This article first appeared in The Edge Financial Daily on June 18, 2018

KUALA LUMPUR: Educational counselling player JM Education Group Bhd is targeting a better top line and bottom line for the financial year ending Dec 31, 2018 (FY18), on the back of a growing number of students recruited for counselling and local placement, according to managing director Teh Cheong Hua.

Although Teh declined to disclose any target numbers, he said the group is planning to open its 10th branch office in Iskandar EduCity in Nusajaya, near Johor Baru, by the second half of 2018 and a tentative second Johor branch in Batu Pahat.

“Johor is an important market for us. There are a lot of students and educational institutions there for us to serve the market,” said Teh in an interview with The Edge Financial Daily recently.

Founded in 1992, JM provides counselling and alternative placement to Malaysian educational institutions as well for students facing budgetary concerns. The group is the third company to be listed on Bursa Malaysia’s LEAP market, out of the seven currently.

In FY17, JM’s net profit slid 10% year-on-year (y-o-y) to RM2.04 million from RM2.27 million, due to one-off listing expenses of RM520,000. Excluding that, the group would have seen a 13% rise in net profit, as revenue grew 15% y-o-y to RM11.43 million from RM9.96 million.

In FY17, the bulk or some 42% of JM’s revenue came from its Australian market, followed by the UK (35%), Malaysia (18%). The remainder 5% was derived from other countries like New Zealand, Singapore, the US and Canada.

Interestingly, despite being a small firm, JM had a track record of paying dividends prior to its listing. Teh said JM endeavours to pay out at least 20% of its profit after tax (PAT), subject to financial conditions.

JM declared a 1.4 sen final dividend to shareholders in respect of FY17.

“We want the company to become efficient in terms of deployment of capital. If we think there is excess capital, we will try to [put it to good use], if not, [we will] distribute it back to shareholders,” he added.

Teh said the company is currently working with over 150 educational institutions globally, most of which are in Australia, the UK, the US and New Zealand. The group most recently partnered with University of Sydney at the end of last year.

In 2017, JM had 1,261 students, of whom 494 were sent to the UK, while 443 went to Australia.

The group’s secondary business, Miraj Academy, which JM acquired in 2013, is a technical and vocational education and training (TVET) academy. The academy had 161 trainees as at 2017.

While JM’s core business in education counselling and overseas student placement contributes almost 90% of its revenue and profit, Teh sees strong growth potential in TVETs, especially under the new government.

“Once a clearer direction and blueprint is out from the new government, I think we foresee more focus, [and] better coordination for the TVET sector, so private providers will play a role in uplifting the skills of our students and workers,” he added.

Part of the proceeds from the group’s listing will go to its Nusajaya branch, which Teh estimates will cost around RM60,000 to RM80,000.

Upon its listing on Feb 8, shares in JM have not been much traded. They were last traded at 54 sen apiece last Monday. “[It’s the] same across the board, not much trading. Our shareholders are fine, there’s not much complaint. Secondary investors should know [that] it’s not for short-term trading, it’s [more of] a medium-term — three to five years’ horizon — investment,” said Teh.

On JM’s plans to migrate from LEAP, investments in LEAP-listed shares are only restricted to sophisticated investors, to the ACE or Main Market, Teh said the company does not have a fixed time frame and will instead focus on growing and strengthening its business in the meantime.

Teh added that LEAP is a good environment to grow in, citing lower listing cost, lower barriers to entry, and less regulation on reporting and governance.