Raffles Edu - Stock Analyst Research
| Target Price* | 0.20 |
| Recommendation | BUY› BUY |
| Market Cap* | - |
| Publication Date | 16 Oct 2026 |
*At the time of publication
Raffles Education Ltd - Back to school and growth
- Returning to net cash through asset monetisations, Raffles Education (RE) will focus on growing its K-12 presence in ASEAN. The increasing regionalisation of higher education within ASEAN, driven by easing immigration policies within Asia and restrictive immigration policies in the UK and US, will support RE’s expansion.
- RE is growing its K-12 platforms in Thailand (RAS Bangkok expansion), Malaysia (RAS Iskandar) and Indonesia (new K-12 school in Jakarta). To fund this growth and further deleverage, we estimate RE’s planned asset sales yielding over S$500mn of gross proceeds (Figure 1). Divesting these lower-return China assets (revenue return on non-current assets: China 9% vs ASEAN 22%) would improve group asset efficiency.
- We initiate coverage on Raffles Education with a BUY rating and target price of S$0.20. Our valuation is based on DCF analysis, using a 7% WACC and a 7.5x EV/EBITDA exit multiple based on peer comparables. Our TP is conservative, as our share count reflects dilution from warrants, and takes into account c. S$35mn of resulting cash proceeds. RE currently trades at c.11x FY27e EV/EBITDA. It is expected to be in a net cash position by FY27/28.
Company Background
• RE is a Singapore-listed private education group. Founded in 1990, it runs 13 institutions
(K-12 schools, universities and design colleges) across eight countries, with c.12,400
students. ASEAN is its core market, contributing 57% of FY26 course fees. It owns 75% of
HK-listed Oriental University City Holdings (OUCHK), a consolidated subsidiary that leases
out a college campus in Langfang, China.
Investment Thesis
+ Strengthening presence in ASEAN region. Raffles Education is expanding its Kk-12
education presence through Malaysia, Thailand and Indonesia (Figure 2). We believe RE is
well placed to benefit from i) increasing regionalisation of higher education within Asia, ii)
expanding base of affluent locals that drive demand for international schools. Visa
restrictions, rising tuition fees, and policy uncertainty in the US and UK will drive outbound
Asia demand away from the US/UK back toward the ASEAN region. Enrolment trends are
strong, with Raffles University enrolment more than doubling from 438 students in 2022 to
1,002 in 2025 (Figure 3).
+ Disposing lower return assets. In FY26, Raffles Education sold 51 Merchant Road,
Singapore, for S$121.8mn (a S$52.3mn gain) and Wanbo College, Hefei, for S$78.4mn (a
S$29.4mn loss). We expect more assets to be divested (Figure 1), worth more than c.
S$500mn in gross proceeds before tax deductions. The majority of the lower-return assets
are either vacant land or assets located in China (FY26 revenue per dollar of non-current
assets: ASEAN 0.22x vs China 0.09x). Education stocks listed in China trade at a median P/E of
1.9x vs 11.1x for SEA peers (Figure 4). Exiting low-return China assets makes RE a more ASEAN
focused business, which could narrow its valuation gap to SEA peers.
+ Anchored by local demand, lifted by regional investment. Most of RE’s assets rely on
affluent local demand except Raffles Singapore and RAS Iskandar, which rely on expatriates
(Figure 5). We believe increased investment in SEA will have a knock-on effect by expanding
the base of affluent locals. The RTS link and the Johor-Singapore Special Economic Zone in
Malaysia/Singapore, the Eastern Economic Corridor (EEC) special economic zone in Thailand,
and the Belt and Road project benefiting Indonesia will be key drivers of jobs and inward
investment, adding to demand for international schooling.
About the author
Hashim Osman
Research Analyst
PSR
Hashim graduated from the National University of Singapore with a degree in Business Administration.
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About the author
Hashim Osman
Research Analyst
PSR
Hashim graduated from the National University of Singapore with a degree in Business Administration.
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