Wednesday, March 30, 2011

MEGB update no. 2

Is MEGB marching into the light with its newly approved programmes?

(credit: Dreamstime)

Since my last post on MEGB more than a month back, a lot has happened.

A Concerned Investor sends in some queries to MEGB's Investor Relations (IR) Another concerned MEGB shareholder, Zuuk has been sharing some info with me via email and these were his concerns:

1) An updated list of the shareholders - this was updated on 9.03.2011 - which shows that Fidelity and Smallcap World Fund were still shareholders to a total of 8.5%. But of course, this was 3 weeks ago and the composition may have changed and we can only wait and find out whether they have further shed their ownership of Masterskill's shares.

2) Zuuk also had concerns as MEGB's bursa announcement that it had obtained approval from the Education Ministry to run its Kuching campus which conflicted with the Kenanga report on MEGB saying that the Diploma in Nursing for Kuching was facing some delay in obtaining approval. Management's reply to this was that the two things are not the same thing as the former as to do with the campus and the latter with the programme. Hence, they were not conflicting. Nevertheless, good on Zuuk for spotting these things and being an active investor and of course, sharing this info with us

Catalysts for Higher Prices? MEGB now has hit around the average price I bought it - RM1.9 and the fact it has been in the news may have something to do with it:

March 23 - Approval for its Cheras Campus to conduct BSC (hons) Nursing programme - This is obviously good news as well, if all goes well, a recognised certificate is almost as good as printing money.

March 29 - Masterskill then announced it was to collobarate with Kinta Medical Centre to set up a physiotherapy centre - This again is a plus as it states that KMC will bear the costs and share the profits with Masterskill and this may give Masterskill the 'unique selling point' it needs to get more students into Masterskill as the healthcare education industry gets more crowded with more players entering into this space.

What about Dividends? Share Buy Back? Of course the two pieces of news I cannot wait for is the share buyback and the payout of dividends.

And guess what - they recommend a dividends payout of 7.9 cents per share payable on 15 June so if my maths is right - a 4.1% return for the shares at the price of RM1.89 (closing price today). Read about it on the Edge.

Yet, when I think about it, can MEGB afford to also do a share buyback? Can they fund both while expanding aggresively as they are opening its new campuses or do they have to settle for one option? To me, I would prefer a dividends payout as I am holding long on to MEGB. Perhaps, it's time to write into their IR to find out...

Update 31/03 : OSK research maintains MEGB as a trading buy with unchanged fair value of RM 3.44 citing the current PER at 6.4 the cheapest in its covergae. Read it on the Edge.

Full disclosure: Yes, I do have shares in MEGB.

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