KUALA LUMPUR: Affin Hwang Capital has cut Scicom (MSC) Bhd's financial years 2020, 2021 and 2022 earnings forecasts by 2.0-28 per cent after incorporating lower revenue from the e-solution business.
Affin Hwang said this was due to the temporary halt in entry of new international students and longer-than-expected restrictions in cross-border travel.
The firm said the number of international students in Malaysia's higher education institutions had declined by 29 per cent in 2019 to 93,600, with private colleges reporting a sharp 36 per cent decline to 59,000.
This affected Scicom's financial years 2018 and 2019 revenue, with the e-solutions business segment contributing 26 per cent in 2019.
It said the segment derived the majority of its revenue from the processing of international student visa applications and provision of ancillary or value-added services.
Affin Hwang said entry of new international students was on hold until further notice.
"This may further weaken Scicom's financial year 2021 revenue. That said, we are neutral on its medium-term business prospects.
"Once the government relaxes its travel restrictions, we believe that Malaysia's relative success in handling the Covid-19 outbreak and its relatively safe environment may increase the country's appeal as a destination for higher education," it said.
Elsewhere, Affin Hwang said Scicom's business process outsourcing (BPO) segment remained stable.
Scicom, it said, had adopted a rotating work from home arrangement and hence, there would lijely bevlimited disruptions to its BPO business throughout the MCO (Movement Control Order) or conditional MCO period.
"Broadly, we expect the BPO revenue to remain stable – existing operations should support revenue but growth may only return in financial year 2022," it said.
Affin Hwang maintained its "hold" call on Scicom with a lower target price of 97 sen from 99 sen previously.