Stars in the Childcare and Education Sectors: Charter Hall Social Infrastructure REIT & Janison

  • Aug 11, 2020 AEST
  • Team Kalkine
Stars in the Childcare and Education Sectors: Charter Hall Social Infrastructure REIT & Janison

Summary

  • During the current reporting season, some companies have reported losses due to the pandemic while a few have reported impressive top-line and bottom-line figures.
  • ASX-listed REIT Charter Hall Social Infrastructure’s profit was up by 25% to A$85.9 million during FY20.
  • Charter Hall Social Infrastructure disclosed settlement of 11 existing childcare properties for A$64.8 million, with a further three current childcare properties under contract for ~A$12.6 million.
  • Janison Education Group Limited’s revenue climbed 22% in FY20 owing to new customer wins in the US, Brazil, and Russia.

All businesses have not been affected by the pandemic in the same way. Several companies went belly up during the challenging situation posed by COVID-19 while few ASX-listed stocks have reported positive operational and financial performance during the period.

A few REITs are racing out the pandemic induced closures and remain relatively unaffected. In regards to the ASX-listed REITs, the current market volatility is universally recognised as providing reliable or adequate liquidity to absorb the economic stress, generated due to COVID-19, for at minimum next few months.

Amid COVID-19-induced lockdown, Several industries shifted towards the new pattern of work from home while schools and colleges also the same strategy of following social distancing norms distinctly. The education stocks are also using technology to enable web conferencing based face-to-face lectures, online assessments etc. 

The current reporting season, so far, has seen the expected degradation of the financial performance of various businesses. However, we have also seen some exceptions like ASX-listed REIT’s and education sectors stocks that have defied the odds and generated high numbers during the period.

On 11 August 2020, Charter Hall Social Infrastructure REIT (ASX:CQE) and Janison Education Group Limited (ASX:JAN) reported their respective FY2020 results and both stock ended in the green zone.  The exceptional results where CQE’s profit rose by 25%, and Janison’s revenue grew by 22% caught the eye of the market participants whose optimism was reflected in the share price gains during the day.

Let us now discuss the FY20 Highlights of CQE and JAN in detail-

Charter Hall Social Infrastructure’s Profit up by 25%

ASX-listed real estate investment trust Charter Hall Social Infrastructure REIT is managed by Charter Hall Group (ASX:CHC) and invests in social infrastructure properties. With over 29 years of experience in property investment along with funds management, Charter Hall Social Infrastructure is one of Australia’s leading fully integrated property groups.

Highlights from the financial front

  • The operating earnings of the Group were reported at A$51.1 million, climbing 15.6% on pcp.
  • Operating earnings of 16.5 cents per unit, in line with pcp.
  • Distribution in FY was 16.0 cents per unit, unchanged on pcp.
  • Statutory profit of A$85.9 million was up 25.0% on pcp.
  • Balance sheet gearing was 16.4% with a liquidity of approximately A$289.61 million.

Highlights from the operational front

  • Weighted average lease expiry rose by 2.8 years, or 28%, to 12.7 years.
  • Settlement of 11 existing childcare properties for nearly A$64.8 million, with a further three current childcare properties under contract for ~A$12.6 million.
  • Net property valuation rose by 4.4% to A$44.2 million.

Source: Company's presentation

Childcare Market- The key drivers for growing childcare demand are:

  • Critical labour supply mechanism, vital to allow Australians to return to work during or post COVID-19.
  • Considerable learning benefits for young children with the quality of early learning services improving continually.

Strategy and Outlook

Charter Hall Social Infrastructure will continue its strategy to offer investors with a stable and secure income and capital growth through exposure to social infrastructure property.

As part of this approach, the Group will engage in new prospects in social infrastructure for increasing income sustainability and strength.  Moreover, the FY21 forecast distribution guidance is anticipated to be 15.0 cpu.

Charter Hall Social Infrastructure will continue to pay quarterly distributions.

ALSO READ: How REITs Are Reacting to COVID-19 Uncertainty?

Stock Information: On 11 August 2020, CQE stock closed the day’s trade at A$2.470, up by 4.661% from its previous close. With a market capitalisation of nearly A$850.48 million, CQE has approximately 360.37 million shares trading on the ASX.

Janison Education Group Limited’s Revenue Up 22% in FY20

Education technology pioneer Janison Education Group Limited (ASX:JAN) provides online learning as well as digital assessment solutions for several educational courses. The Group offers learning by its two main offerings in the education technology, and these are Janison Insight and Janison Academy.

On 11 August 2020, Janison Education Group released its financial results for FY20 (ended 30 June 2020) and operational highlights for the year.

In its second full year of trading on the ASX, Janison Education Group has further grown its penetration of the A$150 billion Education Technology market delivering approximately 22% growth in platform revenue.

Highlights from the financial front-

  • Platform Revenue of Janison surge by 22% in FY20 owing to new customer wins in the United States, Russia, Brazil, and other PISA-for Schools.
  • The Company GM% rose by 11 percentage points, with 16 percentage points increase for Assessments.
  • EBITDA recorded to be A$2.5 million, up by 26% on the fiscal year 2019, and assessments now delivering positive EBITDA.

Operational Highlights-

  • Janison Education Group has completed the acquisition of Educational Assessments from UNSW Global.
  • OECD partnership expansion into seven new countries, including the US, Portugal, Brazil, Thailand, Spain, Japan, Russia).

Source: Company's presentation

DID YOU READ: How is Education Sector Placed With Online Learning Trend Amidst Virus Threat

Outlook 2021-

COVID-dependent, Janison Education Group anticipates strong revenue growth in the fiscal year 2021 by:

  • Introduction of EA schools’ products (ICAS, JET, REACH)
  • Continuing expansion of the OECD PISA-for-Schools assessment into more countries
  • New customer acquisition – direct and via partnerships such as D2L
  • Expansion of existing clients.

The Group’s revenue expansion in FY21 is planned from delivering higher gross margin products on the existing Janison platform with little or no custom software development.

Combined with efficiency gains and expected savings in hosting costs, Janison management anticipate gross margins to increase over 11% point growth recorded in FY20.

Furthermore, the latest surge in the number of inbound leads received by the Group is a testimony of accelerating plans to adopt digital formats for teaching as well as assessing students and suggests a favourable outlook for the fiscal year 2021 and beyond.

GOOD READ: How Has COVID-19 Pandemic Altered the Education System? Lens on ICT and JAN

Stock Information: On 11 August 2020, JAN stock last quoted at A$0.410, climbing by 7.895% compared to its previous close. With a market cap of nearly A$79.67 million, Janison has almost 209.65 million shares trading on the ASX. JAN has delivered an impressive return of 40.74% in the last three months.

 


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