MindChamps PreSchool Ltd’s IPO: 3 Big Trends Investors Should Know

Shares of MindChamps PreSchool Ltd (SGX: CNE) started trading last Friday.

The company had filed its initial public offering (IPO) prospectus a week prior to its public debut. At the time of the filing, MindChamps PreSchool had a network of 54 centres. 10 centres are owned and operated by the company itself, while another 44 are owned and operated by franchisees.

As part of the IPO, MindChamps PreSchool commissioned Converging Knowledge Partners to prepare a report on the early childhood education industry in Singapore.

The assessment provided insight on why the industry is growing.

1. The female labour participation rate is rising

According to the report, the percentage of married females who are working has increased from 60.7% in 2012 to 63.6% in 2016. For a summary:

Source: MindChamps PreSchool’s IPO prospectus

The report surmised:

“With a higher number of married women in the labour force, child care services will increasingly fall on external parties outside of the family, thus boosting the need for more preschools, particularly those offering full-day programmes, in Singapore.”

2. Full-day child care is on the rise

The report also displayed the number of children enrolled in full-day child care from 2012 to 2016:

Source: MindChamps PreSchool’s IPO prospectus

In 2012, the number of children enrolled in full-day child care was 69,075. By 2016, the figure had climbed to 97,672. The growth rate had come in between 10.3% and 8.7% per year.

3. Rising household income

The two trends above coincide with the rise in average monthly household income. The report noted:

“Singapore’s economy grew at a CAGR of 3.1% from 2012 to 2016, reaching SGD 402.2 billion in 2016, from SGD 355.7 billion in 2012. The rise in GDP is mirrored by rising household income in Singapore, where the average monthly income for resident employed households attained a CAGR of 2.9% (from SGD10,348.0 in 2012, to SGD11,589.0 in 2016).”

For a summary of the growth in average monthly household income in Singapore, see the chart below:

Source: MindChamps PreSchool’s IPO prospectus

Converging Knowledge Partners believes that the rise in monthly income will support the ability of working parents to afford better quality education and full-day child care for their children:

“Continued growth in monthly income will support the ability of working parents to afford rising expenses in child care. More importantly, it also means increased access to higher quality ECE [early childhood education] and enrichment classes for their children.

This trend of increasing affordability is reflected particularly in the rise in enrolment rates for full-day child care programmes.”

If you would like to learn more about MindChamps PreSchool, click here.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.