MindChamps PreSchool shares surged more than half, or 56.05% on Aug 11 to close at 25 cents, following the company's significantly improved 1HFY2023 earnings.
For the six months ended June, the company reported earnings of $7.1 million, up 373% y-o-y versus just $1.5 million recorded in the year-earlier 1HFY2022.
Revenue in the same period was up 11% to $35.2 million, as it was able to book higher franchise fees, especially in US and Western Australia.
On the other hand, the company incurred lower costs, particularly in manpower following the sale of subsidiary business units.
“I’ve always believed that growing an education brand is not about chasing footprint," says executive chairman and CEO David Chiem.
"It’s about ensuring that the brand, and the operating engine behind it, are so strong that it can withstand the challenges of global expansion.
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"There are currently millions of physical preschools (‘hardware’) around the world, so, to scale globally, what we have been doing for the past 25 years is creating a cutting edge, research-based curriculum (‘software’) that separates us from the rest," he adds.
MindChamps, under Chiem, is trying to shift towards an asset-light business model where it sells franchises for its pre-school education brand, instead of trying to own its own centres.
As at June 30, the company has a net asset value per share of 31 cents, up slightly from 30 cents as at Dec 31 2022.
For the FY2023 and FY2024 ahead, MindChamps says it is seeing a "healthy recovery" and that it is capitalizing on the reopening of economies and return of working parents back to the workplace.
However, it remains mindful of the uncertain macroeconomic environment with higher rates and inflation driving up operating costs.
To address these trends, MindChamps has increased school fees starting from FY2023 to cushion the impact of rising operating costs.
"Suitable subsidiary corporations have also been identified for divestment to our franchisees to lower borrowings and reduce interest expense," the company says.
It will continue to execute its strategy of transiting its business model from company-owned centres and focussing on accelerating its franchise sales in key markets such as Singapore and Australia, as well as most recently, the US market, where it is on track to be registered with every major US state.
MindChamps as a franchisor is approved by the US government under the Small Business Administration Scheme, enabling franchisees to take up to 80% loans backed by the US government.
