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MindChamps
17-11-2017, 11:30 PM,
Post: #1
MindChamps
This IPO caught my eye because Target Asset Management, a well known, investment firm based on value investing approach is a corner stone investor.

In short, I am less than one-third done reading 600++ page offering document and I have found quite a bit of risks. Since I am still pretty new to value investing (2 years), I probably am missing something.

Just want to share my inputs
a) This appears to be extremely high ROE (about 70+% based on 2016 audited figures) It appears that equity is very depressed. I gathered that the PE of about the high 30s to 40. I guessing investors (or should I say bankers) are pricing this as a growth stock, with growth coming from overseas. Locally, the firm warns that they might meet into government-led competition through the efforts of the National Institute of Early Childhood Development (Singapore)

b) There is no proof that it can replicate its business overseas successfully. So far the company has made a few acquisitions in Australia. The deals itself are foggy, but I am still reading. It seems to me that if the company depends on overseas for growth, betting on it now seems early.

c) I believe the selling point of this company is franchising its operation. But for the past three years, its "Company-Owned-Company-Operated" (COCO) still is the major bread winner for the firm. About 60-70%. This is despite much of the one-off fee from franchising already collected, as wrote in page 104.

d) Day Sales Receivable went up pretty rapidly. 2014 (82.64 days), 2015 (87.473) and 2016 (107.09 days).

e) Not the healthiest balance sheet around.

Is there something that I am missing out?

Offering Document can be downloaded here:
https://www.shareinvestor.com/news/news....nid=168776

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18-11-2017, 12:10 AM, (This post was last modified: 18-11-2017, 12:12 AM by opmi.)
Post: #2
RE: MindChamps
many years back, CityDev HK listed vehicle invested in Mindchamps......see chairman statement & mgt discussion

http://www.ceslimited.com/wp-content/upl...008-AR.pdf

http://www.ceslimited.com/wp-content/upl...009-AR.pdf

http://www.ceslimited.com/wp-content/upl...010-AR.pdf
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster

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18-11-2017, 09:03 AM, (This post was last modified: 18-11-2017, 12:17 PM by boonsong.)
Post: #3
RE: MindChamps
(18-11-2017, 12:10 AM)opmi Wrote: many years back, CityDev HK listed vehicle invested in Mindchamps......see chairman statement & mgt discussion

http://www.ceslimited.com/wp-content/upl...008-AR.pdf

http://www.ceslimited.com/wp-content/upl...009-AR.pdf

http://www.ceslimited.com/wp-content/upl...010-AR.pdf

Thank you very much.

There isn't much to dispute or repute the investment quality of MindChamps (MC) from those ARs-- although it does affirm that parents treat pre-school as discretionary spending and MC's business was poor during those beaten-down years.. Losses were simply too great for CD(HK) to continue holding MC-- so it is understandable that they cut.

Too bad there isn't any more info from 2010 onwards.

add: Among its cornerstone investors, we have China First Capital Group. Perhaps more insights can be glean from CFCG's ARs.

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19-02-2018, 11:42 AM, (This post was last modified: 19-02-2018, 11:42 AM by weijian.)
Post: #4
RE: MindChamps
These guys are trying to scale up fast. The "franchise" method can be considered speedy already but they take the additional step to accelerate their growth by starting a 200mil fund to make pre-school acquisitions. They remind me a little bit of Centurion, who seeds ~30% of their student accommodation real estate plays and then earn management fees from it, while trying to bring it to scale in the process.

On paper, it all sounds right with entering China - A growing middle class, increasing urbanization that reduces the average family size (and resources are concentrated on less kids) and the halo effect of foreign brands...But all these are already well known by now and are they actually early or late in the game? (contrast this with the competition that was partly to blame for Overseas Education's woes)

MindChamps PreSchool enters China through China First Capital Group joint venture

MINDCHAMPS PreSchool has signed a joint venture agreement with China First Capital Group (CFCG) that will allow it to make its foray into China.

The joint venture (JV) will see the establishment of a fund that aims to raise an initial tranche of US$200 million from the offering and sale of limited partnership interests to limited partners.

MindChamps and CFCG may also invest in the fund. The fund will be used to set up and acquire preschool centres under the MindChamps brand in China.

http://www.businesstimes.com.sg/companie...nt-venture

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12-03-2018, 03:09 PM,
Post: #5
RE: MindChamps
I'm also interested to MindChamps, they mentioned Target AM, China First Capital Group, Hillhouse will be the cornerstone investor during IPO. But I checked the prospectus, cannot find how many shares do these cornerstone investors hold? Do anyone know this? Thanks

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12-03-2018, 03:12 PM,
Post: #6
RE: MindChamps
MindChamps signed a master franchise agreement in China, allow them to open 14 preschools in China. If they successfully expand to China, the potential market is huge...
Look at the RYB

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