MEGB Report... Apr11

Alliance Research.

Maiden overseas venture
On 12th Apr 2011, Masterskill Education Group Bhd (Masterskill) signed an MoU with PT Sejahteraraya
Anugrahjaya Tbk (PTSA) and Dato’ Sri Edmund Santhara, Masterskill CEO to set up a JV in Indonesia for
the purpose of establishing the Universitas Masterskill- Mayapada (UMM) in Indonesia. The MOU would be in effect for a period of 3 months.

Under the JV, PTSA would be the largest shareholder, holding 40% stake while the remaining would be held equally by Masterskill and Dato’ Sri Edmund Santhara respectively. The total paid-up capital would be US$10m (RM30m). PTSA would be responsible to obtain all approvals and consents for the establishment and operation of UMM, which would offer programmes in nursing and allied health education. In addition, PTSA via a tie-up with PT Bank Mayapada Internasional and other financial institutions would provide a
student loan scheme to eligible students for their full course studies in UMM. Masterskill in turn would provide the standard operating procedures, curriculum and guidelines relating to the programmes in nursing and allied health education provided by UMM.

Our view: generally positive, but short on details and near-term meaningful contribution unlikely. We laud the overseas venture given the 1) huge potential market in Indonesia, 2) severe shortage of nurses and healthcare professionals in Indonesia and 3) below-par standard of education in healthcare, which presents a good opportunity for Masterskill to develop nursing and allied health science courses in Indonesia. In addition, UMM students would also benefit from the clinical training provided by Mayapada Hospital, which is indirectly owned by PTSA. However, specific details are scant and we expect the Indonesian venture to
contribute meaningfully from FY14 onwards. Thus, Masterskill’s fundamentals are unchanged at this juncture.
Maintain TRADING BUY with TP of RM2.60 intact.