view.
This article appeared in The Edge Financial Daily, November 3, 2011.
Shares of the private nursing and healthcare eduction provider ended the day 10 sen or 7.75% higher to RM1.39 and saw 6.64 million shares traded, almost twice the previous day’s volume. The increase came after the stock stayed stagnant for four days at RM1.29.
Masterskill shares have fared poorly since the the company was listed early last year, due to a combination of worries about government loan funding for students and lower student intakes, as well as heavy selling by two foreign funds. From an IPO price of RM3.80, the stock plummeted to an all-time low of RM1.06 on Oct 3, 2011.
Since then, the stock has made a slow and steady recovery, with some attributing it to the emergence of key investors in the group and others to the fact that the stock has been oversold.
On Oct 5, Siva Kumar s/o M Jeyapalan emerged as a substantial shareholder of the education group after acquiring 41.2 million shares or a 10.05% stake. Its shares closed at RM1.09 that day.
Siva Kumar’s optimism, however, is not shared by OSK Research. It downgraded the stock to “neutral” from “trading buy”.
One of the reasons it gave for the downgrade was the decrease in student intake due to increasing competition from other health education providers.
“Our previous concerns of Masterskill potentially succumbing to heightening competition now seem well founded as our ground checks indicate that new enrolments in the supposedly major student intake period from September to mid-October is likely to have fallen to the tune of ‘a few hundreds’”, it said.
“We attribute this to aggressive marketing by some of Masterskill’s peers as industry players strive to fill places arising from capacity expansion.
“We are revisiting our model and slashing our earnings per share forecasts by 25% for both financial years 2011 and 2012 as we see earnings pressure in the next few quarters as competition intensifies”, the report added.
The research house has revised down its fair value to RM1.30 from RM1.91, some 6.5% lower than yesterday’s closing price.
Masterskill will be releasing its 3QFY11 results in mid-November and OSK Research expects some potential negative surprises. However, yesterday’s rally suggests some investors are taking a different view.
This article appeared in The Edge Financial Daily, November 3, 2011.
