Overseas Education

Overseas Education: CIMB has an unrated note on the counter. House note that Overseas Education Ltd is a rare find on the SGX, with its resilient business model and little credit risk due to upfront collection of fees. A 50% dividend policy pays investors to wait for the next step up in earnings on completion of its new campus in 2015. House stresses that it has yet to come across parents who do not put their children‟s education first. A no-growth scenario suggests a target price of S$0.81, still sane when referenced to M&A transactions and listed Raffles Education‟s historical forward average P/E. Once the campus is completed, an immediate increase in enrolment could see 27% growth in student strength. If this materialises, earnings are likely to see a significant step up even without any tuition fee hike. Outside SG, the group could seek regional expansion in HK in time to come.