For companies that have stumbled and yet to recover, some of these challenges were beyond their control and some self-inflicted. A case in point: IEV Holdings. The Singapore-incorporated offshore oil and gas support company was one of many in the energy sector that was hit hard when oil prices collapsed in 2014.
Back then, IEV was involved in oil and gas exploration and production in Indonesia, and in delivering natural gas in Southeast Asia to places without pipeline access. To stay afloat, it got out of exploration, production and distribution, and went back to its previous trade of subsea engineering and of inspecting and repairing offshore and onshore oil and gas assets.
But the aftermath of the oil price crash proved too much to bear. In 2019, IEV pivoted to healthcare and wellness by buying a company in Malaysia that provided post-partum services. Helping mothers recover after childbirth and looking after newborns would be its new lifeline.
The following year, IEV exited the oil and gas sector entirely and rebranded as Medi Lifestyle. Unfortunately, with Covid-19 grounding activities everywhere, its growth plans unravelled as quickly as they came together. It went on to dabble in other healthcare ventures, including chiropractic, genetic screening and stem-cell therapy. It even bought a healthcare-focused recruitment and manpower outsourcing business.
See also: SGX sees record year for commodities, highest cash SDAV in four years in June market statistics
Fast forward, Medi Lifestyle remains deep in the red, with very little revenue, no investor interest, and a market value of less than $1 million. Rather than post-natal care, its biggest source of revenue now is trading palm oil derivatives and coffee beans, a business it got into last year.
Even companies with a track record of profitability have found the going tough in engaging the children’s market. One such company, also in the healthcare space, is Cordlife.
The Singapore-headquartered cord blood bank had been a cash cow for years, successfully convincing parents of newborns that storing their baby’s stem cells was a once-in-a-lifetime investment in future health.
See also: SGX launches six more depository receipts for Hong Kong, Thai names
Its time-tested pitch went down in flames overnight in late 2023, when revelations of severe lapses at its Singapore storage facility surfaced after the Ministry of Health found thousands of cord blood units were unfit for use.
Cordlife was ordered to temporarily suspend its Singapore business and clean up the mess. Compensations quickly ballooned even as customers pulled out. While operations in its other Asian markets were not affected, overall revenue collapsed, leaving it with a battered bottom line in 2024, its first annual loss since 2017.
Monetising education
Outside of healthcare, companies targeting the children’s market have generally fared better in the education space.
Already profitable in the years leading up to its trading debut on the Singapore Exchange (SGX) in 2017, Mindchamps PreSchool has consistently been in the black as a listed company. The premium preschool chain offers infant care, academic programmes and enrichment courses for children between two months and 10 years of age.
However, even with Mindchamps’ strong brand name, revenue has stagnated over the past four years, hovering between $60 million and $63 million annually. Meanwhile, an acute shortage of teachers, giving rise to wage inflation, is keeping the company on its toes. This may be a reason for the absence of dividends since 2019.
Indeed, the keen demand for early childhood education teachers worldwide has led to higher salaries and even higher staff turnover at Mindchamps. Its employee turnover rate in Singapore last year was 28.5%. The situation in Australia, its largest market by revenue, was more acute, with a staff turnover rate of 58.5%.
Another consistently profitable education group is Overseas Education, which operates Overseas Family School, an international school catering to the children of expatriates in Singapore. Students range in age from 24 months to 18 years.
Sink your teeth into in-depth insights from our contributors, and dive into financial and economic trends
Unlike Mindchamps, Overseas Education doesn’t face an acute shortage of teachers. Its staff turnover rate last year in Singapore, its sole market, was 15%, about half of Mindchamps’. That said, Overseas Education serves a slightly older student cohort, which calls for a different mix of teachers and expertise.
Overseas Education pays at least half of its annual earnings as dividends. Its net cash flows from operations — and even those for Mindchamps — are generally decent. As at end-2024, Overseas Education’s net debt was 22% of its equity, while Mindchamps’ was 15%.
Compared to these two companies, Raffles Education, another education provider on SGX, has been the most fragile in recent years in terms of its bottom line. Its balance sheet is also the least healthy. Once a darling of the stock market, Raffles Education owes more in the short term than it currently owns.
Profiting from play
Kids-related businesses that are doing notably well seem to be those that let children do what they do best — play. No one epitomises this more than Sim Leisure Group.
The Penang-based theme park builder and operator has seen a surge in business since the world recovered from the Covid-19 pandemic. Revenue rose from RM9.6 million ($2.9 million) in 2020 to RM167.8 million last year, representing a compounded annual growth rate of 77.3%. Over the same period, earnings grew at a 28.3% compounded annual rate.
What sets Sim Leisure apart from most other theme park operators is its focus on creating recreational and outdoor experiences through modern adaptations of classic games. Capital-intensive and highly technical attractions, such as roller coasters, are not on its menu.
From Penang, its only market when it first started, the company has expanded to other parts of Malaysia and into Singapore. It now owns and operates six theme parks in Malaysia and the KidZania amusement centre in Sentosa.
To drum up more business, Sim Leisure is bringing mini theme parks — complete with virtual-reality thrills — into malls in Malaysia. Plans are also afoot to license some of its brands and offer its design and construction services to China’s leisure market.
Outside of Asia, the company is a subcontractor for Saudi Arabia’s Six Flags Qiddiya City, a mega theme park slated to open later this year. It has also designed and built numerous attractions in the United Arab Emirates, Bahrain and Oman.
Sim Leisure’s cash flows from operations are often robust. It’s also in a net cash position. Although it does not have a fixed dividend policy, it has been paying out part of its earnings since its listing on SGX in 2019. The only exception was 2021, when it ended in the red because of the pandemic. It paid about 22% of its 2024 earnings as dividends.
Combine Will International, a contract manufacturer with in-house design capabilities, is another SGX-listed company that hasn’t done too badly in making money from bringing fun to children.
The toy maker’s customers, including multinational corporations, hail from Asia, Europe and North America. Greater China drives the bulk of its revenue, which hit a five-year high of HK$1.47 billion ($239 million) in 2024, and has grown at a 9% compounded annual rate over the last half-decade.
Growth looks set to continue with the company doubling production capacity for plush toys in Indonesia, its latest and only manufacturing base outside China. Plush toys are a new addition to the toys portfolio of Combine Will, which also makes corporate gifts and other consumer products, including razor handles and stationery.
Similar to Sim Leisure, Combine Will has resilient cash flows from operations and no fixed dividend policy. Payouts may be sporadic, but the company has been giving dividends every year since 2019. Based on current exchange rates, its dividend of 5 Singapore cents a share for 2024 translates into a 22% payout.
Tree huggers will have little to fault Combine Will, which is big on green materials and low-impact manufacturing. It expects to make about two-thirds of its products using sustainable materials in 2025, up from over 40% last year.
Fun is serious business
Emotionally resonant but commercially elusive. That, in a nutshell, is how the children’s market seems to have played out for most Singapore-listed companies trying to cash in on kids. Between heavy upfront investments, regulatory hurdles and fickle consumer behaviour, the path to success has been anything but child’s play.
But amid the missteps and missed projections, a pattern has emerged. The companies that have fared better aren’t necessarily the ones promising academic breakthroughs or long-term developmental gains. Instead, those offering good old-fashioned fun are the ones that seem to have pulled it off.
Whether it’s indoor playgrounds, family-friendly attractions or toy suppliers, businesses that deliver joy in the moment seem to have struck a sweeter chord with both children and investors. If the experience of these SGX companies has shown anything, it’s that when it comes to winning over little consumers, fun sells.
