Analysts positive on Sasbadi, maintain ‘buy’ calls

PETALING JAYA: Analysts are positive on Sasbadi Holdings Bhd’s outlook as it is a dominant player in the domestic educational publishing industry with 10% market share.
Alliance DBS Research said the group is well managed and enjoys high return on equity (ROE) and superior profitability, supported by a lean operating structure and complementary business models.
Although Q1 ending November is traditionally a weak quarter for Sasbadi, the company registered strong earnings of RM4.3 million during the quarter, a substantial improvement compared with core earnings of RM2 million recorded in the previous corresponding period.
Alliance DBS Research said network marketing is a key growth driver for Sasbadi. Since obtaining the network marketing licence in April 2016, its management has been actively engaged in recruiting members for the business.
“We gather that the group has so far signed on over 3,000 members and significant contributions will start to kick in from FY17 onwards,” it said.
Alliance DBS Research is positive on the group engaging in such marketing strategies since the general market remains unfamiliar with its digital products and a more personalised marketing strategy could lead to better recognition and appreciation of such products by consumers.
Meanwhile, Hong Leong Investment Bank (HLIB) Research said Sasbadi is gradually cementing its position as an education and solutions provider for Lego Education robotics products and STEM education.
The research house foresees the group’s future earnings coming from the new syllabus for 2018, with the tendering process expected to end by March.
Besides that, HLIB Research expects higher contribution from its online products via Mindtech education as it gains momentum.
Both Alliance DBS Research and HLIB Research are maintaining “buy” calls on Sasbadi, with a target price of RM1.75 and RM1.63 respectively.