We cut our FY14-15 EPS by around 5% to reflect weaker-than-expected UniMy student numbers. As such, our target price falls, based on an unchanged 12.5x CY14 P/E target, on par with that for the education sector. The stock remains an Outperform as its FY14 P/E remains attractive at 10.6x and yield is above 5%. Strong earnings from the oil & gas sector and M&As can catalyse the stock. 

We met up with the management yesterday along with a small group of sell-side analysts for an update on the company. There were both positive and negative surprises. The negatives first: UniMy's foundation student intake in Jul was only 18 students, a big disappointment compared to management's initial target of 300 a few months back. Management blamed it on late offer letters sent to the students and high qualification criteria. 

The positive news i) the company is looking to sign a major oil & gas ICT training job with one of the country's major oil & gas players. If successful, the other oil & gas players might follow suit; and ii) Prestariang is looking at a potential domestic M&A with a domestic oil & gas training company. This will expand the company's training base in the oil & gas downstream segment. 

We see a bright side to UniMy's poor student numbers. Management was probably overconfident about UniMy and the shockingly poor student numbers are a wake-up call. The oil & gas sector offers great potential and we believe that management is focusing on the right sector. We see more corporate developments in this sector for the company. Also, with its strong track record so far with the government (its largest client), listed status and strong balance sheet, it is in a good position to land more contracts with the government, with whom it is in talks on more work in the near future. 

Stay invested in the stock. We believe the poor UniMy student numbers is a temporary setback. Management remains committed to growing the company.

Source: CIMB Daybreak - 01 August 2013, Full PDF Report