This article first appeared in The Edge Malaysia Weekly on June 24, 2019 - June 30, 2019

WHILE Minda Global Bhd is still relatively unknown to the investing community, its former names — Asiamet Education Group Bhd and Masterskill Education Group Bhd — should ring a bell.

The company assumed the listing status of loss-making Asiamet in February last year after completing a one-for-one share exchange arrangement with the latter’s existing shareholders.

It is determined to put Asiamet’s legacy issues — including a long list of unutilised properties parked under wholly-owned subsidiary Asiamet (M) Sdn Bhd — behind it and start afresh.

According to group CEO Naresh Alagan, Minda Global is now a new entity with a new mandate — to become an education group with the ability to generate sustainable profit.

“We are going in a different direction [from Asiamet]. From the perspective of investments and operations, we are now more focused and agile,” he tells The Edge in an interview at the campus of Cyberjaya University College of Medical Sciences (CUCMS).

An integrated private education provider, Minda Global operates CUCMS, Asia Metropolitan University (AMU), Asia Metropolitan College (AMC) and the Asia Metropolitan International School (AMETIS).

CUCMS, Minda Global’s flagship institution, relocated to a five-acre campus in Cyberjaya last year. AMU has campuses in Kuala Lumpur and Johor Baru while AMC operates in Kota Kinabalu, Kuching and Kota Baru. AMETIS is based in Ipoh.

“Moving forward, we will have a centralised operation. We are consolidating our human resources and finance departments. All of these are now handled by the group. We will share some facilities; we don’t need to duplicate resources across different entities,” says Naresh.

The 45-year-old Australian, who assumed his current post in January, is seen as the ideal candidate to help turn around Minda Global.

Naresh has 25 years of corporate experience, including in corporate strategy, business planning, performance improvement, change and transformation, financial restructuring, treasury operations and merger integration.

He reports to Minda Global managing director Tan Sri Dr Palaniappan Ramanathan Chettiar, better known as Tan Sri Palan, the company’s single largest shareholder with 56.98% equity interest.

Previously the CEO and executive director of AirAsia Global Shared Services Sdn Bhd  Naresh oversaw more than 350 professional staff who provided financial, information technology (IT) and business support to the AirAsia Group.

He was also a manager with PricewaterhouseCoopers Advisory, Malaysia, and had a stint in Usaha Tegas Sdn Bhd and Maxis Communications Bhd, both controlled by low-profile billionaire T Ananda Krishnan.
 

Asset-light strategy

Naresh points out that the group will continue to adopt an asset-light strategy, given that the market value of its property assets is about RM150 million.

“We have a large portfolio of properties, but we are not utilising all of them. There is a cost associated to holding these properties.

“Going forward, we don’t intend to carry large infrastructure assets anymore. If the right price is offered or if a strategic use can be identified, we will consider,” he says.

The group’s 2018 annual report shows that Minda Global — via Asiamet — indirectly owns 33 properties across the country, comprising 26 freehold properties in Cheras, Selangor; two leasehold properties in Ipoh, Perak; two leasehold shoplots in Kota Baru, Kelantan and three leasehold properties in Kota Kinabalu, Sabah.

“Currently, we rent out some of these properties. At some stage, we might even use them. Ideally, if we find the right opportunity, we want to dispose of them or find other uses for them. That will allow us to move into other complementary businesses or specialised education areas. The opportunity is there for us to do all that,” says Naresh.

Minda Global’s revenue has grown from RM19.8 million in the financial year ended Dec 31, 2017 (FY2017), to RM90.9 million in FY2018 — a whopping 359% growth, mainly attributed to the injection of CUCMS to the group.

Although Minda Global is still loss-making, Naresh says the group is targeting to be Ebidta (earnings before interest, tax, depreciation, and amortisation) positive this year.

This is given that its loss before interest, tax, depreciation, and amortisation has shrunk significantly by 63%, from RM21.4 million in FY2017 to RM7.9 million in FY2018.

“We are gradually coming out of the woods. Our turnaround plan is working well, and hence, we should see further improvements in FY2019,” Naresh says. Minda Global narrowed its net loss to RM15.9 million in FY2018 from RM28.8 million in FY2017.

“We expect to hit the break-even point in the next one to two years. The business indicators are good (so far),” he adds.

Operational savings in the areas of facilities management, advertising and promotions, IT systems as well as administrative processes have been unlocked through group wide synergies, he adds.
 

Share price seen to hit bottom

Year to date, the share price of thinly-traded Minda Global has declined by 27% to close at four sen last Tuesday, giving it a market capitalisation of RM49.6 million. The counter is currently trading at a price-to-book value of 0.22 times against its net assets of 18 sen per share as at March 31.

“We would like to think that our share price has hit bottom. The only way is up now,” says Naresh, noting that the price weakness represents an opportunity to accumulate the shares.

“The stock price is not just based on our financial performance, but also based on what the market believes. It is a good time [to accumulate our shares] before it gets too high.”

He also points out that the group’s current structure allows it to be brand agnostic and highly flexible in its acquisitions and divestment strategies without having to worry about any brand compatibility. Minda Global is the holding company of Asiamet.

During the restructuring in 2017, CUCMS was injected from Palan’s SMRT Holdings Bhd for RM166 million via the issuance of 830 million shares at 20 sen each in an all-share deal.

CUCMS offers programmes such as medicine, pharmacy, pyschology, allied health sciences, business and management, and occupational safety and health.

Naresh says Minda Global is building smart partnerships with its network of affiliate colleges to help deliver the CUCMS programmes regionally, including in Nepal, Sri Lanka and Indonesia.
 

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