International schools in Singapore still enjoy tight placements despite two new entrants - Dulwich and GEMS - this year. Maintain BUY with DCF-derived TP of SGD1.40.

We think Dulwich and GEMS are drawing students from smaller schools. The larger schools are not affected.

The international schools in Iskandar may only appeal to a small segment given cost and travel constraints.

Tight supply despite two new entrants

Our checks reveal that the bigger international schools in Singapore still experience high demand. Admissions for the 2014/15 academic year are either full or have limited seats left. Supply of preschool seats is running particularly low. New entrant GEMS still has 900 seats available at its new school in Yishun (to open this August). The other new entrant Dulwich (500 seats), with a more convenient location in Bukit Batok, is filling up fast. With most of the smaller schools showing availability, we believe the new entrants could be drawing students from them and are not threatening the larger and more established schools such as Overseas Education Ltd (OEL).

Iskandar Malaysia not an option for everyone

The two most prominent international schools in the Iskandar region that Singapore-based parents can send their children to are Marlborough College and the upcoming Raffles American School (RAS). The all-in costs to attend Marlborough and RAS are equally if not more expensive than Singapore’s international schools. The travelling time that could consume up to two hours per day is hardly appealing. Students can board at the schools but that is only possible for ninth graders and above. In addition, RAS offers an American curriculum only, which only appeals to someone with American universities in mind. Seri Omega is the other large international school in Johor and it has a predominantly Malaysian student base (90%), while the rest are small with 60-300 students.  

Source: Maybank Kim Eng Research - 30 Jun 2014