Local uncertainties keep investors at bay

KUALA LUMPUR (APRIL 26): The FBM KLCI was unable to sustain its earlier gains and slipped at the mid-day break on Thursday as while most regional markets improved on US data and policy, local investors remained edgy ahead of this weekend’s planned Bersih 3.0 protests.

The FBM KLCI shed 0.69 of a point to 1,578.66 at 12.30pm, weighed by losses including at BAT, PPB, Petronas Dagangan and Hong Leong Bank.

Losers led gainers by 375 to 198, while 312 counters traded unchanged. Volume was 839.42 million shares valued at RM563.21 million.

Te ringgit strengthened 0.13% to 3.0560 versus the greenback, crude palm oil futures for the third month delivery fell RM32 per tonne to RM3,479, crude oil slipped six cents per barrel to US$104.06 while gold rose US$3.48 an ounce to US$1,647.10.

Meanwhile, Asian shares mostly rose on Thursday, retaining positive momentum as the Federal Reserve reassured markets that it will keep its very accommodative stance to support growth, while optimism grew over strong quarterly corporate earnings, according to Reuters.

Along with the Fed's assurance that its very easy monetary policy will be kept in place as long as needed, U.S. stocks rallied on Wednesday after Apple Inc reported quarterly profits nearly doubled, it said.

At the regional markets, Hong kong’s Hang Seng Index gained 0.51% to 20,752.20 and South Korea’s Kospi was up 0.19% to 1,965.61.

However, Japan’s Nikkei 225 shed 0.06% to 9,554.94, the Shanghai Composite Index lost 0.21% to 2,401.83, Taiwan’s Taiex fell 0.50% to 7,525.33 and Singapore’s Straits Times Index was down 0.17% to 2,974.74.

On Bursa Malaysia, BAT fell 82 sen to RM54.30, PPB down 14 sen to RM16.66, Petronas Dagangan and HLFG down 12 sen each to RM19.08 and RM12.08, Jaya Tiasa and Petronas Gas fell 10 sen each to RM9.48 and RM16.48, Warisan nine sen to RM2.25, while Hong Leong bank and SEGi fell eight sen each to RM12.22 and RM1.73.

Utopia was the most actively traded counter in the morning session with 134.96 million shares done. The stock was unchanged at 9.5 sen.

Other actives included Ariantec, Focus, Metronic, CSL, RGB, Naim Indah Corp and Winsun.

Gainers included Aeon, Panasonic, Aeon Credit, KrisAssets, Takaful, Tradewinds, Globetronics and Dutch Lady.



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SEG down 5% on takeover offer

KUALA LUMPUR (April 26) : SEG INTERNATIONAL BHD [] fell as much as 5% on updates that its major shareholders made a takeover offer for the remaining shares in the higher-education provider.

Shares of SEG declined nine sen to RM1.72 before trading higher at RM1.74 at 11.45am with some 900,000 shares done.

Private equity firm Navis Capital has made a takeover offer for the remaining shares it does not own in SEG. This follows a shareholders’ agreement between Navis and SEG managing director Datuk Seri Clement Hii Chii Kok, who is also the single-largest shareholder in the education entity.

This has, in turn, triggered a mandatory general offer obligation for the remaining stake in SEG. Navis which already owns 27.84% in SEG is offering RM 1.714 for each share and RM1.214 for each warrant in the higher education firm.



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KLCI gains on US policy, corporate updates

KUALA LUMPUR (April 26) : Malaysian shares erased gains, albeit, still in positive territory in tandem with gains across Asian bourses on Thursday morning. This follows a stronger overnight close across US equities.

Global markets found support from US lawmakers’ commitment to maintain accommodative policies to sustain growth, besides improving corporate earnings from the world’s largest economy.

At 10am, the FBM KLCI added 1.31 points to 1,580.66. Across the exchange, some 343 million shares worth RM160 million were traded, leading to 167 gainers versus 182 decliners.

Top gainers Panasonic Manufacturing Malaysia Bhd was up 40 sen to RM23 while DUTCH LADY MILK INDUSTRIES BHD [] gained 24 sen to RM33.94.

Among decliners, KUALA LUMPUR KEPONG BHD [] fell 14 sen to RM23.68 while SEG INTERNATIONAL BHD [] was down eight sen to RM1.73.

Among actively-traded stocks, Ariantec Global Bhd fell 1.5 sen to RM24.5 sen with some 21 million shares done.



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Stocks to Watch Dutch Lady, Opensys, TH Plantations, SunREIT, SEGi

KUALA LUMPUR (April 25): Malaysian stocks are expected to exhibit weak technical dynamics on Thursday against global economic volatility and domestic pre-election sentiment.

Analysts said crucial world highlights include the lack of clarity over European countries' ability to manage their sovereign debt woes, and the direction of US monetary policy, the effects of which may dictate the direction of global equities.

The FBM KLCI erased earlier gains to close in negative territory, with a 2.93-point decline to 1,579.35 on Wednesday.

Stocks to watch on Thursday are DUTCH LADY MILK INDUSTRIES BHD [], Opensys (M) Bhd, TH PLANTATION []s Bhd, Sunway Real Estate Investment Trust (SunREIT), and SEG INTERNATIONAL BHD [] (SEGi).

Dutch Lady and Opensys shares will trade ex-dividend on Thursday. Dutch Lady, a manufacturer of dairy products, plans to reward shareholders with a dividend of RM1.30 a share comprising a single-tier interim payout of 50 sen and a special portion of 80 sen for financial year ending Dec 31, 2012.

Opensys, an information TECHNOLOGY [] firm, plans to reward shareholders with a first interim tax-exempt dividend of 5% which is equivalent to 0.5 sen a share for financial year ending Dec 31, 2012.

MIDF Amanah Investment Bank Bhd downgraded TH Plantations shares to a "trading sell" from "neutral", with a lower target price of RM2.12 compared with RM3 previously. This follows a downward revision in MIDF's earnings forecast for TH Plantations by 41% and 33% in financial years ending Dec 31, 2012 and 2013 respectively.

SunREIT said its third quarter (3Q) net profit rose 9% from a year earlier, as the group registered higher turnover from an expanded property portfolio. In a statement to the exchange, SunREIT said net profit came to RM47.55 million against RM43.73 million previously. Revenue was up 19% to RM98.09 million from RM82.35 million.

Private equity firm Navis Capital has made a takeover offer for the remaining shares it does not own in higher education provider SEGi. This follows a shareholders' agreement between Navis and SEG managing director Datuk Seri Clement Hii Chii Kok, who is also the single-largest shareholder in the education entity. This has, in turn, triggered a mandatory general offer obligation for the remaining stake in SEGi. Navis, which already owns 27.84% in SEGi, is offering RM1.714 for each share, and RM1.214 for each warrant in the higher education firm.



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Navis Capital to trigger GO for SEGi today

KUALA LUMPUR: Navis Capital Partners Ltd is expected to increase its stake to over 33% today and make a general offer (GO) for the remaining shares in SEG INTERNATIONAL BHD [] (SEGi).

An executive close to the matter told The Edge Financial Dailyon on Wednesday that Navis Capital would announce the GO at a slight premium over the RM1.71 per share.

Navis Capital had earlier acquired 27.8% stake in SEGi at RM1.71 per share from Cerahsar Sdn Bhd, Segmen Entiti Sdn Bhd, and Datuk Chee Hong Leong.

The source confirmed that SEGI’s major shareholder and managing director Datuk Seri Clement Hii, who holds a 28.4% stake, would remained and not accept the GO.

This morning, 18 million SEGi warrants were traded off market for RM21.78 million or RM1.21 per share.



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Navis a major shareholder in SEG International

KUALA LUMPUR (April 2) : Navis Capital Partners Ltd has emerged as a major shareholder in SEG INTERNATIONAL BHD [] after acquiring 21.53% in the higher education provider from Cerahsar Sdn Bhd.

Updates to Bursa Malaysia on Monday show that Navis had acquired the stake comprising 114.8 million shares via Pinnacle Heritage Solutions Sdn Bhd last Thursday from Cerahsar, which ceased to be a major shareholder in SEG following the transaction.

The transaction price was, however, not disclosed. At SEG shares’ closing price of RM1.72 on that day, the deal could be worth RM197.46 million.



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SEG up 8% on speculation of new shareholder

KUALA LUMPUR (March 30) : SEG INTERNATIONAL BHD [] shares rose as much as 8% on Friday morning on speculation that the higher education provider could see the emergence of a new major shareholder after a substantial number of shares changed hands off market.

The stock which added as much as 13 sen to RM1.85 had settled lower at RM1.83 for lunch break.

News reports indicate that a 31.22% stake comprising 174.6 million shares were transacted in six tranches for a total value of RM268.67 million on Thursday.



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KLCI stays above 1,590-level at mid-day break

KUALA LUMPUR (March 30): the FBM KLCI stayed above the 1,590-point level at the mid-day break on Friday, lifted by blue chips including Maybank, CIMB, Petronas gas and KLK.

Meanwhile, Asian shares steadied on Friday as the region's benchmark indices marked their best first quarter in over 20 years and investors awaited a meeting on a possible euro zone firewall and Chinese data that may dictate market trends in coming months.

The FBM KLCI rose 6.44 points to 1,591.88 at the mid-day break.

Gainers trailed losers by 268 to 317, while 354 counters traded unchanged. Volume was 563.26 million shares valued at RM612.26 million.

The ringgit was unchanged at 3.0683 versus the US dollar; crude palm oil futures for the third month delivery fell RM26 per tonne to RM3,430, crudd oil added 62 cents per barrel top US$103.40 while godl shed 45 cents an ounce to US$1660.13.

On Bursa Malaysia, KLK added 42 sen to RM24.56, Takaful up 25 sen to RM3.37, Carlsberg 18 sen to RM10.38, Batu Kawan 14 sen to RM18.74, SEGi 11 sen to RM1.83, Petronas Gss 10 sen to RM16.84, Maybank nine sen to RM8.89, CIMB seven sen to RM7.67 and Ibraco eight sen to RM1.29.

Carotech was the most actively traded counter with 812.94 million shares done. The stiock fell 2.5 sen to 2.5 sen.

Other actives included Metronic, Focus, Key West, Tiger Synergy, SuperComnet, Ariantec, IFCA MSC and CIMB.

Decliners included Dutch Lady, genting, PPB, Shangri-La, TDM, Delloyd, Rapid, HELP, Kluang and Teo Seng.



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SEGi’s 114m shares crossed at RM1.71 each

KUALA LUMPUR (March 29): SEG INTERNATIONAL BHD []’s 114.80 million shares were traded in several off-market deals in the afternoon session on Thursday at RM1.71 each.

According to the stock market data, the shares represented a 20.5% stake, based on its paid-up of 559.179 million shares. The transaction price of RM1.71 was one sen higher than Wednesday’s closing price of RM1.70.

Meanwhile, SEGi’s 59.8m warrants were crossed at average RM1.21 apiece, down three sen from Wednesday’s closing price of RM1.24.



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CIMB Research has technical sell on SEGi at RM1.96

KUALA LUMPUR (Feb 23): CIMB Equities Research has a technical sell on SEG International at RM1.96 at which it is trading at a price-to-book value of 4.8 times.

It said on Thursday that SEGi is still on its uptrend but it believes that the uptrend is coming to an end soon.

“It appears to be forming a bearish wedge pattern following yesterday’s new 52-week intra-day high,” it said.

CIMB Research said both the MACD and RSI sports multiple bearish divergences, suggesting that the uptrend could be coming to its terminal point soon.

“The confirmation would come once prices take out the wedge support at RM1.83. This breakdown would send prices mean that prices could fall fast towards RM1.56-RM1.60 next. Resistance is around the RM2 to RM2.05 mark.

"Sell on further rallies or a break below RM1.83,” the research house said.



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A dividend boost from SEGi

SEG International Bhd (Nov 10, RM1.89)
Maintain buy with revised fair value RM2.16 from RM2.23: SEG International Bhd’s (SEGi) 9MFY11 core earnings of RM36.3 million were in line with both our and consensus forecasts at 71% and 72% of the projections. A second interim gross dividend per share (DPS) of 10 sen was declared, bringing FY11 payout to 13.5 sen (excluding a special DPS of 7.3 sen paid in 1Q) which implies payout of more than 100%. We continue to like its diversified course offering as well as established balance sheet operating on an asset-light model. Hence, we maintain “buy” at revised fair value of RM2.16 based on an unchanged 18 times FY12 price-earnings ratio.

SEGi’s 9MFY11 revenue came in 29% higher year-on-year (y-o-y) at RM207.7 million due to higher student enrolment, which we believe has risen to 26,000 from 21,000. Earnings before interest and tax (Ebit) margin widened correspondingly to 33% from 25% on improved economies of scale as enrolment growth outpaced a marginal increase in operating expenditure.

Lower financing costs and a more favourable effective tax rate helped to further lift 9MFY11 core earnings to RM54.6 million, surging over 74% y-o-y. On a quarterly basis, 3QFY11 numbers were generally flattish q-o-q while on a y-o-y basis, 3QFY11 top line rose 25% to RM70 million while core earnings surged 66% to RM18.3 million on improved utilisation of its existing facilities as the group rolled out healthcare and medical courses.

Although we previously incorporated a FY11 dividend payout of only 50%, year-to-date gross DPS amounted to 13.5 sen (implying a payout ratio of more than 100%) following its second interim gross DPS of 10 sen. This high payout ratio does not entirely catch us by surprise as we have highlighted previously such a possibility given its robust balance sheet operating on an asset-light model. Given its sturdy cash pile of RM106.8 million as of 3QFY11, we believe further upside is not unlikely as capital expenditure remains largely manageable at RM15 million to RM20 million per year, hence we bump up our DPS forecast to 17.7 sen for FY11 and 9.5 sen for FY12 at a payout ratio of 180% and 80% respectively.


We make no major changes to our core assumptions for now. Our FY11 and FY12 earnings per share estimates are lowered by 3% and 1% respectively as we tweak our opex structure to account for higher overhead expenses in the belief that the group will likely recruit more lecturers for the commencement of its vocational courses catering for foreign students. In a separate announcement, SEGi mentioned that courses for an initial batch of 600 Vietnamese students will commence in late 4Q11. — OSK Research, Nov 10


This article appeared in The Edge Financial Daily, November 11, 2011.

SEGi’s 3QFY11 profit up 69%

KUALA LUMPUR: SEG International Bhd (SEGi) saw a 68.5% year-on-year (y-o-y) jump in net profit for 3QFY11 ended Sept 30, and declared a second interim dividend of 10 sen yesterday. The group’s 3QFY11 net profit was RM18.2 million from RM10.8 million in 3QFY10. Revenue was up 24% to RM69.95 million for the period. The improved performance was due to the increase in student enrolment.

Its nine-month cumulative net profit of RM54.7 million has already exceeded its entire FY10 net profit of RM43.1 million.

“You can see that we’re very consistent over the quarters,” CEO Lee Kok Cheng said at a briefing yesterday. “There will be no surprises for investors.”

“We should be performing as well as our earlier quarters,” said Cheryl Chong, executive vice-president of corporate planning and services for the group, adding that SEGi is “definitely” on track to meet its internal financial targets.

Lee highlighted several key areas which SEGi will focus on to meet its internal targets for the rest of the year.

“We’ll still focus on international student arrivals. That is one of the key growth areas this year and in the years to come,” he said. Currently, the international student population originates from over 60 countries and represents 10% of SEGi’s 26,000 students across its six branches.

Lee said the group hopes to see the international student population grow to 30% to 35% within the next few years.

He said the group is also focusing on rolling out new programmes to increase the student count.

Lee: We are very consistent over the quarters.
There will be no surprises for investors.

He noted that the launching of its “big ticket programmes” which include a Bachelor of Medicine, Bachelor of Surgery, and Masters in Pharmacy over the last financial year contributed heavily to the increase in net margins.

“We no longer launch lower-end programmes. The courses we offer now are high-priced, which affect our margins,” said Chong, adding, “We always have new areas to go into and that is where our strength is. We’re very diversified.”

Lee said the group is also focusing on tapping into the working adult learners’ market by investing money in improving its online portals to provide access to classes and materials, as well as providing flexible payment options. Currently, 10% of the student population are working adult learners.

On the recent proposal by the National Higher Education Fund Corp (PTPTN) to exclude loans for living expenses, the group said this would not affect its numbers as its students who take PTPTN loans use them for tuition fees.

The group is looking at building another campus in Ipoh, which Chong said will hopefully begin operating in 2014. The investment in this development, she said, will be very little as SEGi has contracted a developer to build the facility and rent it to the group.

“We would rather be asset light,” she said, adding that the group would rather focus on being an education provider.

In a separate announcement yesterday, SEGi said it had entered into a memorandum of agreement with the Vietnamese ministry of labour, war invalids and social affairs to explore areas of cooperation in vocational training. This is to help the Vietnamese government to meet its immediate and long-term needs in terms of human capital development.

The initiative is a part of SkillsMalaysia INVITE, a national initiative to draw international students and trainees to pursue technical and vocational education in Malaysia.

The group has been in talks with parties in Indochina and Russia, but its initiative in Vietnam has seen the most progress. The group said the programme would only impact its financials next year.

SEGi’s stock ended yesterday at RM1.86, 3.91% higher than the previous day’s close of RM1.79. The company’s net assets per share as at Sept 30 stood at 41 sen.


This article appeared in The Edge Financial Daily, November 10, 2011.

RHB Research maintains Outperform on SEGi

KUALA LUMPUR (Nov 10): RHB Research Institute is maintaining its Outperform recommendation on SEG International with a fair value of RM2.15, based on unchanged target 17 times FY12 price-to-earnings ratio (PER).

It said on Thursday that recent concerns with regards to the possible PTPTN loan reduction will have a minimal impact on SEGi as only about 27% of its students are under the PTPTN loans.

SEGi’s earnings rose 66.3% to RM18.32 million in the third quarter ended Sept 30, 2011 from RM11.01 million a year ago. Revenue increased by 24.1% to RM69.95 million from RM56.36 million while earnings per share were 3.50 sen versus 2.22 sen.

For the nine-month period, its net profit increased by 74.2% to Rm54.57 million from RM31.32 million while revenue saw a 28.8% rise to RM207.65 million from RM161.23 million.

RHB Research said the 3Q11 net profit was within expectations. A dividend of 10 sen per share was declared.

“ Although sequential performance was flattish, revenue grew by 24.1% on-year due to higher student enrolment that we estimate grew 19-20% on-year. As operating costs are mostly fixed, the improved top line resulted in EBIT growing 70.3% on-year. Effective tax rate increased to 21% in 3Q11 (vs. 18.4% in 3Q10), but the stronger EBIT led to an overall increase in the net profit margin to 26.5% (from 19.5% in 3Q10),” it said.

SEGi also inked an agreement with the Vietnam government to finalise the MoU that was signed in Aug. These collaborations will fall under the SkillsMalaysia INVITE project and SEGi will be responsible for providing skill-based training to the Vietnam vocational instructors and students.

“An initial batch of 600 Vietnam students will commence training in 2011. With average revenue of about RM20,000 per student, we believe that the SkillsMalaysia INVITE programme will contribute about 8% to the top line in the longer term,” said RHB Research.

Stocks to watch: Harvest, Hibiscus, SEGi, Guan Chong, Tenaga

KUALA LUMPUR (Nov 9): HARVEST COURT INDUSTRIES BHD [] is expected to be in focus on Thursday, Nov 10 especially after the surge in the share price to multi-year highs amid high volume, prompting Bursa Malaysia Securities to caution investors.

Also in focus could be Hibiscus Petroleum Bhd, SEG INTERNATIONAL BHD [], GUAN CHONG BHD [] and TENAGA NASIONAL BHD [].

Bursa Securities cautioned investors over the recent sharp rise in the price and volume of Harvest shares and warrants.

“Notwithstanding the recent announcements made by the company, Bursa Securities would like to advise investors to exercise caution and to make informed decisions in the trading of Harvest and Harvest-WA,” it said on Wednesday.

Harvest closed up 27 sen to RM1.45 with 24.20 million shares done while the warrants rose 21 sen to RM1.26 with 32.15 million units done. The caution could see speculators taking profit on Thursday.

Also under the watch of Bursa Securities was Hibiscus and Emico Bhd. The regulator had queried the company over the sharp increase in price and high volume of the securities recently.

However, in response to the query, Hibiscus said it was not aware of any factors which may have contributed to the unusual market activity.

It said it had announcement the fulfillment of the Tranche 1 conditions as set out in the share subscription agreement set out on Oct 25 relating to the proposed subscription and proposed acquisition of shares in Lime Petroleum Plc.

Meanwhile, Emico, whose shares and warrants had surged in active trade on Wednesday, said it was unaware of the reasons. Trading was suspended late Wednesday and resumes on Thursday. The warrants surged 23 sen to 30 sen with 11.87 million units done while the shares rose 19.5 sen to 39.5 sen with 89.36 million shares transacted.

SEG International’s earnings rose 66.3% to RM18.32 million in the third quarter ended Sept 30, 2011 from RM11.01 million a year ago, boosted by an increase in student enrolments.

It said on Wednesday, revenue increased by 24.1% to RM69.95 million from RM56.36 million while earnings per share were 3.50 sen versus 2.22 sen.

For the nine-month period, its net profit increased by 74.2% to RM54.57 million from RM31.32 million.

Guan Chong Bhd’s net profit rose 45% to RM25.94 million in the third quarter ended Sept 30, 2011 from RM17.86 million a year ago.

It said on Wednesday that revenue increased by 23.3% to RM365.72 million from RM296.56 million while earnings per share were 8.16 sen versus 5.59 sen.

Guan Chong said the higher turnover was mainly due to higher sales volume of cocoa products as the result of contribution from its Batam plant, which started in February.

Standard & Poor's Ratings Services had revised downwards its outlook on Tenaga Nasional Bhd to negative from stable on weakened profitability.

"We revised the outlook to negative because we expect Tenaga's weakened profitability and higher operating costs to continue to weaken its significant financial risk profile," said S&P credit analyst Rajiv Vishwanathan.

"Our view is based on our anticipation that higher fuel prices stemming from a shortage of gas supply will continue to burden the company's cash flows. Moreover, the company is likely to incur capital expenditure on its hydroelectric and thermal power projects over the next 12 months."

SEG Intl 3Q net profit up 66% to RM18.3m

KUALA LUMPUR (Nov 9): SEG INTERNATIONAL BHD []’s earnings rose 66.3% to RM18.32 million in the third quarter ended Sept 30, 2011 from RM11.01 million a year ago, boosted by an increase in student enrolment and is optimistic about sustainable growth.

It said on Wednesday, revenue increased by 24.1% to RM69.95 million from RM56.36 million while earnings per share were 3.50 sen versus 2.22 sen.

For the nine-month period, its net profit increased by 74.2% to RM54.57 million from RM31.32 million. The group achieved a revenue of RM207.7 million and a profit before tax of RM68.4 million, an improvement of 28.8% and 70.1% respectively, as compared to the corresponding period in 2010.

“The improvement in performance is generally due to the increase in student enrolments of the group’s institutions,” it said.

On the outlook, it said the Group has been recording marked improvement in student numbers and profitability.

“This trend is expected to continue in the foreseeable future as the group has put in place a firm foundation and strategy for sustainable growth,” it said.