Raffles Education Limited: Half-Year FY2026 Financial Analysis

Raffles Education Limited, a Singapore-based investment holding company focused on education services, released its unaudited consolidated financial statements for the half year ended 31 December 2025. The following analysis reviews the key financial metrics, compares performance trends, and highlights significant developments, with an aim to provide investors with a clear view of the company’s financial health and outlook.

Key Financial Metrics and Comparative Analysis

*Inferred: As this is a half-year comparison, H2 FY2025 is assumed to be the prior half-year period (31 Dec 2024). The report does not provide quarterly breakdowns.

Historical Performance and Trends

While revenue remained stable year-over-year, net profit and profit before tax declined significantly (down 58% and 61% YoY, respectively). The decrease in profitability was attributed to a lower foreign exchange gain, higher non-operating expenses, and a lack of one-off other operating income recognized in the prior period.

Dividends

No ordinary dividend was declared for H1 FY2026. However, at the EGM on 23 January 2026, shareholders approved a Proposed Special Dividend of S\$0.004 per share, to be declared in due course. This continues the company’s trend of not paying ordinary dividends in the comparable prior periods, prioritizing capital preservation.

Exceptional Items and Noteworthy Developments

• Foreign Exchange Volatility: The half saw a significant reduction in both foreign exchange gains and losses compared to the previous year, leading to net forex gains, but at a much lower level than H1 FY2025.
• Other Operating Income: The prior period included a forfeited deposit (USD1.5 million) as one-off income, which did not recur in H1 FY2026.
• Borrowings and Leverage: Total borrowings decreased slightly to \$206.3 million, and the net gearing ratio improved to 29% from 34%, reflecting some deleveraging.
• Asset Sales and Divestments:
  • Proposed disposal of the entire equity interest in Hefei Yuren Education Management Co. Ltd for RMB 426.4 million (~S\$76 million), approved by EGM and pending completion.
  • Ongoing sale of the 51 Merchant Road property, which is expected to generate significant cash inflow upon completion (pending as of 27 February 2026).
• Capital Actions:
  • Issuance of 65.2 million new shares (conversion of rights issue bonds).
  • Sale of 26 million treasury shares for \$3.0 million.
  • Proposed conversion of \$11.75 million in bonds and RMB21.2 million in director loans into new shares, which would further dilute existing shareholders but reduce leverage.
• Going Concern and Liquidity: The company continues to operate with a negative net current asset position, but management is confident in addressing this through asset sales, refinancing, and new bond issuance.
• Special Events:
  • Notice of Proposed Government Acquisition of land in Langfang – no impact quantified yet.
  • Share buybacks have not occurred, but treasury shares have been utilized for capital management.

Chairman’s Statement

“The economic and geo-political uncertainty will affect our recruitment of foreign students. The challenging global education landscape, with increasing competition and increasing restrictive policies in the countries that we operate in will continue to affect the Group. Increasing currency volatility will continue to affect the Group. The Group continues to streamline and restructure its operations for better cost management.”

Tone: The Chairman’s statement is cautious and neutral, highlighting industry headwinds, persistent currency volatility, and management’s focus on cost control and operational streamlining.

Events and Outlook

• Pending and approved major asset sales (Hefei Yuren, 51 Merchant Road) are expected to bolster liquidity and reduce leverage.
• Proposed bond and loan conversions are set to reduce financial liabilities but will dilute existing equity holders.
• The company’s current ratio remains below 1 (0.7), but management expects improvement post-asset sales and refinancing.
• No material legal disputes or natural disasters were disclosed that would impact the business.
• Dividend outlook remains conservative, with only a special dividend planned and no regular payout policy re-established.

Conclusion and Investor Recommendations

Overall Assessment: Financial performance in H1 FY2026 was neutral to weak, with stable revenues but substantially lower profitability due to non-recurring income and forex gains in the prior period. The company is actively managing liquidity through asset disposals and refinancing, but the persistent net current liability position and highly competitive operating environment remain key risks.

For Current Shareholders: Hold. Investors already holding the stock should monitor completion of the announced asset disposals and bond/loan conversions, which are pivotal for improving the balance sheet and liquidity. The approval of a special dividend is a positive, but ongoing operational and macroeconomic challenges warrant caution. Maintain a close watch on further dilution from equity conversions.

For Potential Investors: Wait. Those not currently holding shares should remain on the sidelines until there is clearer evidence of improved profitability, completion of the key asset sales, and reduction in net current liabilities. Entry after successful execution of these corporate actions may offer better risk-adjusted returns.

Disclaimer: This analysis is based strictly on data and disclosures from Raffles Education Limited’s official half-year financial report for FY2026. It does not constitute investment advice. Investors should consider their own risk tolerance and conduct further due diligence before making any investment decisions.

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