Overseas Education Limited

Repurchase and cancellation of S$7 million bonds due 2019

The company has repurchased and cancelled S$7 million of it's S$150 million 5.20 per cent bonds due 2019.
The S$7 million repurchased bonds have been cancelled and delisted from the Official List of the Singapore Exchange Securities Trading Limited on 22 September 2016.
The repurchase and cancellation was funded by internal resources of the company and is not expected to have any material impact on the operations and financial position of the company and the group.

OEL recently released its 3Q16 results and it is clear the business continues to fare poorly.

http://infopub.sgx.com/FileOpen/OEL_Resu...eID=428186

The campus is barely breaking even as profit for the quarter fell to $282K as revenue fell by 7.4% while operating expenses only reduced by 2.6%. Net profit margins are thin at 1.3%. If this trend continues to next quarter, its FY2016 profit may only be about $4m. Given the current economic situation, OEL may see even lower enrollment in the foreseeable future which may tilt it into losses. Presently, the market cap is $172m. If we assume FY2016 profit to be $4m, this gives it a p/e of 43.

The other worrying issue is its $143m of 5.2% bonds maturing in about 2.5 years time. Unless the economy returns to growing at a stronger pace of at least 2.5% -- thereby returning expat jobs and their kids -- it is unlikely for OEL to have sufficient cashflow to redeem the bonds. Its campus sits on the balance sheet at a value of $277m. But i doubt the bank will give a high LTV; large private schools are not especially marketable. If the economy remains in its present state over the next two years, OEL may just be able to get by with its $40-50m cash and a conservative 30% LTV financing of its campus. If more jobs are lost in the next six months as growth slows or halts, cashflow may turn negative and reduce its cash pile rapidly, increasing its risk of default. I'm not sure taking these chances is worth the 5.2% yield. Not to me at least.

The good thing is bond holders can still get out at close to par. Last i check at bondsupermart, the ask price is 99.77.

How about swap bonds to equity and wipe out existing shareholders?
Then u have a nice debt free company with 277m assets.

The only catalyst for this stock is an increase in student numbers, which i have learnt are currently around 2,800. 

Management is definitely trying its best increase student numbers to around 3,500 as it is a key condition for OEL to continue holding its land at Pasir Ris. Don't quote me, but I believe they have a few more years to meet this condition.

Whether it actually happens is another matter altogether.

On 23 November 2016 David Alan Perry, Executive Chairman and CEO of Overseas Education Limited, disposed 205,300 shares @S$0.3976 per share.

(24-11-2016, 06:09 PM)cyclone Wrote: On 23 November 2016 David Alan Perry, Executive Chairman and CEO of Overseas Education Limited, disposed 205,300 shares @S$0.3976 per share.

He still holds 33% shares. Could it be he needs some cash to urgent matter?

(Not vested but watching)

Sent from my SM-N910G using Tapatalk

(24-11-2016, 08:43 PM)Ray168 Wrote:

(24-11-2016, 06:09 PM)cyclone Wrote: On 23 November 2016 David Alan Perry, Executive Chairman and CEO of Overseas Education Limited, disposed 205,300 shares @S$0.3976 per share.

He still holds 33% shares. Could it be he needs some cash to urgent matter?

(Not vested but watching)

Sent from my SM-N910G using Tapatalk

Looks like it.. big sell down early in the morning 2.5 million shares.

(24-11-2016, 08:43 PM)Ray168 Wrote:

(24-11-2016, 06:09 PM)cyclone Wrote: On 23 November 2016 David Alan Perry, Executive Chairman and CEO of Overseas Education Limited, disposed 205,300 shares @S$0.3976 per share.

He still holds 33% shares. Could it be he needs some cash to urgent matter?

(Not vested but watching)

Sent from my SM-N910G using Tapatalk

Never a good sign when major shareholder unload huge amts. Even if he needs urgent money he can always pledge to bank his shares if the share/biz is bright. He can sell if off later at much higher price and repay the bank. 

off my radar screen already.

Another disposal.

On 24 November 2016 David Alan Perry, Executive Chairman and CEO of Overseas Education Limited, disposed 65,300 shares @S$0.3938 per share.

Picked up yesterday's copy of Business Times and noticed the huge front cover ad for OFS.

Looks like they are trying hard to get more students. The central theme of their ad positions OFS as a more holistic alternative to MOE schools -- which has seen increasing foreign student enrollment over the past decade.

Looking forward to its next quarterly.