Masterskill downsizing operations

PETALING JAYA: Loss-making Masterskill Education Group Bhd will integrate and downsize its business operations in Malaysia and sell its assets in three states as part of an ongoing cost-cutting initiative to improve its balance sheet and financial position.

The nursing and allied health education provider – which saw its net loss widen to RM166.97mil, or 40.73 sen per share, for the financial year ended Dec 31, 2013, from RM28.19mil, or 6.88 sen per share – said it would phase out its operations in Ipoh, Perak, and Kota Baru, Kelantan, as well as move the operations of its medical faculty in Pasir Gudang, Johor, to Cheras in Kuala Lumpur.

According to Masterskill’s recent filing to Bursa Malaysia, its campuses and properties in Ipoh, Pasir Gudang and Kota Baru will eventually be sold.

This is expected to further shrink the company’s net assets, which had already fallen to 61 sen per share in 2013 from RM1.03 per share in the preceding year.

Masterskill’s 2012 annual report stated that the company’s assets in the three states were made up of leasehold buildings and land in Ipoh and Kota Baru and freehold land and an office building in Pasir Gudang.

These properties had a combined net book value of RM93.7mil as at Dec 31, 2012.

Masterskill’s filing did not state to whom the group intended to sell its campuses or properties and at what price. It also did not elaborate on the timing of the exercise.

A source, however, said Masterskill’s property in Pasir Gudang had attracted some big names because of its location.

Meanwhile, Masterskill said it would focus on its operations in Cheras; Kota Kinabalu, Sabah; and Kuching, Sarawak. The group said it would soon embark on improving its marketing strategies to recruit students.

Sentiment for Masterskill remains negative as the company sunk deeper into the red last year, and analysts saw little catalyst for the company. Its share price has lost 18% year-to-date. It closed unchanged yesterday at 29.5 sen.

Masterskill, which has been struggling with a shrinking student population in recent years because of intense competition and a reduction in the National Higher Education Fund Corp loans, saw its group revenue fall 60.6% to RM58.6mil in 2013 from RM148.8mil in the preceding year.

The group’s higher net loss in 2013, on the other hand, was mainly due to its impairment provision.

“Even though Masterskill has diversified into non-healthcare course offerings, we believe the company will still require a longer gestation period for earnings to be meaningful, given the stiff competition in the tertiary education space,” RHB Research said in its report.

“Given that its core nursing courses continue to face challenges, we believe that Masterskill’s financial performance will continue to remain under pressure due to low student enrolment.”

RHB Research has since ceased coverage on Masterskill. Its previous recommendation on the company was “neutral”, with a fair value of 37 sen per share.