MSH’s education revenues grow as hospitality tumbles

Shares of Myanmar Strategic Holdings (MSH), a London-listed consumer business developer and operator with operations in Myanmar, remained unmoved at US$9.50 per share despite the company announcing narrower losses for the year ended March 31, 2018.

MSH runs hospitality and education businesses in Myanmar. During the year, the company’s new education division in Myanmar helped it offset falling fees from its hospitality division and raise total revenues by 140 percent year-on-year to $791,870 during the period.

Of the company’s total revenues, $611,870 – 77pc – was generated by Wall Street English and $180,000 – 23pc – generated by Ostello Bello Bagan.

Yet, MSH still ended the year in the red, with losses totaling $2.1 million for the period, which is 13pc narrower than the year before. The spike in the company’s revenues was more than offset by a 145pc rise in employee-related costs and higher finance costs.

Enrico Cesenni, MSH chief executive, told The Myanmar Times that hospitality and education share a similar potential in the medium-long term.

“Hospitality may suddenly accelerate or contract due to broader global and regional trends while education demonstrates a more steady growth pace. We would also like to point that MSH’s recent investment in security will further balance its revenue mix while providing another avenue of substantial growth,” he said. MSH’s focus remains on “accelerating the development and growth of the Group towards profitability.”

Non-executive chair Richard Greer stated that the firm will focus on its existing businesses and integrating Exera in the next 12 months. In the future, management will “increasingly focus on businesses targeting the population’s primary needs such as education, security and healthcare.”

“While we are acutely aware of the tragic events in Rakhine, we continue to maintain an optimistic stance on Myanmar’s economic prospects and we aim to contribute to its positive development as a responsible investor in the region,” he observed.

The company predicted that the country’s long-term tourism prospects remains positive, but that its businesses experienced a setback “due to a broader decline in tourist arrivals in Myanmar linked to the conflicts in Rakhine State.” It manages four boutique hostels and the underlying revenues of managed businesses were $1.7 million, $0.5 million higher than the previous year.

Headquartered in Singapore and Yangon, MSH was listed on the London Stock Exchange on August 22 last year with the admission price of $10 per share, giving a market capitalisation of $22.7 million on admission. The company first invested in the country’s hospitality market in August 2014 with the acquisition of the development and management rights of Ostello Bello Bagan, a boutique budget hotel located in Bagan. Its portfolio has since expanded to include three more Ostello Bello hotels in Bagan, Mandalay and Inle Lake.

The firm diversified into the education market by acquiring the rights from the UK’s Pearson Education to open English language centres for adults in Myanmar in 2016, having two centres in Yangon with a third one scheduled to open next month. It is targeting up to ten centres across Myanmar by 2027. In addition, MSH and Auston Institute of Management, an operator of private schools in Singapore and Sri Lanka, will set up a joint venture private school in Yangon. In May, MSH made a strategic minority investment worth a total of $150,000 in digital consulting firm Nexlabs and completed its acquisition of security firm Exera for $2.2 million.

Source: Myanmar Times

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