Overseas Education

Overseas Education: Maybank-KE initiating coverage on the counter with a Buy call and TP $1.32. The recent successful raising of $150m cash to build its new $271m campus has eliminated the overhang on the stock which once faced severe growth constraints. While growth in recent years was decent, it was hampered by space constraints at its old campus. This is set to change, with the new campus increasing its student capacity by 22% and allowing the group to hike its tuition fees. By targeting the children of high-income foreign professionals in Singapore, Overseas education commands strong pricing power at a time when demand still outstrips supply. With the new campus commencing next August, OEL is expected to close the 15% gap between its tuition fees and competitors’. At 16x FY14E P/E, OEL is attractively priced vs sector peers’ 27.5x.