Sasbadi's long-term potential positive

PETALING JAYA: Sasbadi Holdings Bhd's third quarter results may have come below expectations, but HLIB Research remains positive on Sasbadi's potential over the longer term as the company grows more solidly through its ongoing effort to cement its position as a sought-after educational publishing company.

It reiterated its buy call on Sasbadi with a lower target price of RM1.51 from RM1.73 previously.

This represents an upside of 8.6% from its closing price of RM1.38.

"We understand that firstly, ILearn Ace is gaining good momentum, recruiting an average of 350-500 agents monthly and currently has around 6,500 agents. Secondly, Sasbadi is planning to franchise out its robotics education classes after getting its certification, and thirdly, Sasbadi is eyeing to acquire publishing companies of different genre," HLIB Research said in a report yesterday.

It said Sasbadi's nine months FY17 revenue of RM80.1 million was translated into core earnings of RM12.1 million, accounting for only 62% and 55% of HLIB and consensus full-year estimates.

It cut its FY17, FY18 and FY19 earnings forecast by 16%, 13 % and 12% to RM16.9 million, RM21.9 milllion and RM26.5 million mainly to adjust for higher operating expenses and finance cost.

"We continue to like Sasbadi due to its high growth potential (arising from i-Learn Ace and advance augmented reality educational products), its innovativeness in creating products that cater to tech-savvy youth and unique education exposure which is closely linked to the country's education system," said HLIB.