3Q09 registered a $16.5m loss. 3Q topline grew 1% y-o-y while bottomline registered a loss of $16.5m, largely arising from the allowance for the impairment of an associate company – Oriental Century. Below-expected results were due to higher operating expenses and slower than expected topline growth

No dividends declared. No dividends were declared, despite having the scrip dividend scheme in place. While some investors may not like this, we think this is an appropriate stance in view of its current debt position. Management shared that they target to be debt-free by end FY10F.

Trimmed forecasts by 10% - 26%. We trimmed our forecasts by -26% (FY09F), -13% (FY10F) and -10% (FY11F). This is largely on assumption of slower growth in students’ enrollment. The change in FY09F is larger as we take into account the allowance for impairment of the associate company.

Buy, TP: S$0.78. Our TP is unchanged at $0.78 as we roll over our valuation to FY10F, still based on 18x earnings, a discount to regional peers. Maintain Buy as we continue to see Raffles Ed continue to deliver on its growth plans, albeit slower (from a larger base) and its regional presence in the education space.