L&G’s education business not spared from Covid-19 effects

by FARA AISYAH / pic credit: sribestari.edu.my

THE fallout from the Covid-19 crisis has hit the education sector hard with private school business operators being under the Movement Control Order (MCO) and Conditional MCO (CMCO) pressure to resume school operations.

Private and international school operator Land & General Bhd (L&G) said the temporary closure of schools presents a challenge to the financial stability and student enrolment for the new term.

L&G owns Sri Bestari Private School, Sri Bestari International School and Manjaria Bestari Kindergarten via its wholly owned subsidiary Lang Education Sdn Bhd.

“We had a projection of 400 students for our international school this year, but we only managed to enrol 350 students now,” L&G MD Low Gay Teck told The Malaysian Reserve.

He added that although the international school segment has been recording exponential growth since its establishment four years ago, decreased parental income due to the pandemic and the option of home schooling have reduced revenue stream for the segment.

“Because of the Covid-19 pandemic and global lockdowns, some parents cannot bring their children into Malaysia. Some parents are also holding back due to the economic downturn,” he said.

Low said the company targets to have 450 students for the Sri Bestari International School next year.

For the first quarter ended June 30, 2020 (1QFY21), the education segment’s operating profit increased 38.31% year-on-year (YoY) to RM2.14 million from RM1.54 million a year ago.

The segment’s revenue also improved by 27.28% YoY to RM5.52 million from RM4.33 million in 1QFY20.

The group noted in a past filing that the increase in revenue and operating profit was due to the increased student enrolment particularly for its international school with the opening of additional classes for upper primary and secondary following the completion of a new school building.

Low said the education business contributes about 20% to the L&G’s group revenue and slightly more than 10% to the profits.

“But these percentages are going to fluctuate quite widely. If the property segment’s revenue jumps, then the ratio against education business is going to be less than 10%,” he said.

Low previously said the group’s focus for the rest of the year and next year will remain on sales.

For the next calendar year, the group plans to launch two new developments namely Aria Rimba in U10 Shah Alam, and an unnamed project located at the former Sri Damansara Club in Bandar Sri Damansara.

Aria Rimba will be a 112-acre (45.32ha) township development with an estimated total gross development value (GDV) of RM1.2 billion.

The Sri Damansara Club project will be a 14-acre mixed development with an estimated total GDV of RM2 billion.

The developer’s three ongoing projects include Astoria Ampang, Sena Parc Senawang and Damansara Seresta.

“The Home Ownership Campaign 2020 together with the current low interest rate environment should help stimulate demand.

“With Phase 1 Astoria Ampang and Phase 1A Sena Parc now completed, and with the two attractive developments coming on stream next year, we look forward to garnering better sales and better financial performance next year,” Low said.