Site Group Faces Cash Flow Challenges Despite Saudi Growth Prospects

Strategic Milestone in Saudi Arabia

Site Group International Limited (ASX: SIT) has reported significant progress towards obtaining its Higher Training Institute (HTI) registration under Saudi Arabia's Technical and Vocational Training Corporation (TVTC). This license, expected imminently, will enable Site to deliver accredited 1, 2, and 3-year Associate Diploma and Diploma programs in the region. The company’s local partner, Al Ajmi, has invested over A$1 million to support the setup and licensing process, including leasing and renovating a Riyadh campus and workshop.

The attainment of the HTI license is a critical inflection point for Site’s expansion in the MENA region, positioning it to capitalize on Saudi Arabia’s Vision 2030 workforce development initiatives, particularly in partnership with industry giants such as Saudi Aramco.

Robust Revenue Growth and Training Operations

Site Institute’s Australian CRICOS operations have demonstrated strong momentum, with enrolments surpassing 400 concurrent students for the first time in December 2024. This surge in student numbers has driven revenue to $2.25 million for the six months ending December 31, 2024, a 45% increase over the previous half-year and a striking 112% rise compared to the same period last year.

Meanwhile, Site’s Clark facility in the Philippines successfully completed training for the second cohort of OceanaGold Corporation’s underground mining trainees, reinforcing its reputation for delivering specialized vocational training to multinational clients.

Capital Raise and Financial Position

To underpin its growth ambitions, Site completed a $1 million capital raise during the quarter through a placement and a fully underwritten share purchase plan. This recapitalization is intended to fund expansion initiatives, particularly in Saudi Arabia and the broader MENA region.

Despite an EBITDA loss of $514,000 for the quarter, largely due to one-off administrative and setup costs related to the Saudi business, the company’s cash position improved post-quarter with the receipt of a delayed US$354,000 payment from a major Papua New Guinea debtor. This inflow boosted the January cash balance by AUD$568,000, alleviating prior cash flow pressures.

Land Development Prospects in the Philippines

Site Group’s substantial land holding in Clark, Philippines, is advancing through key development approvals. The company is pursuing an increase in Floor Area Ratio (FAR) from 1.25 to between 6 and 8, enabling significant high-rise development potential. This aligns with the Philippine government’s decentralization efforts and could unlock considerable value from this tangible asset.

Outlook and Strategic Focus

With the HTI license issuance expected soon, Site is poised to launch its diploma programs in Saudi Arabia, marking a new chapter in its international expansion. The company’s ability to sustain enrolment growth and leverage its land assets will be critical to its medium-term trajectory. While the recent capital raise provides a buffer, ongoing investor support will be essential as Site navigates the operational ramp-up and market development phases.