Analysts positive on Prestariang’s investment in cloud education
KUCHING: Prestariang Bhd ( Prestariang) has entered into an agreement with OpenLearning Global ( OGPL) and its founder/ chief executive officer (CEO) Adam Maurice Brimo, and analysts are positive on this move as it could allow the group to enhance its expertise on EduCloud or cloudbased education.
In a filing to Bursa Malaysia, Prestariang announced that its wholly owned subsidiary Prestariang Capital Sdn Bhd, entered into a subscription agreement with OGPL and Maurice for the subscription (in tranches) of up to five million new A shares of OGPL and approximately three million convertible preference shares, at a total consideration of A$ 5 million (circa RM17 million) to be funded by internally generated funds. Subsequent to the subscription, Prestariang will own approximately 16.7 per cent interest in OGPL.
According to Prestariang, the agreement was for the purpose of venturing into higher education cloud-based markets both domestically and regionally.
“Positively, the investment would allow Prestariang to tap into OGPL’s student database and technical expertise for the development of EduCloud,” the research arm of AmInvestment Bank Bhd (AmInvestment) said in a report.
However, it noted that it would see competition from more established names like Udemy, Udacity and Coursera. As such, the research team retained its forecasts unchanged for now until further earnings clarity.
On the agreement, it noted that Prestariang’s final equity interest in OGPL would be determined based on a performance band.
It explained, “Based on the latest information available, OGPL remains unprofitable but expects to break even in 2018 and aims to achieve a PAT of A$ 9 million in 2020. Should OGPL achieve the targeted profit after tax ( PAT) of A$ 9 million in the financial year 2020 ( FY20), Prestariang will receive an effective shareholding of 14.3 per cent.
“In contrast, any shortfall in the PAT target could see the shareholding progressively rising to 24.3 per cent.”
It added, “The objective of the agreement is to venture into the cloud-based higher education markets both domestically and regionally. OGPL operates a platform for learning management system ( LMS) and massive open online courses ( MOOC).
“It currently has revenue share agreements with 66 higher educational and vocational institutions across four countries and over 900,000 students in its database.
“Having secured an agreement with the Ministry of Higher Education of Malaysia to set up and operate the National MOOC Platform for public universities, it also has a considerable foothold in our local education market.”
All in, AmInvestment retained a ‘buy’ call on the stock.
“We continue to like Prestariang for its leading position in the ICT training and software distribution space in Malaysia, SKIN project which is expected to beef up net profit by more than eight times from FY16 to FY18F, and recent tie-up with Alibaba Cloud and Conversant Solutions to develop EduCloud, which provides potential for new revenue streams.”