SEG International (SYS MK; BUY; FV: RM2.23; Last Closing: RM1.945)

 SEG International (SEGi) is one of the largest private tertiary education providers in Malaysia by enrolment with 23k students across 6 campuses nationwide. In comparison to its peers, SEGi has one of the widest range of courses ranging from commerce, creative arts, engineering, to healthcare and medical programs. It also enjoys better margins due to the introduction of its homegrown programs since 2008. We believe the growing thirst for tertiary education gives rise to boundless opportunities as SEGi introduces more new courses and better-yielding homegrown programs. Given the expected margin expansion on greater economies of scale and higher take-up of its homegrown courses whilst enrolment is forecasted to grow at 20% p.a., we are modeling for earnings CAGR of about 50% over the next 2 years. Our Fair Value stands at RM2.23 based on 18x FY12 PER. Initiate coverage with a BUY.