This article first appeared in The Edge Financial Daily, on February 15, 2016.

KUALA LUMPUR: After two major acquisitions in the past three years to expand its portfolio, education provider SMRT Holdings Bhd is gearing up for a targeted 15% revenue growth in its education segment in the financial year ending Dec 31, 2016 (FY16) in the face of the weak ringgit, which is driving many Malaysian parents to settle for local options, instead of sending their children overseas for further education.

This could boost enrolment at its Cyberjaya University College of Medical Sciences (CUCMS), the main revenue contributor to its education segment. CUCMS was acquired for RM27.4 million in 2014 to diversify into tertiary education in the medical sciences.

The management has set a target to raise its number of students by 1,500 this year from 3,500 currently. SMRT executive director and CUCMS bursar Kalaiarasu Malayandi believes the target is achievable, as it is just 300 more from the 1,200 new student intake last year.

To draw more students, the group will expand its budget for marketing and promotion to 6.5% of its total revenue in FY16 against the 5% allocated in 2015.

In its nine months ended Sept 30, 2015 (9MFY15), the education segment was the largest revenue contributor at RM49.28 million, or 60.2% of its total revenue of RM81.86 million. The segment also brought in a net profit of RM13.4 million, over four times the RM3.3 million it recorded in the previous year’s corresponding quarter. The group’s two other segments are training and technology.

Prior to CUCMS — which was loss-making when SMRT acquired it — and last year’s joint acquisition of Asiamet Education Group Bhd (formerly Masterskill Education Group Bhd) with private equity firm Creador LLC, SMRT was primarily a provider of integrated human resource (HR) development software solutions and other HR-related services.

To achieve the top-line growth, the group also plans to monetise CUCMS’ medical and pharmaceutical expertise by launching specialist clinics that offer medical and pharmaceutical services to the public, as well as absorbing some of its students by providing job opportunities to them.

It is also looking at monetising campus facilities such as ambulance and homeopathy studios to bring in more auxiliary income.

“We also want to see if we can bring in more auxiliary income through [our] lifelong [learning] centre. Since we already have the expertise at the university, we can develop certificate programmes for executives who are working,” said Kalaiarasu.

The Centre for Lifelong Learning (EXCELL), launched last month, should be in full swing by mid-year, said Kalaiarasu. That will also be the time when CUCMS, equipped with in-house expertise in occupational safety and health (OSH), expands its consultation services to industries.

Meanwhile, Kalaiarasu said there are plenty of opportunities open to CUCMS, with numerous international universities expressing interest to work with it, be it articulation agreements (AAs), joint research, or others.

AAs are formal agreements between two or more colleges and universities to accept credits in transfer towards a specific academic programme.

CUCMS, which was recently named the Gold Winner of the 2015 Workforce Optimas Awards by US-based magazine Workforce, after having successfully turned around its business within a year, is also receiving more interest from international students on the courses it offers.

Kalaiarasu said this bodes well for the group’s direction of “internationalising CUCMS”, as it is working with foreign partners, particularly those in the United States, Europe and Australia, to recognise each other’s curriculum. This means students graduating from CUCMS can choose to further their studies in partner institutions or transfer there seamlessly.

Such flexibility makes CUCMS a more attractive choice to not only Malaysian parents and foreign students, but also to international institutions which want to tap into the Malaysian market.

This is on track with the group’s intention to beef up the percentage of its international students to 5% from the current 1% within two years.

“Our international marketing department is trying to bring in international students from countries such as Sri Lanka, Maldives and the Middle East,” Kalaiarasu told The Edge Financial Daily in a recent interview.

He said the goal is to draw more students to the “non-quota courses”, such as psychology, which has no limit on student intake, unlike the medical science course that has a fixed quota set by the Ministry of Health to curb the oversupply of doctors.

For 9MFY15, SMRT incurred a net loss of RM6.38 million against RM6.89 net profit a year ago, mainly due to share of loss from associate of RM2.2 million, higher finance cost and professional expenses incurred for its acquisition activities, and lower margin from sales generated. The loss was, however, partly offset by the higher profit recorded in its education segment.

SMRT closed half sen or 2.27% lower at 21.5 sen last Friday, valuing it at RM54.4 million.