A Peek Into Education Stocks

EducationInvesting in education is paramount. Education empowers individuals to do great things that they never thought was possible. During the Great Financial Crisis, those who were made redundant were encouraged to educate and improve themselves by going for extra courses.

Let’s look at some education businesses listed in Singapore that help play a part in empowering individuals.

Overseas Education Limited (SGX: RQ1) or OEL for short

OEL operates the Overseas Family School Limited (OFSL) which is a private foreign system school in Singapore. It offers the K-12 International Baccalaureate curriculum for students aged between 3 and 18 years.

It was floated on the market in February this year at $0.48.

Around the middle of last month, the company received a letter of offer from the Singapore Land Authority for the direct alienation of the state land located at Pasir Ris Drive 3 to OFSL, for a term of 30 years. The site will be used for developing and operating a single educational institution. This also means that OFSL is looking to expand beyond its current location in Paterson Road.

Last year, the company reported a gross margin of 39% and the net profit margin was at 21.5%. The Return on Equity was 30.6% and the Return on Asset was 18%. The shares are currently valued at 14 times historic profits.

Raffles Education Corporation Limited (SGX: NR7)

No, this company is not affiliated to Sir Stamford Raffles. Raffles Education is the largest private education group in the Asia-Pacific region. Since establishing its first college in Singapore in 1990, the company has grown to 33 colleges in 30 cities across 11 countries in Asia Pacific that includes Australia, China, India and Singapore.

In 2012, the Group launched the Raffles University Iskandar and Raffles American School in Iskandar, Malaysia. The former school is a comprehensive university approved by the Malaysian government. It is Raffles Education’s first foray into the American K-12 education market. The company was loss-making in 2012.

Informatics Education Limited (SGX: I03)

Informatics is one of the largest education and training institutions in Asia and the first private lifelong learning company to obtain a listing in Singapore. It has been quoted since May 1993. Informatics offers courses in infocomm technology, business, finance, management and languages.

In 2009 the company posted earnings per share (eps) of $0.00348. In 2013, earnings per share were $0.00200. Earnings have been declining at a compound rate of 13% a year. In 2012, the gross margin was at 58.7% while the net profit margin was at 10%. The Return on Equity was 12.6% while the Return on Asset was 7.5%. The company is valued at 47 times profit

Foolish Bottomline

Study hard and get good grades in school, so that you will have a bright future!” is a favourite maxim among Singaporean parents. However, not all are crafted out to excel in school. Some do not do well in exams.

Similarly, not all education companies are created equal as seen from the examples above. Even though education businesses are resilient, not all companies can create value for shareholders.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.