SISB – An Interesting Share in Education Stocks Worth for Investment
Despite all the doubts that SISB’s IPO price is too high, local institutions have shown that it is not by overbooking 14 times of the available IPO
28 พ.ย. 2561

SISB Public Company Limited (SISB)’s shares is the first education (school) stock in Thai market that were teased through social media on whether the share was worth investing or not since its IPO was set at ฿5.20/share, almost 60x of P/E. 
However, on November 27, 2018, the requests to buy SISB’s IPO from local institutions were as high as 14 times of the available IPO, which is only 110 million shares! This incident must be taking into consideration for investors regarding why local institutions were so eager for this IPO if the price was too high?
 
Evidently, the revenue of SISB increases year by year with the gross profit margin (GPM) of almost as high as 40%. In 2015-2017, the GPM was 34.53%, 39.23% and 33.43$, respectively. Meanwhile, the GPM for the first nine months in 2018 was 38.79%.
Another significant indicator for SISB is its EBITDA that also increases constantly. In 2015-2017, the EBITDA was ฿90.63 million, ฿122.08 million, and ฿149.33 million, while the first nine months in 2018 was ฿187.69 million. More importantly, the profit in 2015-2017 was ฿50.43 million, ฿69.83 million, and ฿71.54 million.
 
Moreover, the interesting point of SISB is not how it performed in all those years, but how big its revenue can get in the future from the increasing new students. After adding and subtracting the new students and those who geraduate, SISB’s student increases by 250 people a year, and a net ฿400,000 per student per year. Which means the company can earn at least ฿100 million a year.
SISB’s revenue recognitions (according to 2019 accounting standard) are from entry fees and tuition fees that SISB will recognize successively, creating a recurring income that investors might have overlooked.
The capacity of over 4,000 students within the next 3-5 years from the current 2,400 students also needs to be considered. Can it be implied that the expanding of capacity means the double in growth? Let alone the popularity of the brand “SISB” in the region for the past 2-3 year.
 
Let’s get back to the main point about why does the IPO’s price is set at ฿5.20/share. The price was actually the book building from local institutions. But the 60x P/E is no doubt an eyesore to investors.
Nevertheless, it is undeniable that the growth in profit will lead to a dividend (at least 40% of net profit policy), while SISB is considered an “educational stock”, which means investors will receive a tax-free dividend. 
 
By the looks, the IPO price may not be as attractive as other shares that investors buy for speculation, but it is suitable for “mid-term and long-term investors” that need some assurance on their portfolios.
These are the reasons why the local institutions are so interested in SISB and end up an overbooked IPO.   