RafflesEducation Delivers Positive 1H FY2026 Results and Strengthens Balance Sheet

Key Financial and Operational Highlights

• Positive Operating Profit: RafflesEducation reported a return to positive operating profit in the first half of FY2026, demonstrating the resilience and adaptability of its education-focused business model.
• Stable Revenue Performance: Revenue held steady at S\$56.63 million compared to S\$56.55 million in the prior year period.
• Improved Cash Flow: Net cash generated from operating activities surged 32% to S\$22.53 million, with S\$14.81 million in course fees collected in advance illustrating healthy cash generation and strong enrolment momentum.
• Strengthened Liquidity: Cash and bank balances increased to S\$35.20 million. Net gearing improved, lowering to 29%, indicating a stronger balance sheet position.
• Solid Asset Backing: Net assets rose to S\$669.65 million, underpinned by substantial freehold property assets. Net asset value per share was 39.33 Singapore cents as of 31 December 2025.

Strategic Balance Sheet Actions

• Bonds and Loan Conversion: Shareholders approved at the 23 January 2026 EGM for Chairman and CEO Mr. Chew Hua Seng to convert approximately S\$15.53 million of company bonds (S\$11.75 million) and loans (S\$3.78 million) into ordinary shares. This move reduces leverage and aligns management interests with shareholders.
• Major Asset Divestments: At the 3 February 2026 EGM, shareholders also approved asset sales expected to generate S\$132.3 million in cash:
  • S\$121.3 million from the sale of 51 Merchant Road
  • S\$11.0 million from the sale of Raffles Hefei

  These sales are expected to further strengthen the Group’s balance sheet and support future growth.

Profitability and Capital Management

• Profit After Tax: The Group reported a profit after tax of S\$3.11 million, down from S\$7.36 million a year ago, but demonstrating ongoing profitability.
• Adjusted EBITDA: Adjusted EBITDA remained robust at S\$17.02 million, only marginally lower compared to S\$17.69 million in 1H FY2025, highlighting stable core earnings.
• Deleveraging Progress: The Group has been actively reducing debt via targeted non-core asset divestments, moving towards a net cash position and greater financial flexibility.

Business Outlook and Growth Strategy

RafflesEducation’s Chairman and CEO, Mr. Chew Hua Seng, emphasized the Group’s ability to adapt to market trends, maintain high academic standards, and deliver operational efficiency. With the successful execution of deleveraging initiatives and ongoing balance sheet strengthening, the company is now positioned to pursue strategic growth opportunities.

• Scalable Business Model: The Group’s model allows for low incremental capital expenditure as it expands academic programs across ASEAN.
• Growth Initiatives: The focus is on growing premium K–12 enrolments, especially in Malaysia and Thailand, and establishing a new K–12 school in Jakarta.
• Regional Reach: RafflesEducation operates 16 institutions across 9 countries, including Singapore, Malaysia, Thailand, Indonesia, Cambodia, India, Saudi Arabia, Italy, and China. Through its HK-listed subsidiary, it also leases facilities to 8 educational institutions with about 10,000 students.

Potential Price-Sensitive Developments for Shareholders

• The conversion of debt into equity by Chairman and CEO Chew Hua Seng reduces gearing and aligns management and shareholder interests, potentially improving market confidence.
• The approval and anticipated completion of S\$132.3 million in non-core asset sales will significantly strengthen the company’s cash position and reduce leverage, possibly supporting valuation re-rating and enabling new investments or shareholder returns.
• Continued stable cash flows, underpinned by advance course fee collections, reinforce the Group’s financial resilience.
• Strategic focus on premium K–12 expansion in high-growth markets may drive medium-term earnings growth.

Conclusion

RafflesEducation’s latest results and strategic actions signal a significant step forward in balance sheet strength and financial flexibility. The combination of improved operating profit, robust cash generation, major asset sales, and ongoing deleveraging efforts create a solid foundation for future growth. Shareholders should closely monitor further developments, as these initiatives may have a material impact on the company’s share value and strategic direction.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to conduct their own research and consult with professional advisors before making investment decisions. The author and publisher are not responsible for any actions taken based on the information provided herein.

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