Here’s why IDP Education (ASX:IEL) shares are on the rise today

  • February 24, 2021 01:53 PM AEDT
  • Team Kalkine
Here’s why IDP Education (ASX:IEL) shares are on the rise today

Source: Sutterstock

Summary

  • IDP Education Limited regained momentum during the 1H FY2021 following a challenging CY2020.
  • IDP management was upbeat despite witnessing drops in revenue and EBIT.
  • The Company is well prepared for the 2nd half with proposed investments across student placements, data science & IELTS.
Gold MTF non-AMP

International education organisation, IDP Education Limited (ASX:IEL), similar to other Australian firms, was significantly affected by the COVID-19 pandemic as borders across the globe were closed and there were delays in visa processing. Despite the challenges, the Company is regaining momentum and is already on the recovery path.

IDP Education provides international education services and helps people to achieve their global study goals. On 24 February 2021, the Company released its 1H FY2021 results for the period ended 31 December 2020, reporting a drop of 29% in its revenue at A$269 million. Despite a decline in the top-line and profit figures, the management was upbeat, stating that the Company's diverse business model and long-term strategy enabled it to sail through the disruptions.

Following the results announcement, IEL shares witnessed a healthy jump and were trading 8.966% higher at A$27.100 (at AEDT 1:28 PM). IEL shares were the top movers on ASX 200 at the time of writing.

The Company's global teams are in full strength and have accelerated the digital transformation program. Besides, IEL has entered 2H FY2021 in a healthy position with a cash balance of A$293 million, reflecting a healthy cash flow backed by robust cost management. IDP's A$175 million working capital facility is still undrawn apart from the cash balance, giving the Company a strong balance sheet along with access to substantial liquidity.

Let us walk through the operation and financial highlights of IDP’s 1H FY2021.

Operational Highlights

  • IELTS volumes reached their pre-COVID-19 levels.
  • There was an increased demand for IDP Connect insights services from higher education institutions.
  • Global teams are prepared to aid customers when conditions get better.
  • Improved data science capabilities are supporting the next generation of client and customer services.
  • The volume for student placement declined by 37% due to the uncertainty around the travel and border closure.
  • Placement in Australia dropped 47%. As international borders were closed, student enrolments were restricted to those wanting to continue their studies online.
  • In the UK, the Company reported a better performance as students could travel to the UK to begin their studies.
  • The underlying demand for IDP's other destinations like Canada was strong. However, the volume declined by 39% due to travel restrictions coupled with delays in visa processing.

Financial Highlights

IEL’s board of  Director has declared an unfranked dividend of 8 cents.

 

 


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