Over-reliance on national loans
OVER the week, education and workforce solutions provider SMRT Holdings Bhd identified three strategic parties to take up shares in its new education entity – Minda Global Bhd.
This will fulfill one of the key conditions precedent requirements for Asiamet Education Group Bhd (AEGB) to complete its acquisition of CUCMS Education Sdn Bhd (CESB) from SMRT.
Thus post-acquisition, Asiamet will effectively own two tertiary institutes – CUCMS and Asia Metropolitan University, which will be injected into a new entity called Minda Global Bhd.
For now, AEGB continues to be loss making. For this company, which was formerly known as Masterskill Education Bhd, its main reason for failure was the huge reliance on the National Higher Education Fund Corp (PTPTN) loans.
At its height, Masterskill recorded a net profit of RM102.1mil on revenue of RM315.7mil for its financial year ended Dec 31, 2010, with some 14,000 students.
The reduction in the PTPTN loans amount and the higher entry requirement for the nursing programme resulted in drastically lower student enrolments
Nonetheless, this Minda Global development shows that interest for the education sector remains. It is not surprising that the valuations of most education stocks remain high, with education stocks in Malaysia averagely trading at a price earnings ratio of 36 times.
PTPTN aside, offering the right courses is another important factor. AEGB was mainly offering nursing courses.
Meanwhile CUCMS also has faculties in medicine, pharmacy, traditional and complementary medicine among others. It is also offering other courses in language and general studies to diversify away from the dependency of just medicine. As we all know, the market is now flooded with doctors. A huge backlog has been created, with a waiting time of six or more months for houseman posts.
Education will remain a lucrative and recurring business as long as it offers the right courses, and doesn’t just depend on government subsidies to make up the student numbers.