Singapore’s Big Loser Of The Week: Raffles Education Corp Ltd

Education services provider Raffles Education Corp Ltd (SGX: NR7) closed this Friday at S$0.215, losing 7% of its value since the end of last week. As a comparison, the Straits Times Index (SGX: ^STI) had declined by 3.2% over the same time frame.

Headquartered in Singapore, Raffles Education is a “private education provider, owner and manager of education assets and facilities, and education-linked real estate investor and developer.”

Its first college in Singapore was established in 1990 and the company has since expanded its reach to over 13 countries around the world, including Australia, China, and India. More than 20,000 students are enrolled into Raffles Education’s tertiary programmes each year.

On Thursday this week, Raffles Education released its financial results for the six months ended 31 December 2015. Revenue for the period came in at S$58.6 million, down 2% year-on-year.

The bottom-line, however, worsened considerably. A net profit of S$1.1 million seen a year ago had become a net loss of S$4.3 million. Big contributors to the loss include higher finance costs (up 35% year-on-year), and losses of S$1.58 million from joint ventures and associates.

As of 31 December 2015, the education provider’s total borrowings had increased from S$343 million a year ago to S$415 million. This increase in debt had played a role in the higher finance costs that Raffles Education had experienced. The company also ended 2015 with cash and cash equivalents of S$85 million, an increase from the S$70 million seen a year ago.

In its earnings release, Raffles Education had touched on its outlook ahead. Going forward, the firm said that currency volatility, the recent increase in US interest rates, uncertain global interest rate movements, and a general macroeconomic slow down (especially in China) are causing headwinds for future growth.

The company added that it is “facing a challenging operating environment with increasing competition, higher manpower costs and a more stringent regulatory environment”. But in ended off by saying that it will look for opportunities in new territories; investors may thus be able to look forward to further geographic expansion for the company.

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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.