Monday, May 30, 2011

How Now Masterskill?

So we have the Green Packet boss and management who had contiuned talking about being EBITDA positive since Feb 2008. ( refer And Green Packet Says The Magic Word Once More )

And then we have the KNM boss and his MBO. (refer KNM: Are you IN it to win IT? Or are you IN it to LOSE IT??? )

Today I noted one of the big loser is MEGB. It's currently down some 4.1%.

The chart is coloured specially for a reason.

It represents the period since MEGB's boss gave an interview with Star biz: Masterskill CEO may raise his stake in company.

Friday February 18, 2011
Masterskill CEO may raise his stake in company

KUALA LUMPUR: Masterskill Education Group Bhd group chief executive officer Datuk Seri Edmund Santhara is considering to up his stake in the group.

In a filing with Bursa Malaysia on Wednesday, the education-based Masterskill said Edmund, who owns some 90.6 million shares, or 22.1% stake in the company had announced his intention to deal in his securities in Masterskill.

“(I'm) looking at purchasing at this price,”
Edmund said when contacted by StarBiz yesterday.

However, he said he could only buy the shares today as per Bursa Malaysia rules.

“Well, I need to wait and see. Perhaps, anything below RM2 doesn't justify keeping the company listed,” Edmund said when asked on the amount of shares he intended to purchase.

Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually.

He said that the company was fundamentally sound and that its Kuching campus was already in operation.

“The current share price weakness presents a great buying opportunity for Edmund to accumulate its shares,” an analyst said, adding that Edmund's move to purchase more shares may be a practical thing to do.

The analyst said most companies undertake share buybacks if they believe their shares are undervalued, or to send a signal of confidence in the company.

Masterskill, which raised RM771.3mil from its initial public offer (IPO) in May 2010, has succumbed to selling pressure yesterday.

The counter fell to a record low since its listing after Fidelity Management and Research (FMR) LLC, the parent of Fidelity Investment, sold 280,000 shares in the former.

The counter fell 8 sen, or 4.32%, to RM1.77, its lowest since its listing on May 18, 2010.

However, Edmund remains unperturbed by the divestment by FMR.

“It's a simple portfolio investment, so it's normal. The company fundamentals remain strong,” he said.

Edmund was confident its share price would stabilise soon. “As the company is good, the price will soon stabilise after the seller is gone, mainly Fidelity Investments,” he said.

FMR, one of Masterskill's substantial shareholders, has been trimming its stake in the education group since October. Following the disposal of 280,000 shares, FMR held a direct stake of 20.6 million shares, or 5.02% in Masterskill.

Dealers attributed the price slide the stock has fallen some 30 sen from its one-month high of RM2.34 on Jan 13 mainly to the recent selling pressure. However, they believed the selling might not be done as yet.

As at Sept 30, the nursing and allied health sciences education provider has 17,613 students. It posted a net profit of RM26.2mil for the third quarter ended Sept 30 on revenue of RM80.7mil.

The education group is due to announce its fourth quarter ending Dec 31, 2010 financial performance tentatively next Wednesday. Bloomberg's consensus estimates expect Masterskill to post RM104.6mil in net profit for the full financial year ended Dec 31, 2010.


Let's look at that chart again.

The coloured area showed roughly the preiod when MEGB had been trading below 2.22 - remember 'Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually' and then on Feb 2011, he said 'anything below RM2 doesn't justify keeping the company listed,”

MEGB now trades at 1.85.

And if I am not mistaken, there's isn't a SINGLE buy transaction done by the boss.

Doesn't it makes you wonder?

Why did he on Feb 2011 tell out loud to the local investing public that he intends to purchase shares in MEGB?

Where are the share purchases since?

Is talk really so cheap?


bonny b said...

Looks like gov is stopping/curtailing the sponsoring of students to dubious colleges. Expect enrolments to drop sharply here onwards.

Kris said...

Talk can be very lucrative for him.

Jackie Lee said...

I have been following these shares for quite sometimes already. It seems that there were lots of selling done rather than buying and the counter was moving downtrend.

I was wondering why this company is making so much money and their shareholders are reducing their stake in it (dumping)? Why ?????

Something fishy going on ....

bullbear said...

"As at Sept 30, the nursing and allied health sciences education provider has 17,613 students."

Please check out the followings:

1. Who are accepted for these courses?
2. How do these students finance their courses?
3. What are the qualities of their graduates?
4. Where are these students employed after graduating from these courses?
5. What are the pays enjoyed by these graduates?

There are some rumblings in the community that:

1. The entry requirements are very low, therefore, many students can be accepted.
2. Most students take a government loan for the course. These loans need to be repaid.
3. The quality of the students is dependent on how good the students were on acceptance into the course.
4. There is apparently an oversupply (temporary or otherwise) of these graduates due to overproduction.
5. Many are not able to get into the posts they would wish to work in. They are employed in alternative related jobs.
6. Their pay may not be much higher than those who are also working in such posts, but without going through similar courses.

Moolah said...


Interesting points made..

but to be honest with everyone, I have yet to take a look at its financials. Not sure why but somehow I just lack the motivation to do so.

Having said that, it's always in my opinoon, for those who invest in the LONG TERM (ie decades), one of the most crucial factor is the ownership of the company. What and how the management acts in the public is one of the great indicators.

Best example?

LOL! I won't use KNM but I would use Gamuda.


Remember the time it crashed when the owner sold out the bulk of his shares to just 1.7%? Reasoning given? He wanted to spend more time on estate planning? Gamuda shares which already was in a decline, was trading at a price of 5.75 before the plunge.

How would one interpret such an action from the main owner?

How would anyone invest long term in a company when the founder, himself is no longer a major shareholder?

Those were the simple questions I remembered back then.

Compare Gamuda share price then and today.

In Masterskill case. Here we have, this owner, talking and talking but there's no action? How?

Think of this as a college or high school project. If the team leader just talks and talks and there is no action... how? Would you even want to be involved in the project lead by such a team leader?

Why should shares be any different?

And also for Masterskill, the case is much serious. How could Bursa allow the CEO of a company to make empty promises to the investing public? And more so, since such promise could affect how the share performs.

ps: Now I am not saying that this shares has zero chance of going up or this share is sure to plunge. This would rather be silly because this is the stock market and at any given day, anything can and will happen to any stock.

random said...

hi mm

I notice that he and his wife bought on the feb 22nd

Tuesday, 22 Feb 2011

1:02PM Dato' Sri Santhara Kumar A/L Ramanaidu (49,601,079 Shares Transferred)
1:02PM Dato' Sri Santhara Kumar A/L Ramanaidu (49,601,079 Shares Transferred)
1:02PM Datin Sri Carline A/P A. Johnson DCruz (49,601,079 Shares Acquired)

Moolah said...

random: ? where you get that info?

That's a off market transfer of shares to spouse.

random said...

hmm u are right.. my bad

what is the threshold that the shareholder needs to announce every purchase?

Does he have to announce if he is buying little by little?

Just curious

mgtp12 said...

wonderful post! honest and frank assessment on that few over promised under delivered coy!

I bet their annual reports look colourful and attractive too ( i was told that the aesthetic value of the annual report is correlated to the quality of earnings, inversely correlated that is!!!

Btw, do drop by n visit my blog!

Cheers mate

Moolah said...

If I am not mistaken, once you have a stake worth more than 5.5% of the listed company, you are required to make announcements to Bursa on every single buy/sell decision.

Like I said, all we had seen is this CEO making big talk in the local press that he would buy shares in the company cause it's deemed undervalued. That was in Feb 2011 and to this very date, there's not a single share purchase from him.

And what about his talk to take the company private?

Dejavu? Like in KNM?

It's very discouraging to see CEO make such talks in public because clearly at this moment of time, many are getting the impression that his interview on Feb 2011 was nothing but a cheap attempt to lend his falling shares a support.

Mun Wai said...

Moo: Isn't it 5% the threshold ?
69D, CA

Moolah said...

Oops.. is it 5%?