Studying Three Education Stocks On ASX: NVT, IEL, GEM

  • Mar 30, 2019 AEDT
  • Team Kalkine
Studying Three Education Stocks On ASX: NVT, IEL, GEM

Navitas Limited (ASX: NVT)

Navitas Limited (ASX: NVT) is an Australia based Global education provider delivering services to over 70,000 students spread across 120 campuses in 24 countries each year.

On October 10, 2018, the company informed the exchange that it had received a bid for 100 percent non-binding takeover from BGH consortium at an offer price of $5.50 per share. Recently, the company informed the exchange that Navitas had agreed to the terms of a binding offer from the BGH consortium, under which the consortium will acquire 100 percent of NVT, by the way of a scheme of Arrangement.

The shareholders of NVT would receive cash of $5.825 per Navitas share upon the implementation of the scheme. The board of directors of NVT has unanimously recommended the shareholders to vote in favour of the scheme, due to the absence of a better proposal and the independent experts stating that the scheme is in the interest of Navitas shareholders.

As per the company’s half-yearly report for 2019, NVT had a pass rate of 82 percent, the retention rate of 88 percent and a progression rate of 93 percent. The company had secured 3 new contracts. The student’s enrolments were up by 5.4 percent in the first two semesters, with UK division experiencing strong growth of 16 percent. The company reported revenue from continuing operations of $472.2 million up 6 % on pcp basis. The company reported a 24% drop in pro forma EBITDA coming in at $50.9 million.

The company’s shares have delivered a return of 159.68% since its listing and has delivered a return of 28.86% and 14.74% in the past six months and three months respectively.

IDP Education Limited

IDP Education Limited (ASX: IEL) provides placement offer to international students in the USA, Australia, Canada, the UK, and New Zealand. The company is co-owner of the English language proficiency test, IELTS.

The company recently released its 1HFY19 results; the total revenues grew at 26% coming in at $304.3 million vs. $242.0 million reported in1HFY18. The company witnessed a strong performance from student placement division with Australian placement reporting a 30% revenue growth and multi-destination recording 53% revenue growth. The company witnessed an EBITDA growth of 31% (cc terms) at $66.8 million. The overhead cost growth was on the back of the expansion of network offices in H2FY18 and the investment in digital marketing capability. The EBITDA margin expansion reflects the growth in student placement revenue and IELTS price increases and overall efficiency gains. The Net profit after Tax (NPAT) grew at 31% (cc terms) coming in at $40.7 million in 1HFY19. The company witnessed robust performance in its key operating metrics: 18% increase in volumes in the English language testing, 23% volumes growth in student placement driven by ongoing strength in multi-destination and an uptick in Australian volumes. Segment earnings front Asia witnessed a robust growth of 33% in revenue. Rest of the world reported revenue growth of 30% and Australasia saw revenue degrowth of 11%. The company declared an interim dividend of 12 cps up 41$ as compared to pcp.

The shares of the company have delivered a YTD return of 50.05 percent. It has delivered a return of 42.77%, 51.44% and -1.21% in the past six months, three months and one month respectively.

G8 Education Limited

The childcare operator, G8 Education Limited (ASX: GEM) recently shared its FY18 results. It recorded revenue of $858.2 million in CY18 vs. $796.8 million in CY17 resulting in a growth of 7.7 percent. The company’s underlying operating profit, EBIT de-grew by 12.7 percent coming in at $136.3 million. The profit for the full year also witnessed a de-growth of 10.8 percent coming in at $71.9 million. The company declared a dividend for CY18 H2 of 8.0 cents, representing a 75 percent pay-out.

On the business operation front, the company witnessed below expectation earnings from acquisitions; however, the company has reportedly witnessed positive early signs in CY19. The company met its CY18 EBIT guideline. To further improve the company’s footing, the company appointed Head of Early Learning and Education. Over, 100 centres are connected to the customer engagement centre with the reminder ones on track to be completed by April 2019. The CY18 total capex of $36.8 million was ahead of the estimate drafted in August 2018, and this was mainly due to the acceleration of Refurb and refresh program of ~$4 million, educational equipment of ~1 million and IT upgrades of ~1 million. The total forecasted CapEx in CY19 is $35- $40 million. The net debt stood at $305.4 million in CY18 vs. $268.1 million in CY17. The company’s medium-term ROCE target is + 15 percent. Groups like-for-like average occupancy target of 81 percent.

The shares of the company have moved up in the recent past. It has delivered a return of 50 percent in the past six months. It has generated a return of -4.15% and 5.63% in the past one month and three months respectively.


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