RLS SP / NR7.SI
Look forward to ASEAN K-12 expansion
Education
Revenue fell 4.4% to S$106.8m on the HFYR disposal. The Group posted an audited net loss of S$6.4m (PATMI: -S$5.6m), mainly due to a S$10.1m net FX loss versus a S$24.1m gain in FY25. Borrowings fell 59% to S$86.2m, cutting net gearing to 7% from 34%.
After the HFYR exit, the Group runs 13 institutions with 12,408 students, and ASEAN now contributes 54% of revenue (+4.6% YoY). Costs were contained, but the RM54.4m (~S$17.2m) arbitration award against Raffles K12 is a watch item.
Raffles American School Iskandar reached record enrolment, and management targets FY27 revenue of MYR70–75m. Potential monetisation of ~65 acres at EduCity to recover capital from the school could fund debt repayment, though timing is uncertain.
We reiterate our OUTPERFORM rating on Raffles Education, with a 12-month fully diluted target price of S$0.27 (previously S$0.32), implying 216.6% upside from current levels. Our target price is derived using our DCF valuation methodology, based on an unchanged WACC of 6.3% and terminal growth rate of 2.5%. The reduction in our target price reflects a more conservative FY27–30F earnings trajectory following FY26 results, as we normalise one-off disposal items and assume a slower ramp-up in ASEAN K–12 contributions against a smaller recurring revenue base, while the Group’s improved risk profile after its balance-sheet restructuring and asset monetisation continues to underpin our positive view.
Key downside risks include (i) execution risk on new-campus launches across ASEAN; (ii) margin pressure from rising competition in international schooling across Malaysia, Thailand and Indonesia; and (iii) regulatory and foreign-exchange exposure across multiple jurisdictions.
