HELP ... Dec09

Results Review & Earnings Outlook
• HIC turned in better-than-expected results with 4QFY09 (Oct) net
profit rising 20% YoY and 105% QoQ. FY09 net profit of MYR15.5 mln
exceeded our previous projection of MYR13.9 mln.

• 4Q performance is seasonally stronger, with more classes conducted
for courses from institutions in United Kingdom and United States.

• FY09 revenue and net profit were 12% and 31% higher YoY at
MYR96.6 mln and MYR15.5 mln, driven by growth in both student
population and number of programs offered, as well as better cost
management. Consequently, FY09 net profit margin rose to 16.0% vs.
13.6% in FY08. We note that this was the highest net profit margin
achieved since HIC’s listing.

• Meanwhile, the group’s balance sheet remains robust, with NTA/share
increasing to MYR1.05 as at end-October compared to MYR0.90 a
year earlier. Similarly, net cash/share too strengthened to MYR0.99 in
FY09 from MYR0.83 in FY08.

• Given the solid results and positive outlook, we upgrade our FY10
earnings estimate by 13% to MYR17.3 mln. We also introduce our
FY11 net profit projection of MYR19.1 mln, which assumes modest 4%
and 8% growth in student population and tuition fees respectively.

Recommendation & Investment Risks

• We maintain our Buy recommendation and raise our 12-month target
price to MYR2.00 (from MYR1.60).

• We derive our target price by assigning a target PER multiple of 10x
(from 9x) against FY10 earnings (unchanged), inclusive of a projected
dividend. The higher target PER multiple, a 25% premium over its
closest peer, SEG International Bhd (SYS MK, MYR0.95, Not Ranked),
is justified, in our opinion, given HIC’s superior profit track record.

• We continue to like HIC for its healthy earnings growth, underpinned
by the steady rise in student population (approximately 12,000) and
programs offered, as well as its overseas expansion via franchise and
licensing arrangements. We believe HIC’s prospective FY10 PER of
8.9x is undemanding when compared to the expected double-digit net
profit growth in the next few years. The group posted an average 25%
growth in net profit over the last four years.

• On Dec. 28, 2009, HIC proposed to acquire 1,112 sq m of freehold
land, together with the erected building known as HELP Residence, for
a cash consideration of MYR50 mln. HIC shall pay the vendor in halfyearly
installments over five years. We do not expect any funding
issue, given the group’s high cash holdings and positive cashflow
generation from its operations.

• Risks to our recommendation and target price include unexpected
changes to the policies and regulatory framework by the Ministry of
Higher Education which could affect student intake.