Raffles Education: stock +2.3% at $0.665, but still off by ~15% since the 3-into-1 consolidation took place 6wks ago. Recent weakness may be due to China’s Ministry of Education comments that “a smaller number of students will take the national college entrance examination in 2011 than did in past years”. The govt body further suggested the trend of fewer people taking the test is likely to continue until 2020...
This is likely due to the falling birth rate and growing popularity of overseas education. The reduced interest in the test, which is the benchmark by which students are admitted to university, will likely to have an impact on the financial situation of some of the nation's universities. This structural trend corresponds with Raffles’ declining student numbers over the past reporting periods...
BNP last wk cut TP to $0.80 from $1, but keeps Buy rating. Notes Raffles is “currently undergoing the worst operating period in history particularly for its Oriental University City and China NES (National Education System) operations”.
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