Thursday, August 18

Sasbadi still ‘in the good books’ — AllianceDBS


KUCHING: Sasbadi Holdings Bhd (Sasbadi) is considered by analysts to still be in the good books despite expecting the first quarter of financial year 2015 (1QFY15) results to be seasonably weak.

According to AllianceDBS Research Sdn Bhd (AllianceDBS Research), the group will roll out about 1,300 titles this year compared with 1,150 titles last year.

The research house noted that Sasbadi will also introduce new products to capitalise on the revised examination format with the rolling out of Pentaksiran Tingkatan 3 (PT3) or Form 3 Assessment since 2014, to replace Penilaian Menengah Rendah (PMR) or Lower Secondary Assessment, and to introduce more concise yet comprehensive revision books to cater for increased popularity of such publications to students.

It further noted that the new applied learning centre, which focuses on science, mathematics and technology by using robotics and children educational development products, is expected to commence operations by the first half of 2015 (1H15) in Kota Damansara.

“We are optimistic on this expansion strategy in view of rising demand for such sophisticated educational products/services in Malaysia.

“Besides that, we believe that such a venture serves as a strong platform for the group to tap into government spending on strengthening early childhood education,” AllianceDBS Research said.

To recap, the government has allocated RM530 million for preschool programmes in 2014.

AllianceDBS Research noted that the group is poised to announce its first quarter of financial year 2015 (1QFY15) results at end-January.

The research house believes that the quarterly results will be unexciting, given that September-November period serves as the weakest quarter for the group.

“We are optimistic that the group is on track to meet our FY15 earnings target, supported by additional new products rolled out, coupled with potential value accretive acquisitions,” it said.

All in, AllianceDBS Research reiterated its ‘buy’ rating on Sasbadi, based on a discounted cash flow-derived target price of RM2.25 per share.

It noted that the stock is trading at an undemanding valuation of 10-fold/8-fold/6.6-fold of FY15-FY17 earnings per share (EPS) while yield is decent at five per cent for FY15.