From Star Online: Business
9th July 2013
“At the current share price, an investor is effectively getting the education business for free."
KUALA LUMPUR: CIMB Equities Research is maintaining its “Outperform” rating on Help International Corp Bhd with a lower target price of RM2.23 from RM2.52.
“Higher-than-expected registrations for its new international school in Jan 2014 and higher value for its Subang 2 land should catalyse the stock,” it said.
It added Help announced it was planning a RM71mil five-year 4% Irredeemable Convertible Unsecured Loan Stock (ICULS issue). The ICULS would be offered based on 1 ICULS (RM0.50 nominal value) for every 1 Help share.
“The RM71mil raised from the ICULS would be used to partially fund the construction of the new Subang 2 university campus. We estimate the total capex for Subang 2 at RM150mil, of which RM110mil will be used for the new university and RM40mil for the ongoing construction of the new international school,” it said.
CIMB said it is short-term negative on the proposed ICULS issue due to the estimated 33% financial year 2014 and 2015 earnings per share dilution.
“The current issued base of 142mil will rise to 189.4mil shares on full ICULS conversion. However, the long-term outlook is positive as this finally resolves the long overdue financing issue for the Subang 2 campus. Net profit impact is neutral, as the ICULS’ interest costs will be capitalised until the new campus is ready in three years,” it said.
It said investors should stay invested in Help as its main strength lies in its strong asset base.
“At the current share price, an investor is effectively getting the education business for free."
“In addition, the value of its 23-acre landbank in Subang 2 could appreciate further once the redevelopment of theRubber Research Institute land in Sungei Buloh kicks off. Help’s new international school should also contribute to revenue from financial year 2014,” it said.
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