MindChamps banks on asset-light strategy, after-school care and online learning to accelerate growth

“In the early years, we mainly focused on launching short enrichment programmes, particularly to fill in the gap of not just ‘what to learn’ but ‘how to learn’ or the craft of learning, as well as the development of the mindset,” says Chiem in an interview with The Edge Singapore.

“We were very big on filling in gaps in the education industry,” says Chiem whose research is described in his book The 3-Mind Revolution.

In 1984, at age 14, Chiem was the first Asian to star in a lead role Australian TV series Butterfly Island, in which he played a Vietnamese refugee.

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MindChamps Holdings, the holding company of the listed entity, has 81 MindChamps preschools across Singapore, Australia, Myanmar, Malaysia, Philippines and Indonesia. Twenty-four of these are owned and operated by Mindchamps, or company owned and operated, while 57 are franchisee owned and operated.

In Singapore, MindChamps also commands the biggest 38.5% of the premium preschool market. Of the franchise holders, 75% are also parents of children who went to MindChamps.

With his franchise model very much in demand, Chiem plans to gradually sell most of the MindChamps Preschool outlets owned directly by MindChamps Holdings to franchise owners. By becoming asset-light, the listed entity can better manage its costs and operate more efficiently and profitably.

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“Divestment will help us clear our assets and we will use the money from the divestment to pay off our debts. And once we divest, we will not need to operate the asset anymore,” he says.

The franchise model will be more effective in helping the company grow overseas, especially in the US where he has set his sights — a market about 120 times larger than Singapore.

The way Chiem sees it, the “franchise engine” is ready, with interested franchisees already committed to opening two schools. He believes the environment is conducive to further growth, with the US government providing financing for franchise owners, thereby making their investments more attractive. “We are at a point of exponential growth as we go into the US,” says Chiem, adding that the UK is another market that MindChamps has set its eyes on.

MindChamps Holdings has also started MindSpace, a new business which provides after-school care and enrichment to primary school students, extending their engagement with the brand.

With MindSpace, Chiem wants to cultivate the “Champion Mindset” in children to unlock their full potential. Within a year of opening its first centre on Jan 3, 2002, this fully franchise-operated business had grown to 21 centres. By the end of the year, Chiem expects that number to grow to at least 30 centres.

The beauty of MindSpace’s fully franchised business model is that it can fetch higher margins once economies of scale are achieved. In fact, 62% of the MindSpace owners already hold a MindChamps Preschool franchise.

“With franchising, you spend the first 10–15 years building the engine, which we have done with MindChamps Preschool. We had to cover quite a lot of costs during this period … But once we reach the growth period, the profits will be exponential, where the cost of operating 40 centres, compared to 400 centres, will not have much difference,” says Chiem.

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Ambitious thinker

In early 2018, barely three months after the company was listed, Chiem inked a joint venture with Hong Kong-listed China First Capital Group to raise US$200 million to fund MindChamps’ entry into China, where parents were willing to spend lavishly on the best education for their children with monthly fees as high as RMB10,000 ($1,939) per student not unheard of.

However, that plan was put on hold after Chinese authorities banned for-profit tutoring in core education to rein in the country’s private education industry and improve school-life balance for families. To make matters worse, the pandemic struck.

For now, Chiem’s focus is on growing the business elsewhere, and one way of doing that is to control the training of teachers, which he believes has a direct bearing on MindChamps’ competitive edge.

Chiem explains that all franchise owners can hire their own teacher of their choice but they must undergo the necessary training under MindChamps, regardless of experience and background. “You can’t just put an Oscar winner on a stage and expect them to perform tomorrow. They too will need their training and practice,” he adds.

In its much-touted IPO in November 2017, MindChamps sold 30.4 million shares at 83 cents, raising gross proceeds of some $25 million. As at March 29, shares of MindChamps are down 30.43% over the past year to 16 cents. Earnings and revenue have also not grown consistently since its listing.

In its latest FY2022 ended Dec 31, 2022, earnings rose 22% y-o-y to $2.9 million but revenue fell 2% y-o-y to $61.5 million from a record high. This also marked the first year of earnings growth after declines from FY2019 to FY2021. MindChamps says the drop in revenue was mainly due to lower franchise income and foreign currency loss as the Australian dollar weakened against the Singapore dollar.

During this time, the company also divested four preschools here to their current franchise owners: Serangoon, Zhongshan Park, Punggol Northshore and Paragon. The divestment of these centres, either partially or fully owned, is part of the group’s effort in becoming a 100% franchise business.

Says Chiem: “We want to concentrate on growing our franchise rather than operating a centre. Once we publish our (music-in-education programme) patent, we no longer need too many centres of our own.”

Meanwhile, MindChamps is increasing its product offerings. Last October, it launched the world’s first early learning music-in-education programme, which MindChamps says can help improve the children’s musical literacy and performance in maths and English tests. MindChamps has already integrated this programme, which is patent-pending in both the US and Singapore, with its preschool curriculum in 38 centres and expects it to be available in all MindChamps Preschool centres island-wide by year-end.

Outlook

Launching next year is also MindChamps+, a subscription-based online platform where users can log in from anywhere around the world and access over 1,000 hours of streaming content.

“MindChamps+ is not going to compete with Disney+, which makes cartoons (and shows). But who will you trust when it comes to engaging learning using theatre craft?” says Chiem, who says this business idea has been in the making for 25 years.

Rather than just a one-direction streaming platform, Chiem wants MindChamps+ to be more interactive where the children can interact with MindChamps teachers in the online sessions. Chiem’s vision is for parents to be able to subscribe to a monthly box of physical games and activities that are linked to MindChamps+. With a new and different box every month, parents can better engage their children and be more present in their children’s learning journey.

Further down the road, Chiem wants to provide full education from preschool to college — similar to the international school model. The MindChamps World School was an idea he had for a while but was put on the back-burner due to the pandemic. Chiem is revisiting this as economies reopen, although this “megaproject” will have to be put on hold until the MindChamps can find a suitable location to open the campus.