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Mindchamps Preschool Ltd’s Second Quarter of 2018 Net Profit Soars 65%

Listed in late 2017, Mindchamps Preschool Ltd (SGX:CNE) operates premium preschool centres in Singapore. Its classes revolve around neuroscientist Professor Emeritus Allan Snyder’s research on the three minds model of education: the champion mind, the creative mind, and the learning mind.

Here’s a quick look at how the company performed in the second quarter of 2018.

1. Revenue spiked 60% year-on-year to S$7.6 million from S$4.8 million in the corresponding quarter last year. Comparatively, cost of sales only went up 36%, resulting in a 78% increase in gross profit to S$4.9 million.

2. Operating profit rose to S$1.5 million, up 92% year-on-year. Overall net profit rose 65% to S$1.24 million from S$749,000 a year ago.

3. The higher revenue was largely due to a S$2.2 million contribution from seven newly acquired preschool centres in Australia and Singapore, which are company own and operated. The group also profited from the sale of master franchise license in China for S$0.5 million and an additional S$0.1 million in royalty income from new franchisee-owned and operated centres.

4. As of 30 June 2018, the group had 13 company-owned and operated (COCO) preschools and 51 franchisee-owned and operated (FOFO) centres. This was up from 6 COCOs and 40 FOFOs a year ago.

5. In addition, the trust has acquired another four preschools in Australia and opened its first preschool in Vietnam, increasing its student number and school network.

6. Mindchamps’ balance sheet remains robust with S$33.2 million in cash and equivalents and S$10.1 million in debt, giving it a net cash position of S$23.1 million. It had net assets of S$57.4 million, up from S$56.7 million at the end of 2017. Book value per share was 23.77 Singapore cents.

7. Mindchamps generated S$53,000 in cash from operations and used S$6.3 million in investments, the bulk of which was for the acquisition of preschools in Australia.

8. On its recent business dealings, the management said that Mindchamps acquired four preschools in Australia, as mentioned above. Two were acquired on 15 June, and the remaining two in July. It said that the acquisitions are expected to have a positive impact on earnings per share.

9. On 26 July, Mindchamps signed a non-binding memorandum of understanding with Keppel Capital Ventures Pte Ltd, which is part of Keppel Corporation Limited (SGX: BN4), to cooperate and establish a new private fund to be named “Keppel Mindchamps Education Real Estate Fund.” The fund will have a target size of S$200 million, with both parties holding a 50% stake. The fund will seek to invest in preschool and early learning real estate assets in the Asia-Pacific region, which will be leased back to Mindchamps and its related entities or franchisees.

10. At the time of writing, shares of Mindchamps traded at S$0.695 each, giving it a price to book ratio of 2.92 and an annualised price-to-earnings ratio of 52.6.

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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.