Raffles Education: FY10 results below market and our expectations. Revenue fell 6.9% yoy to $188.1m, in tandem with the decline in total student numbers (-3.3% yoy to 66,649). While headline earnings grew 2.8% yoy to $52.6m, the bulk of it was due to one-off contribution from a $36.7m government grant related to Oriental Century University. Otherwise core earnings would have declined due to high start up costs of setting up new colleges (FY10: 8 colleges - $3.1m; FY09: 5 colleges - $0.5m)…
Momentum has turned negative for the counter, as the Street slashes EPS estimates by up to 25% to factor in concerns about the persistently weak student enrolment in China, and higher cost pressure. Note string of analyst downgrades - KE to Hold from Buy, target $0.30 from $0.48. BNP target cut to $0.34 from $0.49. CS target cut to $0.24 from $0.55.
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