Listed less than a year ago, MindChamps Preschool Ltd (SGX: CNE) operates and franchises preschool, and reading and writing centres. However, since its listing, market participants have not taken so fondly to the stock, beating it down 12% from its initial public offering price of S$0.82 to S$0.72.
Potential investors might be interested in taking a look at MindChamps following the share price decline. Therefore, here are three things to take note about its business and growth prospects.
Market leader in premium preschool centres in Singapore
MindChamp’s classes revolve around neuroscientist Professor Emeritus Allan Snyder’s empirical research on the three minds model of education: the champion mind, the creative mind, and the learning mind.
It currently is the market leader in premium range preschool in Singapore, with a 38.5% market share (as of 15 September 2017). Busy Bees is a distant second at 26.4%, and EtonHouse is third at 5.5%.
Strong pipeline of franchised centres
MindChamps earns its keep largely from company-operated centres or franchised centres. Around 22% of the company’s S$6 million revenue in the first quarter of 2018 was generated through franchisee-owned and franchisee-operated (FOFO) centres.
As of 31 March 2018, there were a total of 51 FOFO centres in operation. However, MindChamps has plans to increase the number of franchisee-operated centres. In total, the group has sold 165 franchise licenses, with only 51 in operation. That means another 114 FOFO centres could potentially be established in the future, increasing the total number of FOFO centres by a whopping 223%.
The graph below illustrates the number of FOFO centres in operation and those that are in the pipeline:
Source: MindChamps 2018 Q1 presentation
Joint venture to invest, establish and acquire preschools globally
In addition, the group has initiated two joint venture agreements to form the “MindChamp PreSchool Global Fund” and the “MindChamp China Fund”.
The group aims to use the capital to acquire and establish preschools under the MindChamps brand in China and other parts of the world. This will hopefully establish MindChamps as a globally recognised brand and increase its global footprint further.
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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 Jeremy Chia doesn’t own shares in any companies mentioned.