SEGi mulls own training hospital
by Chong Jin Hun
Email us your feedback at
fd@bizedge.com
PETALING JAYA: SEG International Bhd (SEGi), looking beyond its bread-and-butter education business, plans to set up a training hospital to complement its medical and health science courses.
The university-college operator is also planning to venture into the information technology (IT) sector. It intends to conduct research and development with partner universities to develop commercially-viable offerings.
“Medical institutions and hospitals go hand-in-hand. We are exploring and should be able to decide by early next year. There could also be IT-related businesses,” SEGi group chief executive officer Datuk Clement Hii told The Edge Financial Daily in an interview recently. He did not elaborate.
The initiatives come at a time when SEGi is expanding its portfolio of academic courses to include higher-margin offerings, and increasing student-intake capacity in line with its aim to double revenue by the financial year ending Dec 31, 2010.
At present, the education provider has some 16,000 students across six campuses in the Klang Valley, Penang and Sarawak. The enrolment is expected to grow by up to 9.4% to 17,500 students by the end of this year.
Foreign students make up 18% of the current enrolment, of which about 70% are full-time students. Hii said foreign students are expected to constitute about a quarter of the student population by end-2009.
SEGi, which started off with courses in business and accountancy, has widened its portfolio to include medicine, nursing and pharmacy, according to its website.
It is capitalising on the global shortage of nurses. Hii said the company was expanding the training unit to become Malaysia’s largest nursing school in terms of student number and campus facility in three-and-a-half years. It already has around 2,000 student-nurses under its roof and the number is expected to quadruple to about 8,000 within the period.
“As the market becomes more competitive, we should go towards high-ticket, high-margin programmes which will allow us better returns. And we should also go into programmes where there are higher entry barriers.
“SEG International is facing very interesting times and it needs to continuously change and re-invent itself in the face of keen competition as well as the constantly changing needs of consumers,” said Hii.
Group earnings improved in the first quarter ended March 31, 2008. Net profit more than doubled to RM5.79 million from RM2.26 million a year earlier as it introduced new courses. Gains from the disposal of its Kota Damansara campus also boosted profit. Revenue, meanwhile, rose 27.1% to RM25.48 million from RM20.05 million.
And owning a hospital would allow SEGi to generate a new income stream from patients.
Note that a university-college status trims overall operating cost as the education provider can confer its own academic qualifications instead of relying on the credentials of partner universities to whom it pays royalty. SEGi was conferred university-college status by the Higher Education Ministry in June.
In general, shares of Malaysian private education entities have outperformed the wider market. Analysts said this was due to the inelastic and recession-proof qualities of the education sector amid poorer economic sentiments which had prompted consumers to spend less.
“The education sector is recession-proof because it is a necessity. There is a lack of substitution due to limited places in public universities,” OSK Research Sdn Bhd analyst Nor Fauzi Nasron told The Edge Financial Daily.
This lack of places at public universities has created a thriving market for private education players in Malaysia. Another contributory factor is that the country is a cheaper destination for foreign students compared with countries like Singapore and Hong Kong.
There are only a handful of public-listed education providers in the country. SEGi ‘s rivals are Inti Universal Holdings Bhd, Stamford College Bhd and HELP International Corp Bhd. SEGi, Inti, HELP and Stamford closed unchanged at 70 sen, RM1.18, RM1.36 and 25 sen, respectively, last Friday.