Raffles Education Set for Growth Pivot as Focus Shifts to ASEAN K-12 Expansion October 21, 2026
Brief Overview
Phillip Securities Research has initiated coverage on Raffles Education with a BUY rating, citing the company’s strategic pivot towards ASEAN K-12 expansion whilst divesting lower-return assets. The firm expects the education group to return to net cash through substantial asset monetisations exceeding S$500 million in gross proceeds, which will fund growth initiatives across Thailand, Malaysia and Indonesia.
Investment Positives
Strengthening ASEAN Regional Presence
Raffles Education is strategically expanding its K-12 education footprint through Malaysia, Thailand and Indonesia. The analyst believes the company is well-positioned to capitalise on two key trends: the increasing regionalisation of higher education within Asia and the expanding base of affluent locals driving demand for international schools. Visa restrictions, rising tuition fees, and policy uncertainty in the US and UK are expected to redirect outbound Asian education demand back towards the ASEAN region. This shift is already evident in strong enrolment trends, with Raffles University enrolment more than doubling from 438 students in 2022 to 1,002 in 2025.
Strategic Asset Disposal Programme
The company has embarked on a comprehensive asset disposal strategy, having already sold its 51 Merchant Road property in Singapore for S$121.8 million (generating a S$52.3 million gain) and Wanbo College, Hefei, for S$78.4 million in FY26. The analyst expects additional asset divestments worth more than S$500 million in gross proceeds before tax deductions. These lower-return assets are primarily vacant land or China-based properties, with ASEAN assets demonstrating superior efficiency at 0.22x revenue per dollar of non-current assets versus China’s 0.09x. The disposal of low-return China assets will transform Raffles Education into a more ASEAN-focused business, potentially narrowing its valuation gap to Southeast Asian peers.
Robust Local Demand Foundation
Most of Raffles Education’s assets benefit from strong affluent local demand, with only Raffles Singapore and RAS Iskandar relying on expatriate populations. The analyst expects increased investment in Southeast Asia to expand the base of affluent locals through several major infrastructure and economic development projects. These include the RTS link and Johor-Singapore Special Economic Zone, Thailand’s Eastern Economic Corridor special economic zone, and Indonesia’s participation in the Belt and Road project, all of which are expected to drive job creation and inward investment, supporting demand for international schooling.
Challenges
The report does not explicitly outline significant investment challenges or negative factors for Raffles Education, focusing primarily on the positive transformation and growth opportunities ahead.
Outlook
The analyst projects Raffles Education will achieve net cash status by FY27/28, supported by the substantial asset disposal programme and improved operational efficiency from focusing on higher-return ASEAN markets. The company’s current valuation of approximately 11x FY27e EV/EBITDA appears attractive given the strategic transformation underway.
Recommendation & Target Price
Phillip Securities Research initiates coverage with a BUY rating and target price of S$0.20. The valuation is based on DCF analysis using a 7% WACC and 7.5x EV/EBITDA exit multiple derived from peer comparables. The analyst notes that the target price is conservative, incorporating dilution from warrants and approximately S$35 million of resulting cash proceeds.
Frequently Asked Questions
Q: What is Raffles Education's main growth strategy?
A: Raffles Education is focusing on expanding its K-12 education presence across ASEAN markets, specifically in Thailand through RAS Bangkok expansion, Malaysia via RAS Iskandar, and Indonesia with a new K-12 school in Jakarta.
Q: How much is the company expected to raise from asset sales?
A: The analyst estimates Raffles Education's planned asset sales will yield over S$500 million in gross proceeds before tax deductions, building on FY26 disposals totalling S$200.2 million.
Q: Why are ASEAN assets considered superior to China assets?
A: ASEAN assets generate 0.22x revenue per dollar of non-current assets compared to China's 0.09x. Additionally, education stocks in China trade at a median P/E of 1.9x versus 11.1x for Southeast Asian peers.
Q: What factors are driving demand for international education in ASEAN?
A: Visa restrictions, rising tuition fees, and policy uncertainty in the US and UK are redirecting Asian education demand towards ASEAN. Additionally, major infrastructure projects across the region are expanding the base of affluent locals.
Q: How strong are the company's current enrolment trends?
A: Enrolment trends are robust, with Raffles University enrolment more than doubling from 438 students in 2022 to 1,002 in 2025.
Q: When is the company expected to achieve net cash status?
A: Raffles Education is expected to achieve a net cash position by FY27/28, supported by the asset disposal programme and operational improvements.
Q: What is the current valuation multiple for Raffles Education?
A: The company currently trades at approximately 11x FY27e EV/EBITDA, which the analyst considers attractive given the strategic transformation underway.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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About the author
Hashim Osman
Hashim graduated from the National University of Singapore with a degree in Business Administration.
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