Overseas Education's net profit dropped 10% to $5.6m

Here's what to blame.

According to DBS, despite higher expenses, Overseas Education Limited's 3Q13 net profit grew 9% y-o-y but fell 10% q-o-q to S$5.6m. 

Here's more from DBS:

Revenue grew 5% y-o-y (flat q-o-q) to S$26m as OEL raised tuition fees by 8.5% on average across all grades for the academic year starting August 2013. As a result, operating margins were 26.5%, up from 24.4% in 3Q12 but lower than 29.2% in 2Q13. Personnel expenses which formed the bulk of costs rose 6% y-o-y and 4% q-oq.

Effective tax rate was higher at 17.5% in 3Q13 vs 14% in 3Q12 mainly due to a tax refund last year. The results were in line as 9M13 earnings met 78% of our FY13F.

Net cash rose to S$113.9m. OEL finished the quarter with net cash of S$113.9m, up from S$94.5m as of 31 Dec 2012, mainly due to IPO net proceeds and tuition fees collected less payment of land premium and development of the new campus in Pasir Ris.

As the construction of the new campus progresses, we expect net cashflow to turn increasingly negative as the required capex is estimated to be around S$260m in total.