# NVT - Navitas Limited



## Muschu

Has anyone been watching this share closely and wish to express a view please?
Best Regards
Richard


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## blaze87

*Re: NVT - Navitas*

i have only began looking at this stock..
was surprised 5 mins to notice that earnings per share was increasing at a faster rate relative the rate of decline in book value per share

this means that the company is getting smaller(in asset value) yet earnings per share is growing at a faster rate relatively to it..

It's my first time looking at this type of sitution. i would assume that even thou the company was able to obtain a much better return on assets, 
the fact that it prefers to distribute those earnings to shareholders would imply there was a lack of growth opporunties. this is further accentuated by the recent announcement of a company buyback..

well those was my take, any1 care to join in?


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## blaze87

*Re: NVT - Navitas*

sorry i made a mistake. 
the company is actually getting smaller in book value..
as a result earnings is also decreasing

opps, my bad


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## Muschu

*Re: NVT - Navitas*

The company has actually grown in size and made some pretty solid announcements that indicate very good future prospects.  Yet the market has barely responded.  Last Friday there were, from memory, 4 sellers. From a peak of over $2.50 they have come back to under $2.
In a Eureka report of last week reference was made to Merrill-Lynch [I think it was them] as listing nvt among their 5 favoured small-cap shares.


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## prawn_86

*Re: NVT - Navitas*

Hey guys,

How about a quick summary of who these guys and what they do? And figures etc

For all us out there who havn't heard of them before. Might also help attract some more interest to the thread 

prawn


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## Muschu

*Re: NVT - Navitas*

Note that IBT changed its name late 2007 to NVT
From etrade website:

IBT Education Limited (IBT) is a global education service provider that offers a range of educational services for students and professionals including university programs, language training, workforce education and student recruitment. These programs are offered on a full-fee paying basis to students in conjunction with Associated Universities in a predominantly on-campus model and provide the opportunity for students to enter the Associated University's courses and obtain a university degree.

Company Strategy
IBT's growth strategy is based around three core principles: expansion of its existing operations; evolution of its current business model to include delivery of degree programmes in association with selected universities on campuses established and maintained by IBT; and targeted strategic acquisitions in the global education sector. During the 2006/2007 financial year, IBT implemented a new organizational structure. It now operates through four divisions: University Programs, English Language, Workforce & Training, and Student Recruitment. The company invested in marketing to develop new student recruitment channels in China, India, Vietnam and Indonesia. It continues to pursue opportunities in Asia, Canada, and UK. The company announced the establishment of the Wynyard Green Education Precinct. This new precinct, located in central Sydney, provides accommodation for a number of IBT's businesses and aims to become a centre of education in Sydney. IBT Education reported NPAT up 2% to $31.5m for the full year ended 30 June 2006. Revenues from ordinary activities were $226,046, up 113% from the same period last year. Diluted EPS was 8.9 cents compared to 13.7 cents last year. Net operating cash flow was $41,384 compared to $26,968 last year. The total dividend for the year was 9.5 cents compared with 8.4 cents last year. The higher revenue for the year was primarily due to the consolidation of ACL and CSM Knowledge from 1 July 2005. During the period, IBT continued its assessment of new initiatives in the UK and Canada aimed at expanding the Group's existing operations. A recognition and educational services agreement was signed with Simon Fraser University to establish a new college, Fraser International College, in Canada. In terms of outlook, growth in NPAT for the year ending 30 June 2007 is expected to be impacted by the proposed $35m capital return and the ACL acquisition in the previous year.


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## blaze87

*Re: NVT - Navitas*



Muschu said:


> The company has actually grown in size and made some pretty solid announcements that indicate very good future prospects.  Yet the market has barely responded.  Last Friday there were, from memory, 4 sellers. From a peak of over $2.50 they have come back to under $2.
> In a Eureka report of last week reference was made to Merrill-Lynch [I think it was them] as listing nvt among their 5 favoured small-cap shares.




eerm... this company acutally has a lower book value ever since it started listing.... its book value has been decreasing ever since the first year. so wat exactly do u mean by grown in size?


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## Muschu

*Re: NVT - Navitas*

I'm a novice and hence likely to be wrong more often than not.  The company has expanded its involvements here and overseas, has increasing student numbers, has returned captial to shareholders, is 100% ff, continues to investigate and initiate new colleges [eg - Fraser Uni Canada]. Clearly there is more to analysis than that.
Thanks anyway.


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## blaze87

*Re: NVT - Navitas*

yeah if u look at the previous 2 years figure u would see that the payout ratio is greater than 100%. This implies that the management is returning money greater than it's earnings back to its shareholder. 

i assume there are only two logical reasons for that
1) it's a non-viable biz, thats y they are returning all the earnings
2) it's a company that doesn't require high capital,ie low capex to keep growing. Hence its trying to control the rate of its growth by returning the money

if it was the second reason, this implies that perhaps the company doesn't really have that well-defined growth opportunities.

ie, imagine ur BHP and u haf lots of money and the IRR and NPV for taking over RIO is much greater than paying back to its shareholder

obviously its the wiser choice to acquire rio and keep growing. 

that was my take, any comments?


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## Muschu

*Re: NVT - Navitas*

I think point 2 is interesting.
They began, well before listing [2004?], with one college in Australia. Now they have about 11 in Australia, Africa, UK, Canada.
My impression is that they take great care to identify potential.  I can only see them growing.
Etrade analysis summary has 2 strong buys, 1 buy and 3 holds - nothing below that.
Is there any comparison to ABC Learning I wonder...
Who knows?


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## blaze87

*Re: NVT - Navitas*



Muschu said:


> I think point 2 is interesting.
> They began, well before listing [2004?], with one college in Australia. Now they have about 11 in Australia, Africa, UK, Canada.
> My impression is that they take great care to identify potential.  I can only see them growing.
> Etrade analysis summary has 2 strong buys, 1 buy and 3 holds - nothing below that.
> Is there any comparison to ABC Learning I wonder...
> Who knows?




at least i can conclude the management is not randomly squandering the company earnings and maintaining a highly respectable ROE and ROA. that's all i can say... but i would appreciate if any1 who's in that industry care to join in the expected growth for universities expansion and education


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## ROE

*Re: NVT - Navitas*

I bought in around $1.90 some months ago.. It's a very good business it just doesn't have the volume and so doesn't get trade often.

I prefer it this way because I can get nice dividend incomes with steady stock grow price as well.

Education is something people are always willing to pay for(in boom and bust time), especially the Asian market.. Asian put very high priority on education.
It is entrance in their culture and from very young age they always push their kids to study as there is other way of making money but to go to school
get a degree and get a job 

This stock is very much similar to the US Apollo Group stock (http://finance.google.com/finance?q=NASDAQ:APOL) 
and I use that as a guidance on how this industry perform 

I will probably average down on this stock if it drop below $1.90


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## Muschu

*Re: NVT - Navitas*

There's a buy back happening here but it is also interesting to note that the current edition of BRW gives the stock quite a promotion.  Very limited trading happening at the moment.


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## Muschu

*Re: NVT - Navitas*

Price still pretty much stagnant and volume is low.  [Still they have performed better for me than CBA recently.......]
However there was another strategic growth move announced yesterday, after close, which should prove to be an excellent one in a great market -- a new college in Singapore.  
Be nice to see a bit of market action as I think their current buy-back has not been helpful to the SP at all.


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## Muschu

*Re: NVT - Navitas*

It seems this is not a stock of much interest on ASF.  That may be because education is not a common area of investment or because it is a stock that is one of limited trading.   Nevertheless it has been a very good one for me.  I'm wondering also whether it is just a reflection of the current overall market that NVT can announce yet another overseas university [this time a beauty imo] and then see the SP watered down by a very small number of low volume trades.
One day I may be granted by greater understanding of the vagaries of investment.....


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## ROE

*Re: NVT - Navitas*

surprise acquisition today  I didn't expected it at all for NVT now to think about it, it could works well for them


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## Muschu

*Re: NVT - Navitas*

Good report yesterday and strong SP lift.

I disclose that we hold NVT in our retirees' SMSF.  I also make no predictions and have no crystal ball.... Would that I had!


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## alfaracing

*Re: NVT - Navitas*

The balance sheets look good to me for Navitas? Am I too late to get on board. Anybody wish to comment?


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## Muschu

*Re: NVT - Navitas*



alfaracing said:


> The balance sheets look good to me for Navitas? Am I too late to get on board. Anybody wish to comment?




A 5 year chart may give your answer.  Charts don't prvide all the answers of course so thorough research is critical.

Again I emphasise that I hold this stock.


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## Muschu

*Re: NVT - Navitas*

Nice to see NVT has joined the ASX300 today.  Good progress continuing and SP up.

Regards

Rick


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## ROE

*Re: NVT - Navitas*

the beauty of picking up good stocks is you do nothing for years but sit on your ass and let it compound in capital and dividend payout


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## Muschu

*Re: NVT - Navitas*

An excerpt from a pres release last week for anyone interested:

ASX Release
31 March 2010
RECENT COLLEGE START-UPS DRIVE FIRST SEMESTER ENROLMENTS TO
RECORD LEVELS
Global education services provider, Navitas Limited (ASX: NVT) today
announced a 16% increase in student enrolments for the first semester of 2010
(“201001”).
Equivalent full time student unit (“EFTSU”) enrolments at the University Programs
existing colleges increased to a first semester record of 17,811, up from 15,419
in the previous corresponding period (“pcp”).
Navitas Chief Executive Officer Rod Jones said enrolments across the Company’s
22 colleges reiterated the success of its University Programs educational model
and reinforced the strong outlook afforded by planned new colleges in growth
markets.
“Our proven business model has seen new colleges consistently move to
profitability within short periods, due to low capital requirements and strong
enrolments,” he said.
“This has been evidenced by the performance of two of our most recent start-ups
in the UK, which more than doubled their enrolments, and continuing growth in
other emerging colleges such as Curtin Singapore.
“And, as past performance shows, these colleges go on to perform consistently
and provide a strong revenue base for the Company’s growth.”
Mr Jones said the rapid maturation of the Colleges, as evidenced by the
enrolment figures, gave the Company confidence in its next growth phase. A
significant contributor to this will be the pipeline of 6 new colleges that will open
in 2010 and FY11, following the recent execution of partnership agreements in
the USA, UK and Australia.
“Our business model is founded on driving revenue through offering high quality
education programs in partnership with leading universities in markets where we
operate,” said Mr Jones.
“These latest enrolment figures underline the success of that strategy – the
ability to offer a very high quality education service and at the same time
generate satisfactory returns for our investors.”
“With our recently announced colleges to be opened in FY11, and a number of
other new college agreements expected to be completed in the near term, we expect to see continued double digit enrolment growth in our University Programs ito the future,” said Mr Jones.


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## ROE

*Re: NVT - Navitas*

surprise  31% increase in net profit plus increase dividend pay out
double bonus for long term holder, I get to sit on my ass for another year of increase payout


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## mr. jeff

*Re: NVT - Navitas*

ROE (am i calling you by your financial ratio correctly?)
very happy with the results, can't see much in the way of shenanigans (have not looked too closely yet), noticed that the margin is stronger this year, I thought NVT might begin to slow now, but it seems that they are in the middle of their growth phase which is great!


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## ROE

*Re: NVT - Navitas*



mr. jeff said:


> ROE (am i calling you by your financial ratio correctly?)
> very happy with the results, can't see much in the way of shenanigans (have not looked too closely yet), noticed that the margin is stronger this year, I thought NVT might begin to slow now, but it seems that they are in the middle of their growth phase which is great!




and the good news is: from now on the more Uni it sign up the fatter the margins....

yeah I like my nick name, I created to remind me why I made 2 fail investment starting out and vouch not to make the same mistake again...

along the way I learn a lot and work out how to pick up good business and the rest is history

business that dont meet my rules I discard with Prejudice....but every now and then greed do tempt me and I break the rule and make a crab investment like NUF hoping for quick bucks 

I still have hope some day someone can still make a bid for NUF and I get my $5.94 return to me and hopefully I dont pay too much for that mistake...

till then live and learn and enjoy life


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## JTLP

*Re: NVT - Navitas*



ROE said:


> and the good news is: from now on the more Uni it sign up the fatter the margins....
> 
> yeah I like my nick name, I created to remind me why I made 2 fail investment starting out and vouch not to make the same mistake again...
> 
> along the way I learn a lot and work out how to pick up good business and the rest is history
> 
> business that dont meet my rules I discard with Prejudice....but every now and then greed do tempt me and I break the rule and make a crab investment like NUF hoping for quick bucks
> 
> I still have hope some day someone can still make a bid for NUF and I get my $5.94 return to me and hopefully I dont pay too much for that mistake...
> 
> till then live and learn and enjoy life




Hi ROE & all...

How do you feel about the current state of NVT?

It posted a 31% profit increase on 03/10/10 - but since then has been on the slippery slope down to a close of $3.75 today.

They had a bit of a write up in the AFR today - trending down yadi yada and also some other issues with the strength of the AUD and the dwindling numbers of students coming to Australia to study (separate article).

I don't know if the second point is too material to NVT but saw it valid.

Comments?


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## robusta

*Re: NVT - Navitas*

What a great business, looking for NVT to get a little cheaper so I can fill up. A$ goes up A$ goes down NVT should outperform long term. The only problem I have working out valuation is 100% + payout ratio.


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## chansw

*Re: NVT - Navitas*

"University hit by drop in foreign student numbers" on Inside Business today.

http://www.abc.net.au/insidebusiness/content/2010/s3040409.htm


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## So_Cynical

*Re: NVT - Navitas*

Thanks for that link chansw, one would think that the bottom for NVT is still some time away, the falling SP and potential to get in at a great price has sparked up my interest.

Has anyone got a currency breakdown of there revenue.?


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## ROE

*Re: NVT - Navitas*



JTLP said:


> Hi ROE & all...
> 
> How do you feel about the current state of NVT?
> 
> It posted a 31% profit increase on 03/10/10 - but since then has been on the slippery slope down to a close of $3.75 today.
> 
> They had a bit of a write up in the AFR today - trending down yadi yada and also some other issues with the strength of the AUD and the dwindling numbers of students coming to Australia to study (separate article).
> 
> I don't know if the second point is too material to NVT but saw it valid.
> 
> Comments?




Never fear when you buy good business with increase earning and dividend payout when it go low enough you double up....

I do this all the time..

double up WWA during GFC when it trade at $1.67
double up CAB when it go to 4.44
double up CCV when it 40 cents, double up again recently at 58 or 60.
double up FLT when it was 5.00
double up NVT when the time is right
and on and on it goes for many more decades to come...

there is a stock recently that I went all in 
as initial holder cos price is too good.
still buying more as off today....but someone is noticing as well
and have a 5 green day straight regardless of the market condition...
up again today....

when the storm is over you get crazy dividend stream
and you go on holiday and sleep like a baby next financial
storm come around...

dont buy stuff if you cant sleep like a baby at night.
time will be your friends these business and in time
you will see the fruit of the seed you sow some years ago
not some short term price movement, leave that for the traders and the commentators

Enjoy life and relax


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## skc

*Re: NVT - Navitas*

I think sub $3.5 would be a decent buy zone. Although on the weekly chart the more decent resistance level is at $2.5.

Will be surprised if it gets down there but market is pretty irrational most days...


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## robusta

*Re: NVT - Navitas*

Warren Buffet said "The best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return"

NVT does have a high rate of return of invested capital (ROE= ~61%) but it does not have the ability to reinvest that capital to give shareholders the value of compounding. (look at the payout ratio for the last 5 years, 107%, 100%, 101%, 100%, 104%.)

This to me makes the business worth less than a business with a lower ROE but also ability to retain capital (lower payout ratio) and maintain a satisfactory ROE on that retained capital. This sort of business becomes a "compounding machine" delivering strong capital growth with dividend growth to follow in due course. eg COH, CSL, FGE, MCE, FRI...

To do a quick back of the envelope valuation of NVT we can treat it a bit like a bond due to all the profits being paid out.

My required return is 10% (to compensate me for the risk of investing in equities)

NVT share price is about $3.70

Dividend yield = 5.2%

To achieve my RR of 10% need to pay no more than $1.85 - would prefer to pay a whole lot less so I have a margin of safety.

There goes another stock that does not tick all the boxes for me, the search continues....


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## So_Cynical

*Re: NVT - Navitas*



robusta said:


> Warren Buffet said "The best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return"




robusta, dude seriously who gives a toss what Warren or Roger or UBS think, the opportunity to buy NVT at $1.85 is long gone, the challenge before us now is to get in at the best price possible....of course assuming NVT is a business we want to own a piece of.

---------------

I've been thinking lately of the benefits of buying great stocks before the market recognises there great stocks and all the "value" nuts and fund managers jump on and pump up the price...i mean every stock Roger has rated at A1 started with a different rating.

Buying a stock that ticks all the boxes really means buying well after the best entry point...there's good money to be made buying stocks that will be great.


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## robusta

*Re: NVT - Navitas*



So_Cynical said:


> robusta, dude seriously who gives a toss what Warren or Roger or UBS think, the opportunity to buy NVT at $1.85 is long gone, the challenge before us now is to get in at the best price possible....of course assuming NVT is a business we want to own a piece of.
> 
> ---------------
> 
> I've been thinking lately of the benefits of buying great stocks before the market recognises there great stocks and all the "value" nuts and fund managers jump on and pump up the price...i mean every stock Roger has rated at A1 started with a different rating.
> 
> Buying a stock that ticks all the boxes really means buying well after the best entry point...there's good money to be made buying stocks that will be great.




I do care about the lessons from Graham, Buffett and Montgomery because they teach me how to identify exceptional busineses and work out the intrinsic values for those businesses.
That is the great thing about the stock market I don't have to buy anything, every day I am quoted a new price on businesses I want to own. I can wait until all the boxes are ticked and only buy the best stocks for less than they are worth.
I wish you the best of luck in unearthing the next great stock before the market recognises it. Personally I think the best way of buying great stocks before the market recognises them is to be a "value" nut.


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## ROE

*Re: NVT - Navitas*



So_Cynical said:


> robusta, dude seriously who gives a toss what Warren or Roger or UBS think, the opportunity to buy NVT at $1.85 is long gone, the challenge before us now is to get in at the best price possible....of course assuming NVT is a business we want to own a piece of.
> 
> ---------------
> 
> I've been thinking lately of the benefits of buying great stocks before the market recognises there great stocks and all the "value" nuts and fund managers jump on and pump up the price...i mean every stock Roger has rated at A1 started with a different rating.
> 
> Buying a stock that ticks all the boxes really means buying well after the best entry point...there's good money to be made buying stocks that will be great.




I have to agree with So_Cynical here and I respect your principles of buying great business but buying that sort of business at bargain price only exist in 2 scenarios

1. You understand the business and pick it up early before
    people notice...like spend heaps of time going through
    small caps annual reports and stocks...

2. There is a problems with the business and Market price it
    to fail and you are absolutely sure in your judgment about  the business and understand it enough to go against the market.

Pretty easy to punch keys on the computer and work out a number but it's a garbage in garbage out....

say you pricing a stock that prime for growth and it miss that growth target you are over paying for it...because all the calculation has been based on that rate....

But if you manage to do that without much hassle then you are on to something good and will be making exceptional return...


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## robusta

*Re: NVT - Navitas*



ROE said:


> I have to agree with So_Cynical here and I respect your principles of buying great business but buying that sort of business at bargain price only exist in 2 scenarios
> 
> 1. You understand the business and pick it up early before
> people notice...like spend heaps of time going through
> small caps annual reports and stocks...
> 
> 2. There is a problems with the business and Market price it
> to fail and you are absolutely sure in your judgment about  the business and understand it enough to go against the market.
> 
> Pretty easy to punch keys on the computer and work out a number but it's a garbage in garbage out....
> 
> say you pricing a stock that prime for growth and it miss that growth target you are over paying for it...because all the calculation has been based on that rate....
> 
> But if you manage to do that without much hassle then you are on to something good and will be making exceptional return...




Sorry ROE but how about scenario 3 & 4

3. Top quality company has short term problem and market sentiment turns against it pushing SP below intrinsic value. eg CAB. (I wasn't smart enough to pick up this time, but next time with similar company will be ready). Looking at the CAB thread I am pretty sure you did not let the opportunity go past.

4. Macro economic factors. Look at any great business in the middle of GFC - bargains everywhere.


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## So_Cynical

*Re: NVT - Navitas*



robusta said:


> I do care about the lessons from Graham, Buffett and Montgomery because they teach me how to identify exceptional busineses and work out the intrinsic values for those businesses.




And after you have done all that number crunching and found your great stock, post up a 3 year chart of that great stock and ill be happy to point out where you should of brought it.

I do care what Roger and Warren think and say because these guys are smart and well Roger in particular has a way of looking at stocks that i don't give alot of consideration to...so its helpful to get that perspective.


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## So_Cynical

*Re: NVT - Navitas*



ROE said:


> buying that sort of business at bargain price only exist in 2 scenarios
> 
> 1. You understand the business and pick it up early before
> people notice...like spend heaps of time going through
> small caps annual reports and stocks...
> 
> 2. There is a problems with the business and Market price it
> to fail and you are absolutely sure in your judgment about  the business and understand it enough to go against the market.




Yep agree



robusta said:


> Sorry ROE but how about scenario 3 & 4
> 
> 3. Top quality company has short term problem and market sentiment turns against it pushing SP below intrinsic value. eg CAB. (I wasn't smart enough to pick up this time, but next time with similar company will be ready). Looking at the CAB thread I am pretty sure you did not let the opportunity go past.
> 
> 4. Macro economic factors. Look at any great business in the middle of GFC - bargains everywhere.




And yep agree....except CAB is not a good business, you guys tend to confuse was with is.


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## mr. jeff

*Re: NVT - Navitas*

I haven't been closely following NVT lately, so I apologize for ignorance, however one point that is quite important here is that NVT has been losing students in Australia. When they have highlighted enrollment numbers, it seems to be in their smaller markets overseas. 
I think it is very important to note that the transferability of their business is successful, but it has been noted in the Aus Fin Review that about 80% (anyone read this?) of their current revenue comes from Australia and at the moment Australia is struggling with student numbers. This is the concern and what I think  weighs on the stock currently. 
What happens long term of course is different; but whilst watching a holding retreat 15 - 20 % whilst that money could be elsewhere is always a bit sad.
I think NVT is a good business and well run and it does seem that they have good promise, particularly in the overseas markets, so perhaps just a rough patch while Australia struggles...
Sorry long winded, just a bit of rubbish to kick around.


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## robusta

*Re: NVT - Navitas*



So_Cynical said:


> And after you have done all that number crunching and found your great stock, post up a 3 year chart of that great stock and ill be happy to point out where you should of brought it.
> 
> I do care what Roger and Warren think and say because these guys are smart and well Roger in particular has a way of looking at stocks that i don't give alot of consideration to...so its helpful to get that perspective.




But would you be confident to buy a business like CBA, WOW or MND in the middle of the GFC just looking at a chart? That would scare the crap out of me.
But if I knew MND worth $12.00 intrinsic value, sp = $6.00 that would give me some confidence.


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## Julia

*Re: NVT - Navitas*



mr. jeff said:


> I haven't been closely following NVT lately, so I apologize for ignorance, however one point that is quite important here is that NVT has been losing students in Australia. When they have highlighted enrollment numbers, it seems to be in their smaller markets overseas.
> I think it is very important to note that the transferability of their business is successful, but it has been noted in the Aus Fin Review that about 80% (anyone read this?) of their current revenue comes from Australia and at the moment Australia is struggling with student numbers. This is the concern and what I think  weighs on the stock currently.
> What happens long term of course is different; but whilst watching a holding retreat 15 - 20 % whilst that money could be elsewhere is always a bit sad.
> I think NVT is a good business and well run and it does seem that they have good promise, particularly in the overseas markets, so perhaps just a rough patch while Australia struggles...
> Sorry long winded, just a bit of rubbish to kick around.



On the contrary, Mr jeff, you've made important points that seem to have been previously overlooked.  The government's policy on student visas I'd have thought is pretty fundamental to this stock.




robusta said:


> But would you be confident to buy a business like CBA, WOW or MND in the middle of the GFC just looking at a chart? That would scare the crap out of me.



But robusta, you are not buying any of these well known and respected companies by "just looking at a chart', are you?
We all are familiar with these businesses, and know how well run and successful they are.
Imo you don't need to crunch out such stuff as intrinsic value.  All that really matters is the price action when it comes to making money, given you have no reason not to be confident you're investing in a good business.

I've said it often before:  you can have a business which stacks up on all your painstakingly calculated criteria but if market sentiment doesn't agree with you, then you just won't make money, at least in the reasonable future.


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## So_Cynical

*Re: NVT - Navitas*



robusta said:


> But would you be confident to buy a business like CBA, WOW or MND in the middle of the GFC just looking at a chart? That would scare the crap out of me.
> But if I knew MND worth $12.00 intrinsic value, sp = $6.00 that would give me some confidence.




At the bottom of the GFC (Mar 09) i came into some cash selling out of 2 Gold stocks that recovered earlier than the general market, as the Gold stocks had bottomed 4/5 months earlier.... i tried to buy 2 stocks, PPT and STW, i low balled them a little to much and they rallied away from me, i would move my price up 10 or 20 cents and they would keep on moving up...still kicking myself for not just buying at market.

I ended up buying and holding ALL for about 7 days in the first week of April   made a fast 5 or 6% and moved on....its a little nerve racking buying big bottoms because its impossible to pick em so you have to back your judgement and do it accepting that there's a good chance the SP will keep falling.

I tell you what...the first time you do pick a near bottom, back your judgement and win, pocket the money and think how easy was that! .. every time i do it now it just gets easier to do, probably not a good thing cos im getting a little blasÃ© about it.

------------------

We better stop side tracking this thread and get back to NVT talk....i want to buy NVT because the price is falling and its a great business with great potential once they diversify there currency revenue, as they are planning to do.


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## JTLP

*Re: NVT - Navitas*

NVT SP rise could be attributed to a few things today (but i'm still holding out).

- Write up in the AFR > CEO coming out and basically saying that his company is oversold and analysts who are delayed in their reporting have created panic amongst holders.

- More from the AFR > UBS (I think) have upgraded their status on NVT to 'hold' or 'buy'. I'm still not convinced with the student numbers situation in Australia (the CEO even made mention that he expected flat growth from Australia!). Make a more accessible Student Visa and I'll be more convinced.

AUD at record high's also makes for not a lot of love.


----------



## Muschu

*Re: NVT - Navitas*

Massive acqusition just announced by NVT.  I have no idea what this will do to the SP.  Any thoughts?  I'm interested as I've sold 80% of our hold during the year...  

This is one announcement but there is an investor presentation of about 25 pages as well.

ASX RELEASE
14 December 2010
Navitas expands global education offering with acquisition of SAE Group
Global education services provider Navitas Limited (ASX: NVT) today announced that it has entered into an agreement to acquire 100% of SAE Group (SAE), a leading global provider of creative and new media education.
Highlights:
 Navitas is acquiring SAE for A$289 million, representing 8.75x estimated CY2010 EBITDA
 The acquisition is expected to deliver high single digit adjusted EPS accretion in FY2011 on a full year pro forma adjusted basis (based on broker consensus estimates for Navitas) 1
 The transaction will be funded by way of new debt facilities, a fully underwritten institutional equity placement and issuance of shares to the vendor
 Post acquisition, Navitas will retain a strong balance sheet with material additional headroom under new facilities
 Navitas will pay a deferred amount on any final audited EBITDA in excess of A$33 million in CY2010 at the same 8.75x multiple (in shares at the institutional placement price)
SAE Group
Founded in Australia in 1976, SAE has expanded to become one of the world’s largest media technology training institutes, with 47 campuses in 19 countries.2 SAE offers a range of post secondary education opportunities to approximately 8,000 students, including certificate, diploma, degree and Masters programs across three major fields of study: audio production, film production and interactive media.
SAE benefits from high brand recognition within its core markets and is well placed to continue to benefit from growth in demand for multimedia and technology skills. SAE owns and maintains its key intellectual property and delivers its programs via a combination of classroom based teaching and practical learning in its state-of-the-art training facilities.
SAE is expected to deliver revenue of $109 million and EBITDA of $33 million in CY10. On a constant CY10 currency basis, SAE recorded $100 million of revenue and $28 million of EBITDA in CY09.
1


----------



## ROE

*Re: NVT - Navitas*

I'm buying more at this price 

Uncle Warren Buffett Love this business so much so that
he try to buy NVT before it went public but Rod Jones

say no thanks, we aussie want to take it public and let aussie in
benefits..

this business model has negative capital requirement 
cant get any better than that...


----------



## VSntchr

*Re: NVT - Navitas*

Whilst I agree that fundamentally this is a great business, with a great business model (and one that I would certainly love to own). I really cant justify myself purchasing any at current prices, even after the recent falls in price.

Based on NVT hitting $69m NPAT my valuation is roughly $2.20...far below the current share price.

NVT will stay right next to SEK in my "high quality but too expensive watchlist".


----------



## robusta

*Re: NVT - Navitas*



VSntchr said:


> Whilst I agree that fundamentally this is a great business, with a great business model (and one that I would certainly love to own). I really cant justify myself purchasing any at current prices, even after the recent falls in price.
> 
> Based on NVT hitting $69m NPAT my valuation is roughly $2.20...far below the current share price.
> 
> NVT will stay right next to SEK in my "high quality but too expensive watchlist".




Have to agree with you there Valuesnatcher, will have to keep on waiting.


----------



## frankbaozhu

*Re: NVT - Navitas*

I used to buy cheap stocks valuing at 5xP/E, 0.5xP/B, but those things did not work so well. You hope the market will notice the discrepancies and correct it, but have no idea when it is going to happen. But when I started to buy great businesses a few years ago, traditional accounting metric like P/B, P/E and P/S have played a less important role than before. 

What I am trying to say is that we should think out of the box. A stock trading at 30xP/E does not mean it automatically qualifies as a bad investment, although in most cases the answer is yes. I know we need years to accumulate knowledge to build our existing model, but it is worthwhile to go a step further and think a bit differently. 

My best investment in recent years Delticom, a stock trading in Germany. I bought it at the start 2008 @ 13.8 before the GFC really hit, and it had went up almost 6 times adjusted for dividend in 3 years time. And the funny thing is that, I bought it at 16XP/E, and it is now trading at 23XP/E. If I were stick my old paradigm, I would have missed the boat completely or sold out when it was up 100%. Sometimes you just need to sit on your ass and let the show rolling.


----------



## robusta

*Re: NVT - Navitas*



frankbaozhu said:


> I used to buy cheap stocks valuing at 5xP/E, 0.5xP/B, but those things did not work so well. You hope the market will notice the discrepancies and correct it, but have no idea when it is going to happen. But when I started to buy great businesses a few years ago, traditional accounting metric like P/B, P/E and P/S have played a less important role than before.





P/E is IMO the worst indicator and as a rule I do not use it at all. If you are trying to value a company and hopefully buy it at less than that value why wuold you factor price into the equation. Better to work out the value then look at the price and act accordingly.



frankbaozhu said:


> What I am trying to say is that we should think out of the box. A stock trading at 30xP/E does not mean it automatically qualifies as a bad investment, although in most cases the answer is yes. I know we need years to accumulate knowledge to build our existing model, but it is worthwhile to go a step further and think a bit differently.
> 
> My best investment in recent years Delticom, a stock trading in Germany. I bought it at the start 2008 @ 13.8 before the GFC really hit, and it had went up almost 6 times adjusted for dividend in 3 years time. And the funny thing is that, I bought it at 16XP/E, and it is now trading at 23XP/E. If I were stick my old paradigm, I would have missed the boat completely or sold out when it was up 100%. Sometimes you just need to sit on your ass and let the show rolling.




NVT is still too expensive for me but it has nothing to do with P/E, in my portfolio of seven companies three have a P/E of 17 plus.


----------



## tinhat

*Re: NVT - Navitas*

NVT has no investor relations. When I phoned their corporate headquarters a few weeks ago I asked to speak with Investor relations. I was asked were I was from and I told the receptionist I am a share holder and she replied "Oh you are just a shareholder?". I was told that the company secretary would return my call but they never did.


----------



## ROE

*Re: NVT - Navitas*



tinhat said:


> NVT has no investor relations. When I phoned their corporate headquarters a few weeks ago I asked to speak with Investor relations. I was asked were I was from and I told the receptionist I am a share holder and she replied "Oh you are just a shareholder?". I was told that the company secretary would return my call but they never did.




Small shareholder don't get much time and I think it is fair enough, imagine you get a couple of thousand small shareholder ring up and want questions answer, they have better things to do

I normally write email and if I get an answer I rate them a bit better 
I got reply from ONT CEO sometimes ago before I invest in that stock...


----------



## frankbaozhu

*Re: NVT - Navitas*

Robusta, no offense, just my 2 cents here. If I injected into this conversation unwisely, my apology.

I own a company in Germany called SMT Scharf. I wrote to the company twice, and the CEO replied to me without 24 hours, twice with a length that you must think he got plenty of time to spare. I also wrote to other companies, but it turned out to be not so well. 

Generally, if a CEO did reply to you personally, it is either the CEO is not busy, or he cared about his business and want more people to understand it. If it is later, it is a good sign.


----------



## Noddy

*Re: NVT - Navitas*

Strong report today from NVT.

Revenue up 7.9%
Profit up 18.4% on pcp.

Mystified as to your valuations of $2.20. Interested in how that valuation is calculated ?
Maybe from Value-able ??

This year the stock has traded between $3.40 and $5.40, currently at $3.82 and IMO will trade higher after today's announcement.

Agree the stock is fairly expensive, have a DCF valuation of $3.00 to $3.30 by my calculations, but the stock generally trades much higher than that.

Interested in any comments.


----------



## frankbaozhu

*Re: NVT - Navitas*



Noddy said:


> Strong report today from NVT.
> 
> Revenue up 7.9%
> Profit up 18.4% on pcp.
> 
> Mystified as to your valuations of $2.20. Interested in how that valuation is calculated ?
> Maybe from Value-able ??
> 
> This year the stock has traded between $3.40 and $5.40, currently at $3.82 and IMO will trade higher after today's announcement.
> 
> Agree the stock is fairly expensive, have a DCF valuation of $3.00 to $3.30 by my calculations, but the stock generally trades much higher than that.
> 
> Interested in any comments.




I would suggest you not use any models like DCF analysis for investing. Mr. Buffett never used excel sheet or projections to arrive on intrinsic value on an investment, and neither should we. Investing is never a precise science. When you have enough experience, you will know something is cheap or expensive or fair-valued. It is a delicate balance among quality, statistics, risk/reward, people, etc. and you know it on the spot. 

Over the years I have grown to be more suspicious about models, especially those ones from the academic world. If I relied on a model like DCF to value stocks, I would have missed lots of good ones. My recommendation is to read Mr. Munger's book: Poor Charlie's Avalanche. It discussed extensively about models. I can't find a better book to address the problem.


----------



## Noddy

*Re: NVT - Navitas*



frankbaozhu said:


> I would suggest you not use any models like DCF analysis for investing. Mr. Buffett never used excel sheet or projections to arrive on intrinsic value on an investment, and neither should we. Investing is never a precise science. When you have enough experience, you will know something is cheap or expensive or fair-valued. It is a delicate balance among quality, statistics, risk/reward, people, etc. and you know it on the spot.
> 
> Over the years I have grown to be more suspicious about models, especially those ones from the academic world. If I relied on a model like DCF to value stocks, I would have missed lots of good ones. My recommendation is to read Mr. Munger's book: Poor Charlie's Avalanche. It discussed extensively about models. I can't find a better book to address the problem.




Thank you for your response.
So do you think NVT is cheap, expensive, or fairly valued at around $3.82.
I think it's expensive, but based on 2010 trading levels, I think it's a good buy.


----------



## frankbaozhu

*Re: NVT - Navitas*



Noddy said:


> Thank you for your response.
> So do you think NVT is cheap, expensive, or fairly valued at around $3.82.
> I think it's expensive, but based on 2010 trading levels, I think it's a good buy.




Hey Noddy, a lot things depend on your own expectations. If you are aiming for 30%+ annually, NVT is not for you; but if you are looking for a 10% total return over the years, this is a very safe bet. If you still want my opinion, I would say this thing is something between fair-valued and expensive. Nothing scientific or concrete, just sheer feelings after several hours of research.

NVT has a very strong business model, which enables it to grow when paying 100% earnings as dividend and still has cash to expand its operations. It is like an insurance company. The advanced tuition is float it holds which can be invested at very high return rates. There are many investment opportunities for NVT at the moment, so if past experience(the old campuses) is of any indication, then NVT is a good buy. However, things tend to go wrong from time to time. In bad businesses, things go wrong a lot; in good ones, it still happens. 

One thing bothers me is that NVT now sets foot in the markets they are not so familiar with. I am at best an amateur on education businesses, but I would not expect things develop at the same rate as that in AU market. What is the confidence level of yours that the major investment made recently will pay off handsomely? At current price, you have to figure them out before you make a decision. If NVT is trading at 50% of current price today, you might just go out and load up without thinking about those stuff.

Another word about cheap or expensive. When looking at investments, I do not speculate where they are traded, where they are trading, not to mention how price will change the next day. My experience with trading stocks is always that when I sell,  it goes up; and when I buy, it goes down. That's why I based my conclusion on the valuations and risk/reward profiles. 

Last year I bought AMA at 0.044 and today I am thinking of buying more. Conventional wisdom will tell you to take profit when it is up 200% in a few months, but it is just wrong. A stock will not automatically become a sell when it goes up; and it will not become a buy when it goes down. Investing successfully involves valuing an asset objectively, no matter how the market fluctuates.

Hope this helps. I myself still try to learn every day. It just never ends.


----------



## Noddy

*Re: NVT - Navitas*

FRANKBAOZHU

Appreciate your interesting reply.
I generally buy on the back of profit announcements, and hold for a relatively short time, usually up to a month. Follow the trade using a combination of stop loss and candle stick reading. Sometimes drawing Darvas boxes.
Only trade stocks with a ROE above 10%, and paying dividends. Happy with any capital gain above 10%, and usually hold until a dark cloud or engulfing candle appears.
Not interested in investing or long term holds.
For me it's the game that counts, and my prime objective is preservation of capital so that I can stay in the game.
Have bought some NVT yesterday, think it's a good short term proposition.


----------



## ROE

*Re: NVT - Navitas*



Noddy said:


> Thank you for your response.
> So do you think NVT is cheap, expensive, or fairly valued at around $3.82.
> I think it's expensive, but based on 2010 trading levels, I think it's a good buy.




expensive or cheap is up to individual, I have a formula I use which I don't like to disclose, no point using it if everyone use the same thing

no competitive advantage on my part if everyone use the same thing I use , that why I get into stock other people run or stay on the side line...

It's not the best but it's the best I can come up with based on my judgment
and it works so far pretty well for me so I keep close to my chest....

I use the same one on every stock depend on my understand of the business 
once the business is understood, it pretty easy for me to work out a price tag...
I always work on a ball park figure but never a precise figure because nothing is certain in life 

my calculation on this stock a couple years at PE 20 and I still buy, stock since then deliver a 100% or more return on capital plus 60% increase in dividend...

cheap or not I did state I bought a fair bit more at $3.70 ..time will tell...

other people think it's extensive and it's fair enough they get no argument from me...each has their own method and that what makes the market...

Good luck and  this is one of many stock that give me a lot of conform during GFC with their ever increase in dividend payout and keep me FOCUS 

and I wont complain with an extra 8% pay out this time around either.


----------



## ROE

*Re: NVT - Navitas*



frankbaozhu said:


> I would suggest you not use any models like DCF analysis for investing. Mr. Buffett never used excel sheet or projections to arrive on intrinsic value on an investment, and neither should we. Investing is never a precise science. When you have enough experience, you will know something is cheap or expensive or fair-valued. It is a delicate balance among quality, statistics, risk/reward, people, etc. and you know it on the spot.
> 
> Over the years I have grown to be more suspicious about models, especially those ones from the academic world. If I relied on a model like DCF to value stocks, I would have missed lots of good ones. My recommendation is to read Mr. Munger's book: Poor Charlie's Avalanche. It discussed extensively about models. I can't find a better book to address the problem.




No argument from me there, you sum it up pretty well

when I start out I am fairly fixate on how much a stock price, over time, with dozen and hundred of books under my belt,  things change for the better and come up with my own calculation and judgment...

these days pretty relax, don't care if the market crash, or gold will hit $2000 a pop
or worldly events ... dividend keep coming in, portfolio rise and fall every day and one thing that I cannot do without is a nice cup of coffee each morning at the local shop.

time to hit the sack and turn on the kindle and finish Talent is overrated book.
and keep on that Deliberate practice on investing...


----------



## frankbaozhu

*Re: NVT - Navitas*

ROE, we are in the same old school 

I like NVT, but passed because I found better ones to buy. It is surprising that you did not find this little company considering your scope in the AU market. The name of the company starts with a "F".


----------



## Muschu

*Re: NVT - Navitas*

In my view the current NVT SP is fair value.  I would suggest it may become a little lighter until the USA agreements / ventures kick in.  This may take a year or two but the market, which they have "cracked", is enormous.


----------



## Muschu

*Re: NVT - Navitas*

I have continued to decrease my hold in NVT but today's "status" announcement of a likely move into the top 200 stocks seems to have given the SP a nice boost.
I am not sure but suspect this means that the stock will become one of more interest to institutional investors.

Rick


----------



## ROE

*Re: NVT - Navitas*



Muschu said:


> I have continued to decrease my hold in NVT but today's "status" announcement of a likely move into the top 200 stocks seems to have given the SP a nice boost.
> I am not sure but suspect this means that the stock will become one of more interest to institutional investors.
> 
> Rick




you should sell them after march if you want out ...

once it in top 200 in march, fund that are based on index are force to buy this stock driving price even higher 

I still hold, I did bought more at $3.70  a while ago .... their investor relation is real good ... I have some question for them which I cant find in annual reports... and they came back with answer the next day ..that pretty much cement my faith in them for more


----------



## tinhat

*Re: NVT - Navitas*



ROE said:


> you should sell them after march if you want out ...
> 
> once it in top 200 in march, fund that are based on index are force to buy this stock driving price even higher
> 
> I still hold, I did bought more at $3.70  a while ago .... their investor relation is real good ... I have some question for them which I cant find in annual reports... and they came back with answer the next day ..that pretty much cement my faith in them for more




I obviously got the wrong receptionist on the phone when I called their corporate office last year. I asked for Investor Relations and she said they didn't have one and told me the company secretary would call me back which they never did!

This is interesting news. I find that NVT is a hard business to value based on fundamentals. Unusual business structure, very low tangible assets generating very hight ROE. High PE. The share price is based on yield more than any thing else as far as I can tell.

I bought a small holding as a defensive/income stock to put into the portfolio. This was before they announced their recent acquisition and subsequent debt and equity raising. I was planning to get out at 4.40 but this news of its potential inclusion in the S&P 200 might make me hang on a bit longer and aim a bit higher.

Thanks for the info.


----------



## Muschu

*Re: NVT - Navitas*

Last year, on March 31, NVT announced student enrolment numbers.  A continued increase would be of benefit to the SP of course. Whether it will occur I have no idea.


----------



## Muschu

*Re: NVT - Navitas*



Muschu said:


> Last year, on March 31, NVT announced student enrolment numbers.  A continued increase would be of benefit to the SP of course. Whether it will occur I have no idea.




Numbers are down it appears. Can the SP hold up I wonder?

[No longer holding]


----------



## VSntchr

*Re: NVT - Navitas*

From what I can see, Navitas paid way way way too much for SAE. That combined with tough operating restrictions may see the awesome fundamentals of this one start to deteriorate of the next couple of years. Will be watching over the long term...but with the price paid for SAE I can't say I have full confidence in management.
I do note that I did not look into the acquisition completely and could be missing something vital.


----------



## GG999

*Re: NVT - Navitas*



robusta said:


> Warren Buffet said "The best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return"
> 
> NVT does have a high rate of return of invested capital (ROE= ~61%) but it does not have the ability to reinvest that capital to give shareholders the value of compounding. (look at the payout ratio for the last 5 years, 107%, 100%, 101%, 100%, 104%.)
> 
> This to me makes the business worth less than a business with a lower ROE but also ability to retain capital (lower payout ratio) and maintain a satisfactory ROE on that retained capital. This sort of business becomes a "compounding machine" delivering strong capital growth with dividend growth to follow in due course. eg COH, CSL, FGE, MCE, FRI...
> 
> To do a quick back of the envelope valuation of NVT we can treat it a bit like a bond due to all the profits being paid out.
> 
> My required return is 10% (to compensate me for the risk of investing in equities)
> 
> NVT share price is about $3.70
> 
> Dividend yield = 5.2%
> 
> To achieve my RR of 10% need to pay no more than $1.85 - would prefer to pay a whole lot less so I have a margin of safety.
> 
> There goes another stock that does not tick all the boxes for me, the search continues....




robusta, this all made good sense to me

except Navitas doesn't really look like a bond - according to Commsec it's grown earnings 30.9% in 1 year, 7.6% over 5 years, and 2 year forecast is 12.8%.
And dividend growth over 5 years of 17.5%.

Someone cleverer than me will explain how this is done with a payout ratio of about 100%.


----------



## ROE

*Re: NVT - Navitas*



GG999 said:


> robusta, this all made good sense to me
> 
> except Navitas doesn't really look like a bond - according to Commsec it's grown earnings 30.9% in 1 year, 7.6% over 5 years, and 2 year forecast is 12.8%.
> And dividend growth over 5 years of 17.5%.
> 
> Someone cleverer than me will explain how this is done with a payout ratio of about 100%.




its business model required very little capital for expansion ..so it can pay out 100%
and fund expansion from cash flow with ease...

I think I post on here a year or two ago, it probably one of the best business model
I ever seen combine with the Asian appetite for education you have one hell of a cash cow business 

Talk about Asian demand for soft commodity and raw material..they place even more emphasis on education but not many people know that 

And to answer  robusta why do you need to reinvest the capital when there is no need for it? its model is clearly far more superior to other because for FGE to make more money it need to reinvest that cash to buy new machine and equipment ...NVT can do it without re-investing the capital ....so share holder profit both way, capital appreciation and bigger and better dividend each year 

I cant find better business model


----------



## VSntchr

*Re: NVT - Navitas*

I too like the NVT model, but what did you think of the price paid for SAE, ROE?
far too much in my opinion...


----------



## ROE

*Re: NVT - Navitas*



VSntchr said:


> I too like the NVT model, but what did you think of the price paid for SAE, ROE?
> far too much in my opinion...




On the face of it i think they paid a fair price maybe toward the upper end but i wouldnt say over paid

What they paid for most of that in education license which is very hard to acquire
This should build them a bigger moat.

They paid $294 for 33m earning close to 9 times ebitda it isnt too expensive compared to similar corporate take over 

It could proved expensive or cheap and we wont know until a couples of year time but right now based on projected earning i say it is an ok buy


----------



## Huskar

*Re: NVT - Navitas*

Is Mr Market toying with Navitas or are the recent share price falls justified on weak outlook/high AU$? Otherwise a pretty impressive FY result. Decline in enrolments but revenue and NPAT are up ~20%.


----------



## Muschu

*Re: NVT - Navitas*



Huskar said:


> Is Mr Market toying with Navitas or are the recent share price falls justified on weak outlook/high AU$? Otherwise a pretty impressive FY result. Decline in enrolments but revenue and NPAT are up ~20%.




Problem is that this announcement was based on a period when the $A was lower.  At its recent level I would anticipate further decreases in student numbers -- and the answer can't be in just increasing fees again.

Much is now dependent on the overseas markets -- but fair value is now looking lower than the current SP imo.

Rick

[No longer holding]


----------



## McCoy Pauley

*Re: NVT - Navitas*

I must admit that I only briefly scanned through the report when it was released, but it also seems to me that NPAT was boosted by an acquisition NVT made during the past financial year.  IMHO, you need to account for that acquisition before comparing it with previous performance.


----------



## vishalt

*Re: NVT - Navitas*

Anyone looking at this stock?

Share price has been beaten down to near 52-week lows (nice rally on Friday though). Good dividends (6.2%), still high P/E, and company expects headwinds for fiscal 2012 but better times beyond by fy 2013 due to policy changes.

I may probably jump in on a dip - education is a bullet proof sector and something people well throw the kitchen sink at to get.


----------



## McCoy Pauley

*Re: NVT - Navitas*



vishalt said:


> Anyone looking at this stock?
> 
> Share price has been beaten down to near 52-week lows (nice rally on Friday though). Good dividends (6.2%), still high P/E, and company expects headwinds for fiscal 2012 but better times beyond by fy 2013 due to policy changes.
> 
> I may probably jump in on a dip - *education is a bullet proof sector and something people well throw the kitchen sink at to get.*




Agree with this, to an extent, but NVT's business model in Australia relies upon government regulations which, at any time and from time to time, may change depending on the whim of who is at the controls.  Tightening student visas, increasing fees for education and other issues may make it more expensive (and therefore more difficult) for overseas students to come to Australia.  

Then there is the issue of the high Australian dollar discouraging overseas students from attending Australian education institutes in preference for institutes in other jurisdictions.  

NVT has wisely diversified its portfolio geographically, but there's no doubt it makes the bulk of its money from its Australian operations.

I've looked at investing in NVT a few times over the past 18-24 months but something has always held me back, and it's the issue that NVT plays in a market that is subject to governmental whims.  There are other examples on the Australian market that show that share market returns can be muted when the government gets involved.


----------



## craft

*Re: NVT - Navitas*

Not the best year for NVT, Strong Australian Dollar. Gov’ts messing with student visas which they have subsequently had to rethink. Bedding down a major acquisition and the word is in a bit of a funk over Euro Debt. Pretty safe to say the business is not enjoying cyclical high conditions and the share price is reflecting that as it has been in decline since March last year. 

I have a long term position in NVT and I have been adding to it in the last few weeks. The reason has nothing to do with the above paragraph – that is just short term noise to me.

My reasoning goes along these simplified lines. 
One of the things the West can actually do better than the developing countries is tertiary education. The traditions, the institutions the reputations and the environment in which the academics want to live are all going to take a long time for the developing countries to replicate.  Spending on education increases as wealth increases and this is one avenue that the west has of tapping the wealth creation occurring in the developing parts of the world.  I suspect that education will grow faster than GDP in developed countries by continuing to attract foreign students.

NVT is leveraged to this growth outperformance macro picture and best of all the business model requires little to no capital to facilitate the organic growth, leaving all funds earned to be distributed or invested in buying new business.

 NVT’s current franked up dividend yield is around 9% and that is based on a rather average sort of current environment for the business.  The macro picture over the long run should see the earnings grow above CPI and because of its low capital intensity model the dividend should grow at the same rate. 

With a down trend in place this stock may be no good for anybody who requires immediate gratification from there share purchases.  But for me, If I only had the choice of NVT or a 2030 CPI Indexed bond and they both yielded the same, I would still choose NVT because I expect their  growth over 20 year period to exceed CPI. When NVT offers a 9% yield and the indexed bond offers 1.8% it becomes a no brainer.

Even if NVT does no better than match CPI (whatever that turns out to be) over the next 20 years the dividend yield alone will see a *rea*l return of $46K on a 10K investment. The CPI indexed bond yield over the equivalent time will be a *real* return of about 4K on a 10K investment. If the market comes to appreciate my preference for the NVT yield over the Indexed bond then there is the opportunity for capital gain. If it doesn’t or marks the price down even further then the re-investment rates available on the dividends will produce the return.

Of course if I’m wrong about the business the dividend yield will fall over the long term and I will not make the sort of returns that I envisage.


----------



## McLovin

*Re: NVT - Navitas*

Seems like things haven't improved much in the industry. A 20% fall in new student applications.

http://www.abc.net.au/news/2012-01-...mbers-down-again-industry/3774858?section=nsw

I like NVT and I do think education is certainly a "growth" industry as the middle class in developing countries expands. With the current headwinds though, 15x earning seems a bit steep. It will be interesting to see their interim results next month.


----------



## Muschu

*Re: NVT - Navitas*

Results out now.  Increased dividend but SP down about 7%.


----------



## McLovin

*Re: NVT - Navitas*



Muschu said:


> Results out now.  Increased dividend but SP down about 7%.




EPS down fractionally. CY11 EBITDA for the SAE business is $3.2m lower than 2010.

The visa troubles in Australia (which should have some resolution this year) are being played out in the UK as well, which is affecting their operations there.

This is one I'll keep watching but won't consider at these levels.


----------



## skc

*Re: NVT - Navitas*



McLovin said:


> EPS down fractionally. CY11 EBITDA for the SAE business is $3.2m lower than 2010.
> 
> The visa troubles in Australia (which should have some resolution this year) are being played out in the UK as well, which is affecting their operations there.
> 
> This is one I'll keep watching but won't consider at these levels.




Also an opeque forecast for H2... the only information being that it will be lower than pcp. 

The chart had $3.20 as a major ledge. They crashed right through that today but has bounced back from a low of $2.87. I think we would see consolidation below $3.20 followed by another leg down. More solid support at $2.80 and then $2.40.


----------



## JTLP

*Re: NVT - Navitas*

I've always been keen to pick up NVT - but these results looked a bit flaky - especially when their core business (UP) fell by 5%. 

The increase in dividend may help arrest the slide and provide something for people after yield though...


----------



## craft

*Re: NVT - Navitas*

Returned home from tripping around to find NVT under 3 bucks and despite having a reasonable holding, I psychotically had an inner smile and bought some more.

The headings from 4 of their presentation slides sum it up for me.

Global student numbers increase....
... as will those studying abroad.
Expecting a tough second half....
....but confidence in long term outlooks remains.

http://www.asx.com.au/asxpdf/20120131/pdf/4241dl65l33znf.pdf

The combination of an established medium term down trend in the price chart and no short term business catalyst should provide even more opportunities. 

I think this company has great economics and GDP+ growth prospects over the long term. My goal is to get fully set whilst reasonable prices are on offer and at the same time hopefully avoid too much premature accumulation.


----------



## JTLP

*Re: NVT - Navitas*



craft said:


> Returned home from tripping around to find NVT under 3 bucks and despite having a reasonable holding, I psychotically had an inner smile and bought some more.
> 
> The headings from 4 of their presentation slides sum it up for me.
> 
> Global student numbers increase....
> ... as will those studying abroad.
> Expecting a tough second half....
> ....but confidence in long term outlooks remains.
> 
> http://www.asx.com.au/asxpdf/20120131/pdf/4241dl65l33znf.pdf
> 
> The combination of an established medium term down trend in the price chart and no short term business catalyst should provide even more opportunities.
> 
> I think this company has great economics and GDP+ growth prospects over the long term. My goal is to get fully set whilst reasonable prices are on offer and at the same time hopefully avoid too much premature accumulation.




Had to re-read that last sentence a few times :

Why did you buy more when you note there is a downtrend and no short term business catalyst? This doesn't sound like an opportunity but an avoidance...


----------



## skc

*Re: NVT - Navitas*



craft said:


> My goal is to get fully set whilst reasonable prices are on offer and at the same time hopefully avoid too much *premature accumulation.*




Too much of that and you will leave your partner very unsatisfied indeed.


----------



## McLovin

*Re: NVT - Navitas*



skc said:


> Too much of that and you will leave your partner very unsatisfied indeed.




Bill might be able to sell you something to fix it.


----------



## craft

*Re: NVT - Navitas*



skc said:


> Too much of that and you will leave your partner very unsatisfied indeed.




Ha Ha Ha.... everybody makes fun of the premature accumulator. 



McLovin said:


> Bill might be able to sell you something to fix it.




Who’s Bill? Does he offer quantity discounts?



JTLP said:


> Had to re-read that last sentence a few times :
> 
> Why did you buy more when you note there is a downtrend and no short term business catalyst? This doesn't sound like an opportunity but an avoidance...




On a more serious note, there is actually a rational answer to this question, well at least I think it’s rational – in  the context of my investment philosophy, which is to buy assets that generate a greater ‘real’ cash flows over their life time then the price paid for them.

Once an opportunity is identified, there are two risks in relation to timing, one is buying too early, the other is missing out on the price that gives rise to the opportunity.

Buying too early means I suffer a few % points of opportunity cost over my envisaged time frame but I have at least locked in acceptable actual return. (so long as my assumptions were correct).

The ramifications of ‘could have, would have, should have’ are potentially unlimited opportunity costs and missing the opportunity to lock in an acceptable actual return. 

Buying too early is a mistake of commission that sucks. ‘Could have, would have, should have’ is a mistake of omission that whilst probably easier to bear, can ultimately be a lot more detrimental to wealth creation. 

Obviously I would like to buy at the absolute low – but I’m not that good, given my fallibility I err on the side of buying too early rather than missing out. But I’m not oblivious to the charts or the short term momentum of the business – they guide how aggressively I accumulate. Specifically I bought NVT this time round because; the market had had a chance to factor in the 2nd half forecast; and from an EW perspective there are some possibilities that a low is in place (I genuinely hope not) – ie a fairly symmetrical ABC correction terminating at the 61.8% Fib. Now I don’t really trust that analysis but it seems as good a reason as any to fire off another shot – and I still have a few more rounds left.  I may run out of ammo before the price stops falling and that is a situation that really frustrates me but as I have hopefully explained, ultimately I would rather be a premature accumulator then the guy who sees the possibility but never takes the chance due to performance anxiety.


----------



## robusta

*Re: NVT - Navitas*



craft said:


> On a more serious note, there is actually a rational answer to this question, well at least I think it’s rational – in  the context of my investment philosophy, which is to buy assets that generate a greater ‘real’ cash flows over their life time then the price paid for them.
> 
> Once an opportunity is identified, there are two risks in relation to timing, one is buying too early, the other is missing out on the price that gives rise to the opportunity.
> 
> Buying too early means I suffer a few % points of opportunity cost over my envisaged time frame but I have at least locked in acceptable actual return. (so long as my assumptions were correct).
> 
> The ramifications of ‘could have, would have, should have’ are potentially unlimited opportunity costs and missing the opportunity to lock in an acceptable actual return.
> 
> Buying too early is a mistake of commission that sucks. ‘Could have, would have, should have’ is a mistake of omission that whilst probably easier to bear, can ultimately be a lot more detrimental to wealth creation.
> 
> Obviously I would like to buy at the absolute low – but I’m not that good, given my fallibility I err on the side of buying too early rather than missing out. But I’m not oblivious to the charts or the short term momentum of the business – they guide how aggressively I accumulate. Specifically I bought NVT this time round because; the market had had a chance to factor in the 2nd half forecast; and from an EW perspective there are some possibilities that a low is in place (I genuinely hope not) – ie a fairly symmetrical ABC correction terminating at the 61.8% Fib. Now I don’t really trust that analysis but it seems as good a reason as any to fire off another shot – and I still have a few more rounds left.  I may run out of ammo before the price stops falling and that is a situation that really frustrates me but as I have hopefully explained, ultimately I would rather be a premature accumulator then the guy who sees the possibility but never takes the chance due to performance anxiety.




Jokes aside this approach makes perfect sense to me, I picked up a piece of this excellent company a few days after the recent 'bad' result and would have been happy if the price kept falling as I could have bought more for less. The way I look at it is I win either way as long as the fundamentals of NVT continues to be strong.


----------



## Ves

*Re: NVT - Navitas*



craft said:


> Returned home from tripping around to find NVT under 3 bucks and despite having a reasonable holding, I psychotically had an inner smile and bought some more.



 thanks for leaving some for the rest of us, mate! the best I could do was my $3.17 purchase on the "capitulation" day.

from my brief experience buying into companies for long-term holds seems to be worthwhile if you buy in after a capitulation event in the market, waiting for an even lower low is often too "greedy."


----------



## McLovin

*Re: NVT - Navitas*



Ves said:


> thanks for leaving some for the rest of us, mate! the best I could do was my $3.17 purchase on the "capitulation" day.
> 
> from my brief experience buying into companies for long-term holds seems to be worthwhile if you buy in after a capitulation event in the market, waiting for an even lower low is often too "greedy."




Yes...and unfortunately, I got too greedy when others were fearful and missed the boat.


----------



## tinhat

*Re: NVT - Navitas*

I owned some NVT up until about a year ago. I didn't have a good feeling about it then but went ahead with a recommendation. Actually made some money on it but decided to get out. There is nothing about this company that I like. The whole thing is a deck of cards waiting to fall IMHO. The thing I didn't like about it when I bought was that it pays out 100% of earnings as dividend. Oh, but NVT has a business model that doesn't require investment in new capital. Woopee! Then they decide to make an "earnings accretive" acquisition but... oops!... no retained earnings so they run out and dilute shareholders capital with a capital raising, hock up on debt and do a good job of bashing up the balance sheet in the process.

NVT can cry all it wants about the harsh environment it has been operating in these past two years but its management followed the age old trick of hocking up on debt to fund an acquisition that was foreboding of the challenging environment for revenue growth ahead.


----------



## Muschu

*Re: NVT - Navitas*

The SP dropped after a bad report and has risen for no apparent reason other than perhaps the dividend, the perceived safety of education as a have and hope of visa requirements easing.

Not for me at this time.


----------



## robusta

*Re: NVT - Navitas*

Bought NVT under $3.00 recently and still hold but if they take on more debt and dilute shareholders again I will drop them like a cold spud. Hopefully lesson learnt by management.


----------



## craft

*Re: NVT - Navitas*



robusta said:


> Bought NVT under $3.00 recently and still hold but if they take on more debt and dilute shareholders again I will drop them like a cold spud. Hopefully lesson learnt by management.




They issued 27 Million shares via placement/SPP and 6 Million to SAE vendors all at $3.80. They listed with 346.5 Million shares and now have 375 Million shares – Hardly chronic dilutors.

When one cash cow buys another they aren’t going to have too much trouble paying down the debt. Net interest cover for the last half was 12.3 – Hardly demanding. More like efficient use of a very robust cash flow.

Nothing here for a long term investor to be fussing about. Buy right - hold tight.




tinhat said:


> The thing I didn't like about it when I bought was that it pays out 100% of earnings as dividend. Oh, but NVT has a business model that doesn't require investment in new capital. Woopee!




Looks like we are in total disagreement twice in the same week.  That is one of the most powerful wealth creating business models that you are going to see.

I don’t really have much to add to my previous posts about NVT except for TIME. Lets revisit this in 10 years time. The proof will be in the pudding.  

ps. If I was a medium term trader this is still in a down trend despite the last few weeks.


----------



## ROE

*Re: NVT - Navitas*



tinhat said:


> I owned some NVT up until about a year ago. I didn't have a good feeling about it then but went ahead with a recommendation. Actually made some money on it but decided to get out. There is nothing about this company that I like. The whole thing is a deck of cards waiting to fall IMHO. The thing I didn't like about it when I bought was that it pays out 100% of earnings as dividend. Oh, but NVT has a business model that doesn't require investment in new capital. Woopee! Then they decide to make an "earnings accretive" acquisition but... oops!... no retained earnings so they run out and dilute shareholders capital with a capital raising, hock up on debt and do a good job of bashing up the balance sheet in the process.
> 
> NVT can cry all it wants about the harsh environment it has been operating in these past two years but its management followed the age old trick of hocking up on debt to fund an acquisition that was foreboding of the challenging environment for revenue growth ahead.




You seem fearful for such minor stuff 
If you think this business is a deck of card what is a good business 

Yes they have a bit of a hiccup..and for that they expand their moat a bit more...
all good in my book...

None of this stuff is red flag, I think it's helpful for the business and management to
run into headwind every so often, that way they are level headed and not become too hubris.

The founder family entire fortune is with NVT like FLT Graham Turner....both has extremely good insight into the industry they operate...I put my money on these 2 any day ...Remember Doom and Gloom around FLT during GFC, Graham show people what he's made off ...all good stuff....

PS: you know Education Accreditation is like a little mini monopoly right? it is hard and expensive to get
every time you get one of these the moat get a bit bigger....


----------



## tinhat

*Re: NVT - Navitas*



ROE said:


> You seem fearful for such minor stuff
> If you think this business is a deck of card what is a good business
> .



I admit I had a bit too much red wine before posting 

I don't understand this business. By conventional standards its balance sheet doesn't look good. I will keep an eye on it and go over and read this thread from start.

Cheers.


----------



## ROE

*Re: NVT - Navitas*



tinhat said:


> I admit I had a bit too much red wine before posting
> 
> I don't understand this business. By conventional standards its balance sheet doesn't look good. I will keep an eye on it and go over and read this thread from start.
> 
> Cheers.




Another way of looking at his business is Computer Shares cash side of type of business.

CPU get to hold the cash in advance for distribute to shareholders. This can be anything from dividend, to capital raising to hybrid payment. They hold that cash up until the day they distribute and earns a little interest earner risk free.

NVT collect money from students upfront, earn risk free interest, take a margin
pay the tutor and then teach the student.

Is there any other business where people pay you first and you get the service later?
do you pay your burger at mccas 3-6 months in advance and collect the burgers?
do you pay JBH $2000 three months before you collect the TV?

They need very little capital to operate and expand...so the more money they make
I prefer them give to me in dividend rather than keep it in their banks account
that do little for shareholders 

And because the founder has a decent stake, he likes his dividend too so this likely to continue
and I love it..the more they make the more dividend I get and rising each year...


----------



## robusta

*Re: NVT - Navitas*



craft said:


> They issued 27 Million shares via placement/SPP and 6 Million to SAE vendors all at $3.80. They listed with 346.5 Million shares and now have 375 Million shares – Hardly chronic dilutors.
> 
> When one cash cow buys another they aren’t going to have too much trouble paying down the debt. Net interest cover for the last half was 12.3 – Hardly demanding. More like efficient use of a very robust cash flow.
> 
> Nothing here for a long term investor to be fussing about. Buy right - hold tight




IMO NVT is one of the highest quality companies listed on the ASX, and I hope to hold for the long term.

Having said that I think they paid too much for SAE and would not like to see more transactions of this type. 

Would be happy if NVT stuck to their knitting from now on.


----------



## Ves

*Re: NVT - Navitas*



robusta said:


> Having said that I think they paid too much for SAE and would not like to see more transactions of this type.



What are you basing this on?


----------



## robusta

*Re: NVT - Navitas*

SAE missed earnings expectations, hopefully this is temporary but I do not understand this side of the business enough to be sure.

ROE is down, I know there are mitigating circumstances but...

This article probably has a agenda to push but some food for thought here.

http://www.juliusmedia.com/cxweb/index.php?option=com_content&task=view&id=1000&Itemid=1


----------



## Ves

*Re: NVT - Navitas*



robusta said:


> SAE missed earnings expectations, hopefully this is temporary but I do not understand this side of the business enough to be sure.




Thanks for the article; a good read and a perspective that I hadn't come across.

I think my main point is it is too early to tell whether the amount they paid for SAE was under / equal / over an _intrinsic_ value.  I think the license they gained from the acquisition will be handy over the long-term with their expansion into new frontier markets.


----------



## coinemas

*Re: NVT - Navitas*

Now its chinese student being bashed,, and bad publicity for Australian Education once again.  
In the midst of strong AUD and declining number of International student, there has been a call to cap the no of student. 


http://www.theage.com.au/national/chinese-students-at-risk-in-australia-20120426-1xn5v.html


and 

"Gloom with glimpses of light in latest student figures "
BY: BERNARD LANE From: The Australian April 27, 2012 1:58PM
Increase Text Size
Decrease Text Size
Print

SOME universities are in for a tough year with official figures showing the downturn in the number of new overseas students has deepened.

In the year to March, higher education commencements fell six per cent to 52,101, according to Australian Education International. (The key China market was down 6.9 per cent.) "


----------



## ROE

*Re: NVT - Navitas*



coinemas said:


> Now its chinese student being bashed,, and bad publicity for Australian Education once again.
> In the midst of strong AUD and declining number of International student, there has been a call to cap the no of student.
> 
> 
> http://www.theage.com.au/national/chinese-students-at-risk-in-australia-20120426-1xn5v.html
> 
> 
> and
> 
> "Gloom with glimpses of light in latest student figures "
> BY: BERNARD LANE From: The Australian April 27, 2012 1:58PM
> Increase Text Size
> Decrease Text Size
> Print
> 
> SOME universities are in for a tough year with official figures showing the downturn in the number of new overseas students has deepened.
> 
> In the year to March, higher education commencements fell six per cent to 52,101, according to Australian Education International. (The key China market was down 6.9 per cent.) "




It happen every where, where there is international students, it is not a problem only in Australia. US, UK all has this sort of incident once in a while

it just happen to be an international student.

People wont stop sending there kids to Australia or other place because of one or two incidents ...it has to be a wide spread thing.....

Most of this stuff doesnt even register on people I know in Asia if they want to send their kids here..

but fear is always good for solid stocks 

Students enrollment up and down is normal...some years you get it good other years you get less people as long as it not a one way street down...


----------



## coinemas

*Re: NVT - Navitas*

well, it looks like this time it might be a one way street down.. It has been down 2 yrs in a row so far...

Government must do something to protect one of Austraila's biggest export from falling down ....


Australia latest: decline continues, big China drop
Posted on Apr 30, 2012 by Dan Thomas
Posted in Immigration, News, under Australasia.
Tagged with Australia.
Bookmark the permalink.
Australia’s international education malaise looks set to continue, according to new international enrolment data from Australian Education International (AEI). However, the English language teaching sector has avoided a repeat of the the major slide it saw last year, but key market China declined further.
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About Dan Thomas
Dan Thomas previously worked as a freelance finance and culture journalist. He has also worked in communications in the international education industry.
HE saw commencements from the Indian market climb 27.3%
Across the education sector, course commencements fell by 7.2% to 117,136 in the year to March 2012. Particularly worrying was the accelerating decline in higher education, where commencements fell 6% to 52,101 compared with 2% in the year to March 2011.
Vocational education and training commencements also fell 8.3% to 29,627. However, the Elicos (English language intensive courses for overseas students) sector’s drop of 5.6% to 21,224 , compared with -22% last year, has been called a recovery by some observers.
Executive director of English Australia, Sue Blundell explained: “The Higher Education student ‘pipeline’ is longer than the Elicos sector which means that they are usually the last to see declines whereas [our sector] sees declines first but also sees the return to growth first as well.”
However, she saw no evidence of a rapid turnaround. “Whilst the [English language] decline seems to have slowed, I would be alarmed if it hadn’t as it couldn’t continue at the rate it had been falling. It is important to remember that the percentage decline for YTD March is a further decline on top of declining numbers in previous years,” she said.
Stable numbers of visitor visa holders and increasing numbers of working holiday visa holders was “good news”
AEI said enrolments (as opposed to course commencements) across all sectors had declined by 8.5% to 351,878, with striking falls from India, down 25%, Nepal 14.6%, and Sri Lanka 14.6%.
There were some success stories: HE saw commencements from the Indian market climb 27.3%, although this followed the huge tail-off caused by attacks on Indians in Australia and resulting bad press in 2010.
In the Elicos sector, Colombia climbed 11.7% to 1,637 following a 10.5% fall last year. However, the Chinese market – the sector’s largest student source – declined by a concerning 21.3% and current bad press around attacks on Chinese students won’t help.
On balance, Blundell said she was pessimistic about the country’s English language sector’s prospects given the decline in longer term student visa holders who generate the majority of the sector’s revenue.
However, she said the stable numbers of visitor visa holders and increasing numbers of working holiday and other visa holders was “good news”, having ”somewhat mitigated the decline in student visa holders”.


----------



## Muschu

*Re: NVT - Navitas*

NVT has had a good ride since it's plummet to $2.87 or thereabouts.  I think this must be because some investors consider "education" a defensive area - and perhaps it is.

However NVT's progress is totally dependent on student enrolments.  Since their poor annual report I have seen no evidence of increases that warrant the SP gains.  

I don't hold NVT at this time and don't plan to at this time.


----------



## coinemas

*Re: NVT - Navitas*

Lets face the facts that the number of international students are now in declining trend. It may take many years to recover ( if at all )  in my opinion. 

An education agent that i know with offices in Aus and overseas has recently down sizing the number of their branches.

With the introduction of skill select migration scheme recently, student who wants to apply PR must wait to be invited, if no invitation that means no PR . There is no certainty any more. 

in my opinion Visa streamline is only to make student easier to apply student visa. It wont help if there is no certainty if they can apply PR after study. We all know most student comes to aus to study with intention to apply PR later.

declining number of international students will also affect the property market as we are now witnessing.


----------



## coinemas

*Re: NVT - Navitas*

Latest statistics on International students in Australia. 

http://www.immi.gov.au/media/statistics/study/_pdf/student-visa-program-report-2012-03-31.pdf


It shows declining of Offshore student visa application.  Which in my opinion is the most accurate measure of trend, rather than measuring onshore student visa application, which my be double counted   ie. the same student already in australia is applying to extend his student visa onshore for further study.


----------



## robusta

*Re: NVT - Navitas*



coinemas said:


> Latest statistics on International students in Australia.
> 
> http://www.immi.gov.au/media/statistics/study/_pdf/student-visa-program-report-2012-03-31.pdf
> 
> 
> It shows declining of Offshore student visa application.  Which in my opinion is the most accurate measure of trend, rather than measuring onshore student visa application, which my be double counted   ie. the same student already in australia is applying to extend his student visa onshore for further study.




Will be interesting to see what happens to these numbers when the visa issues are fixed.


----------



## JTLP

*Re: NVT - Navitas*

This thing has absolutely rocketed to $4.48 from the flat earnings and low of the terrible $2's. I thought it would have stayed down there but obviously not - and it appears the high AUD isn't deterring punters.

I wonder what's driving this? Thoughts?


----------



## robusta

*Re: NVT - Navitas*



JTLP said:


> This thing has absolutely rocketed to $4.48 from the flat earnings and low of the terrible $2's. I thought it would have stayed down there but obviously not - and it appears the high AUD isn't deterring punters.
> 
> I wonder what's driving this? Thoughts?




I think these guys have a very bright future with a decent growing dividend yield. Strange 3% fall in the price today however, maybe people are taking profits? I will continue to hold


----------



## Muschu

*Re: NVT - Navitas*

To my knowledge the SP has risen since a poor report and on the back of no good news.  I suspect the stock is seen as defensive.  However they'll need an outstanding report, imo, to maintain the current price.  
Just my view.
Rick

-- not holding and have not for quite a long time.


----------



## skc

*Re: NVT - Navitas*



Muschu said:


> To my knowledge the SP has risen since a poor report and on the back of no good news.  I suspect the stock is seen as defensive.  However they'll need an outstanding report, imo, to maintain the current price.




+1. The valuation is now pretty stretched unless one is confident of them having turned things around. A flat EPS reported will the share price re-adjust to much lower levels imo.


----------



## ROE

*Re: NVT - Navitas*

competitive advantages business with reliable cash flow and earning will command a premium in this sort of market 

also government reports coming out recently gearing Australia toward the next 15 years gaining more skill workers with degrees and they changing policy to reflect that so it all bold extremely well for NVT for the next decade.  

price run because someone probably has access to this information before you do


----------



## robusta

*Re: NVT - Navitas*

Had a bit of a laugh to myself today, I like to read the market preview on Google news, anyway this morning noticed UBS upgraded NVT to outperform before the open.

I will just continue to hold.

Sp down about 10% today.


----------



## skc

*Re: NVT - Navitas*



robusta said:


> Had a bit of a laugh to myself today, I like to read the market preview on Google news, anyway this morning noticed UBS upgraded NVT to outperform before the open.
> 
> I will just continue to hold.
> 
> Sp down about 10% today.




Very surprised that the announcement wasn't even marked market sensitive. They did say that the guidance is maintained as they made more money overseas to cover the lack of enrolment in Australia.


----------



## Ves

*Re: NVT - Navitas*

As a holder you have to decide whether this is short-term noise or if it has long-term implications (that threaten the strength of the business model).  

I have certainly seen worse announcements so far this year from other companies.


----------



## robusta

*Re: NVT - Navitas*

Just noise, a bit surprised by the reaction, maybe it was enough of a movement to hit a heap of stop losses


----------



## coinemas

*Re: NVT - Navitas*



robusta said:


> Just noise, a bit surprised by the reaction, maybe it was enough of a movement to hit a heap of stop losses




From the anns :

A significant number of applicants for which Confirmation of Enrolments had been
issued have experienced delays in receiving their visa due to pressures arising from
the newly implemented Streamlined Visa Processing arrangements. The majority of
these students have therefore deferred into 201203.

and then 

" Navitas therefore
remains confident that a return to positive growth in Australian enrolments in key
offshore source markets is eventuating as a result of greater sector stability established
from Knight Review changes "


So knight review is good or bad?


----------



## Ves

*Re: NVT - Navitas*



coinemas said:


> Good or bad?



Read what they wrote again.  Those statements do not contradict each other if you are implying that.  One refers to a temporary delay  (caused from the changes) and the other refers to its on-going effect after the initial delays have been cleared.

A better question is;  does this matter? Is legislation like this ever permanent? They are forever changing the rules in most industries, yet some companies are still able to perform regardless of the changes.  It is best to look for the reason for that.


----------



## coinemas

*Re: NVT - Navitas*

Interesting to see what is market reaction when NVT issue their result early next week. Previous experience thought us that NVT has been too overly optimistic and SP dive after result is announced.


----------



## craft

*Re: NVT - Navitas*



coinemas said:


> Interesting to see what is market reaction when NVT issue their result early next week. Previous experience thought us that NVT has been too overly optimistic and SP dive after result is announced.




Day before 2011 results 3.85 a month later 3.84
Day before 2010 results 4.40 a month later 4.46
Day before 2090 results 2.75 a month later 3.37

And those figures are despite going ex a juicy franked dividend during the month in question

Now CRAFT might be an acronym for Cant. Remember. A. F..... Thing. So maybe that’s the reason I don't remember these SP dives you talk about or possible you have some other agenda – do tell.

Long term picture looks as good as ever to me.

Buy Right [tick]

Hold tight [tick - nothing has changed the long term picture, the market got a little exuberant and corrected that on a pretty minor reality check announcement]

Yawn – back to sleep.


----------



## ROE

*Re: NVT - Navitas*

AFR street talk this is a Private Equity favorite because of its business model and its exposure to 
the top 4 destination for students (US, UK, Australia and Canada) with Australia market is 
pretty much saturated but the other three markets still under-develop so they can grow 
earning there for many years yet...

they said private equity maybe looking at the book but they concluded that PE need a min of $5 bid to get any attention from shareholder.


----------



## coinemas

*Re: NVT - Navitas*

31/07/2012 financial result out, SP down 5%  , it market does not like the earning figures.


----------



## skc

*Re: NVT - Navitas*



coinemas said:


> 31/07/2012 financial result out, SP down 5%  , it market does not like the earning figures.




Very difficult to like a company with PE 20+ but falling EPS in the short term.

Long term I've been wrong about most things so...


----------



## coinemas

*Re: NVT - Navitas*

Private Equity should jump in now while price still cheap, as shareholders wont sell below $5 . might as well buy on the market.


----------



## skc

*Re: NVT - Navitas*



coinemas said:


> Private Equity should jump in now while price still cheap, as shareholders wont sell below $5 . might as well buy on the market.




I read somewhere (sorry can't remember where) that you can't actually buy shares on market when you are planning a takeover bid. It's insider trading as you possess the inside knowledge that you yourself are going to launch a takeover bid. Sounds stupid so I can't be sure that it is true.


----------



## prawn_86

*Re: NVT - Navitas*



skc said:


> I read somewhere (sorry can't remember where) that you can't actually buy shares on market when you are planning a takeover bid. It's insider trading as you possess the inside knowledge that you yourself are going to launch a takeover bid. Sounds stupid so I can't be sure that it is true.




That doesn't sound right to me... I thought that is why the 20% rule is in place. Once you hit 20% you have to launch a bid (or get a special dispensation).


----------



## Ves

*Re: NVT - Navitas*



skc said:


> Very difficult to like a company with PE 20+ but falling EPS in the short term.



EPS fell because there were long-term investment and set-up costs associated with SAE.  These show up in the P & L as increased depreciation.  OCF was up against PCP by 6% in comparison. The market is seeing through the decline in EPS still (although, the pigs at the trough will want to be rewarded next year or they will look elsewhere).

The earnings outlook for 2013 looks much better than 2012 ("possibly the toughest year ever for Navitas").  The balance sheet is still strong and there are opportunities galore if you can believe the company and the statistics provided.  

I wouldn't trade it short-term obviously.

PS: I still need to have a detailed look at the Annual Report - I've only had a quick look on my lunch break.


----------



## Ves

*Re: NVT - Navitas*



prawn_86 said:


> That doesn't sound right to me... I thought that is why the 20% rule is in place. Once you hit 20% you have to launch a bid (or get a special dispensation).




I think it depends on the industry regulations too (see the EGP saga) - but this sounds pretty accurate from what I recall.


----------



## robusta

*Re: NVT - Navitas*

Just had a quick read of the report, no major surprises there. The eventual reduction in the payout ratio to 80% interests me, I would like to see the companies plans for these retained profits.


----------



## Ves

*Re: NVT - Navitas*



robusta said:


> Just had a quick read of the report, no major surprises there. The eventual reduction in the payout ratio to 80% interests me, I would like to see the companies plans for these retained profits.



They're preserving the franking credits balance - that would be my guess. Offshore income is increasing, so they are not generating as much Asusie tax credits.


----------



## craft

*Re: NVT - Navitas*



coinemas said:


> Interesting to see what is market reaction when NVT issue their result early next week. Previous experience thought us that NVT has been too overly optimistic and SP dive after result is announced.






craft said:


> Day before 2011 results 3.85 a month later 3.84
> Day before 2010 results 4.40 a month later 4.46
> Day before 2090 results 2.75 a month later 3.37
> 
> And those figures are despite going ex a juicy franked dividend during the month in question.





Updating for this year.

Day before 2012 results 4.15 a month later 4.28 and in-between gone ex a FF 10 cent div.


----------



## Huskar

*Re: NVT - Navitas*



craft said:


> Updating for this year.
> 
> Day before 2012 results 4.15 a month later 4.28 and in-between gone ex a FF 10 cent div.




And not without a chance to buy in at 3.70 in the meanwhile as well.


----------



## craft

*Re: NVT - Navitas*

University Programs enrolments continue to show improvement

http://www.asx.com.au/asxpdf/20121120/pdf/42b9xj8s741y1j.pdf


----------



## pavilion103

*Re: NVT - Navitas*

I haven't been following this one but it is near significant resistance. Look further back on the chart too. If it breaks it could be good.


----------



## craft

*Re: NVT - Navitas*



pavilion103 said:


> I haven't been following this one but it is near significant resistance. Look further back on the chart too. If it breaks it could be good.
> 
> View attachment 49899




Ascending Triangle with a measured target of old highs? But don’t trust me I’m a fundie.




If a pattern falls on a chart but no one is around to see it does it make a difference?


----------



## pavilion103

*Re: NVT - Navitas*

Yeh that's what it looks like. A good result today breaking above. Notice that it broke on very little volume which is interesting. Will watch with interest.


----------



## pavilion103

Look at yesterday's volume!!!


----------



## pavilion103

Moving nicely so far today. A good trade.


----------



## ROE

*Re: NVT - Navitas*

One more for buy and hold and dividend keep coming in every 6 months and more every year


----------



## robusta

*Re: NVT - Navitas*



ROE said:


> One more for buy and hold and dividend keep coming in every 6 months and more every year




Yep certainly is a solid business. Can't wait to see what they do with the retained capital, hopefully debt is paid down so next time they buy something they can pay cash.


----------



## robusta

*Re: NVT - Navitas*

Result out today for NVT, bit of a flat result but the outlook looks good.

Here is the webcast of the results.

http://engage.vevent.com/index.jsp?eid=2012&seid=16

This is from the newspapers.

http://news.brisbanetimes.com.au/br...s-foreign-students-return-20130205-2dvp3.html


----------



## VSntchr

*Re: NVT - Navitas*

The Navitas thread has been quiet for a while so thought I'd chime in for an update.

Have seen quite a bit of material in the AFR lately about education enrolments turning the corner and finally posting rises in numbers.

SP wise, NVT has had a stellar run to all time highs. On current figures it is starting to look expensive, but with a company like this I guess it comes down to how much potential you give it to earn excess returns over its cost of capital in the long term. Most businesses cant achieve excess returns over the long term, with ROC usually sliding back to the cost of capital - I think NVT has a good enough model to defy the norm, the question remains for me... by how much! 
Until I answer this question more accurately I leave excess returns at a very conservative level for the long term and continue to learn about the business


----------



## robusta

*Re: NVT - Navitas*

Northern hemisphere enrolments released today, up 15% all up, the growth story continues... 

http://www.asx.com.au/asxpdf/20130703/pdf/42gv8h59f4shdh.pdf


----------



## Ves

*Re: NVT - Navitas*

Some interesting figures to show the power of NVT's business model / capital structure.

Net capital employed in 2007 report (ex-intangible assets)   was _negative_ $59.59m

Reported EBIT in 2007 FY   was  $48m 

Net capital employed in 2013 report (ex-intangible assets)   was _negative_ $102.24m*

Reported EBIT in 2013 FY   was  $116m 

There is nothing like using interest free leverage to fund and grow your business.  I have yet to see a business that takes it to this level and not only maintains negative capital employed, but increases it at high rates over time.

Deferred revenue received in advance is starting to grow again - my favourite line on the balance sheet. So is cash flow generation.


*Note that I have taken out $40m excess cash from the assets in 2013.


----------



## craft

*Re: NVT - Navitas*



Ves said:


> Some interesting figures to show the power of NVT's business model / capital structure.
> 
> Net capital employed in 2007 report (ex-intangible assets)   was _negative_ $59.59m
> 
> Reported EBIT in 2007 FY   was  $48m
> 
> Net capital employed in 2013 report (ex-intangible assets)   was _negative_ $102.24m*
> 
> Reported EBIT in 2013 FY   was  $116m
> 
> There is nothing like using interest free leverage to fund and grow your business.  I have yet to see a business that takes it to this level and not only maintains negative capital employed, but increases it at high rates over time.
> 
> Deferred revenue received in advance is starting to grow again - my favourite line on the balance sheet. So is cash flow generation.
> 
> 
> *Note that I have taken out $40m excess cash from the assets in 2013.




And with the straight shooter Rob Jones at the helm of such a good business model there’s not a lot to do with this investment.
Buy right – hold tight.


http://www.abc.net.au/insidebusiness/content/2013/s3817717.htm


----------



## Muschu

*Re: NVT - Navitas*

Didn't I read very recently that Bell Potter, who floated NVT [as IBT at the time] now have a target price on the company of $5.10?

May be wrong.


----------



## craft

*Re: NVT - Navitas*



Muschu said:


> Didn't I read very recently that Bell Potter, who floated NVT [as IBT at the time] now have a target price on the company of $5.10?
> 
> May be wrong.




Don’t know – Don’t Care.

But if other people’s views rock your boat – here’s the latest Consensus Price Target.


----------



## ROE

*Re: NVT - Navitas*

Buy the right business ...hold for long term chance are you will be richer every year more often than not...
Reduce and top up as required


----------



## robusta

*Re: NVT - Navitas*



Ves said:


> Some interesting figures to show the power of NVT's business model / capital structure.
> 
> Net capital employed in 2007 report (ex-intangible assets)   was _negative_ $59.59m
> 
> Reported EBIT in 2007 FY   was  $48m
> 
> Net capital employed in 2013 report (ex-intangible assets)   was _negative_ $102.24m*
> 
> Reported EBIT in 2013 FY   was  $116m
> 
> There is nothing like using interest free leverage to fund and grow your business.  I have yet to see a business that takes it to this level and not only maintains negative capital employed, but increases it at high rates over time.




Looked past this business a few times until I worked out the cash flows. It just didn't make sense on first perusal, they payed out 100% plus of earnings and still managed to grow without retaining capital to grow. This is a fantastic business to hold for the long term if you can buy for a reasonable price.



Ves said:


> Deferred revenue received in advance is starting to grow again - my favourite line on the balance sheet. So is cash flow generation.




My other favorite line is net debt falling to $94.9m from $117m on 30th of June 2012, I would love to see this fall further in the future with the reduction to a 80% payout ratio.


----------



## Muschu

*Re: NVT - Navitas*



craft said:


> Don’t know – Don’t Care.
> 
> But if other people’s views rock your boat – here’s the latest Consensus Price Target.
> 
> View attachment 53693




I'd rather fly my own kite.

Maybe I am deluded in thinking that ASF is largely about sharing views and opinions....


----------



## craft

*Re: NVT - Navitas*



Muschu said:


> I'd rather fly my own kite.
> 
> Maybe I am deluded in thinking that ASF is largely about sharing views and opinions....




Sorry Rick.

Broker Targets are a dime a a dozen as far as I'm concerned and just a Google search away. If you do fly your own kite then please do share your personal views, opinions, research, analysis


----------



## Muschu

*Re: NVT - Navitas*



craft said:


> Sorry Rick.
> 
> Broker Targets are a dime a a dozen as far as I'm concerned and just a Google search away. If you do fly your own kite then please do share your personal views, opinions, research, analysis




Appreciated thank you Craft.  I was trying to get to the point that this came from Bell Potter.  Not only did they float the company but they also got a massive number of shares at the float price of $1.  Maybe they no longer hold but, to my knowledge, they have consistently promoted the company.  It strikes me as curious that, if accurate, they are now suggesting a target well below the current SP.

I got in at the float and also traded the company as it used to (imo) follow a pattern.  NVT served me well but I don't hold at this time. I have no evidence but feel they may now be overvalued.  

I also agree that Rod Jones is an excellent CEO.  

Regards

Rick


----------



## Snagglepuss

*Re: NVT - Navitas*

Craft, do you mind me asking where that chart comes from?


----------



## robusta

*Re: NVT - Navitas*

Just some interesting news on Navitas.

Goldman Sachs has this as a sell over the next two months.

http://finance.ninemsn.com.au/newsbusiness/motley/8742691/10-buys-and-sells-for-the-rest-of-2013

Some very clever automated marketing using Marketo seems to be widening the moat IMO.

http://www.cmo.com.au/article/52764...tion_helped_navitas_digital_marketing_agenda/

Finances have not been forgotten.

http://www.itbusinessnet.com/articl...ide-Using-Polaris-Reporting-Workbench-2874540


----------



## Ves

*Re: NVT - Navitas*



robusta said:


> My other favorite line is net debt falling to $94.9m from $117m on 30th of June 2012, I would love to see this fall further in the future with the reduction to a 80% payout ratio.



Didn't see this at the time - Robusta.   I kinda disagree.

In a company where there is growth within a franchise that is achieving profitability rates well above it's cost of debt it is often very healthy to employ a little bit of leverage  (especially if it can be used to employ capital that otherwise could not be funded).   You often see this is mature companies because debt suddenly becomes cheaper than when they were smaller and more viable than equity finance.

In the case of NVT cashflow can definitely service the debt without introducing unncessary financing risk.  And in this case returns on capital are very high,  so any debt utilised to finance further capital deployment should increase the valuation of the company.

Paying down the debt may not be the wisest use of capital at this point in time, either.


----------



## robusta

*Re: NVT - Navitas*



Ves said:


> Didn't see this at the time - Robusta.   I kinda disagree.
> 
> In a company where there is growth within a franchise that is achieving profitability rates well above it's cost of debt it is often very healthy to employ a little bit of leverage  (especially if it can be used to employ capital that otherwise could not be funded).   You often see this is mature companies because debt suddenly becomes cheaper than when they were smaller and more viable than equity finance.
> 
> In the case of NVT cashflow can definitely service the debt without introducing unncessary financing risk.  And in this case returns on capital are very high,  so any debt utilised to finance further capital deployment should increase the valuation of the company.
> 
> Paying down the debt may not be the wisest use of capital at this point in time, either.




Maybe my thinking is a little old fashioned, I just can't see the need for debt with the strong cash flows from this business. The cash generated from operations should be enough to fund any organic growth while a significant reduction of debt should reduce the need to issue equity if there are any acquisitions made in the future.

I'm still wondering what they are going to do with the retained capital as the pay out ratio is reduced to 80% over the next couple of years.


----------



## Muschu

*Re: NVT - Navitas*

Very significant drop in SP today on back of 2 announcements which did not impress me as being too negative.  Was the drop something of an over-reaction?


----------



## robusta

*Re: NVT - Navitas*



Muschu said:


> Very significant drop in SP today on back of 2 announcements which did not impress me as being too negative.  Was the drop something of an over-reaction?




Really not sure what the market was expecting   The northern hemisphere growth looks strong while they are investing in systems to manage further growth.


----------



## Muschu

*Re: NVT - Navitas*

I've watched this stock for a long time.  I'd anticipate a further drop tomorrow and then a bounce.


----------



## ROE

*Re: NVT - Navitas*

This stock run way ahead of itself, correction is justified given the grow rate...
market price this baby 25%+ grow ... I don't think it is achievable but Mr Market is way too happy with this one...

I like to price this around 5% grow a year with some premium due to its superior business model .... 
Education is not some internet based business where you have leverage earning ...

Business model no doubt great but everything has price and $6 a pop is a price too far


----------



## Muschu

*Re: NVT - Navitas*

I forget which major it was (Deutsch?) that lifted NVT to a Buy last week....  Still anyone can get it wrong.  I certainly can.


----------



## galumay

*Re: NVT - Navitas*



Muschu said:


> I forget which major it was (Deutsch?) that lifted NVT to a Buy last week....  Still anyone can get it wrong.  I certainly can.




That would be enough to put me off buying!

EDIT - not you! A major broking/investment house calling it a buy.


----------



## Muschu

*Re: NVT - Navitas*



galumay said:


> That would be enough to put me off buying!




Ok G


----------



## Muschu

*Re: NVT - Navitas*



robusta said:


> Really not sure what the market was expecting   The northern hemisphere growth looks strong while they are investing in systems to manage further growth.




Positive reaction today.  I don't know that there is a lot more upside short term but the charts for this company and GEM (G8 Education) could be a lot worse.


----------



## craft

*Re: NVT - Navitas*



> “With very good growth in all key markets the University Programs Division is well placed for a strong financial result in the coming years,” Mr Jones concluded.


----------



## VSntchr

*Re: NVT - Navitas*



craft said:


> View attachment 55639




I don't own NVT, but I do watch it very closely. 

When they say that new student growth was +30%, but EFTSU was +13% against PCP...does this simply mean that many of the students are not enrolling at a full time capacity? Or is there some other factor I am missing?

Also, based on how the industry is looking to take a turn back up in the coming years (cycle clearly appears to have passed the bottom now), have you looked at other businesses set to benefit? 
My inkling would be that you are happy with the best-in-breed company based on other posts I've read regarding your personal situation and FCF/income paying preference and as such have not looked elsewhere..

I've been looking at the much smaller RDH which is in the educational space, unlike NVT it is cheap...but of course that is a function of the uncertainty associated with its ability to grow earnings in the future - something that I believe is the reason that NVT trades on such high multiples....


----------



## craft

*Re: NVT - Navitas*



VSntchr said:


> I don't own NVT, but I do watch it very closely.
> 
> When they say that new student growth was +30%, but EFTSU was +13% against PCP...does this simply mean that many of the students are not enrolling at a full time capacity? Or is there some other factor I am missing?




Some students are finishing their courses - growth in EFTSU requires more new students then those finishing up.



VSntchr said:


> Also, based on how the industry is looking to take a turn back up in the coming years (cycle clearly appears to have passed the bottom now), have you looked at other businesses set to benefit?
> My inkling would be that you are happy with the best-in-breed company based on other posts I've read regarding your personal situation and FCF/income paying preference and as such have not looked elsewhere..
> 
> I've been looking at the much smaller RDH which is in the educational space, unlike NVT it is cheap...but of course that is a function of the uncertainty associated with its ability to grow earnings in the future - something that I believe is the reason that NVT trades on such high multiples....




I don't have anything meaningful to add on RDH. Obviously the industry tailwind helps and by virtue of their size they have great share price appreciation potential (double edged sword) if they turn out to be a winner - But your right - I'm at a point where companies like NVT interest me more - but that's not to say that others shouldn't be looking in this area, depending on your capital, commitments, age, knowledge, objectives, volatility tolerance ......


----------



## piggybank

*Re: NVT - Navitas*

Although it hit an ATH today of $6.47, it eventually closed lower at $6.32.


----------



## Ves

*Re: NVT - Navitas*

The half-year report looks good to me.  No surprises that I can see.   Still investing heavily for growth,   which is impacting margins in the short-term,  but it looks like the industry headwinds are fast turning and momentum is building to the upside. The consolidation / investment period of the last few years is really going to start bearing fruits in the next few years.  My prediction is that the share price won't look ultra-expensive in hindsight - I haven't added since the $3s,  but may consider on any big dips.


----------



## McLovin

*Re: NVT - Navitas*

I was so dumb on this one, I think largely because I didn't understand these guys' ability to grow for free. I kept wanting them to fall further and further and they never did. In hidsight when they were below $4 they were a bargain.


----------



## VSntchr

*Re: NVT - Navitas*



McLovin said:


> I was so dumb on this one, I think largely because I didn't understand these guys' ability to grow for free. I kept wanting them to fall further and further and they never did. In hidsight when they were below $4 they were a bargain.




Agree 100%.
Have had a read through the result and I like it.

It appears that the company investing heavily over the last couple of years has been timed very well with industry headwinds just starting to turn around recently. As Ves points out this could well look like a masterstroke to those who follow NVT in the years to come...


----------



## robusta

*Re: NVT - Navitas*

Yep took me ages to understand how they can use this crazy negative cash flow model and it's not a negative like I first thought. They get paid up front for a service that after the basic costs are covered any growth in revenue (more students) basically flows straight to the bottom line. To put it another way they don't need to retain working capital within the business as they can self fund from the reoccurring revenue that is flowing in all the time. Now here is the icing on the cake NVT seems to have a competitive advantage and can raise prices while growing student numbers and revenue.

Lucky for me the penny dropped Feb 2012 and being a slow learner after a lot of thinking topped up my holding Oct 2013


----------



## tinhat

*Re: NVT - Navitas*

Yes. I had shares in this co a couple of years ago and did OK but I sold the shares because I could not get my head around their cash flow growth model. No retained earnings. All paid out as dividends usually indicates a dividend trap. When they bought whatever that business was that is the sound engineering educational business that is when I got out. That's probably a good business in terms of student demand but there are very few jobs in sound engineering.

I think what grates with me the most and why I cannot invest in education stocks is that I grew up in  a county that still was a post war country that believed that all that had been sacrificed and fought for and won deserved the ideal that equality of opportunity was worth something - that education was not a business and that education was a good start to the journey of life.


----------



## craft

*Re: NVT - Navitas*

NVT has one of the most powerful economic models around. When reality meets with some Muppet like Roger Montgomery and his ridiculous valuation formula implying that it can’t grow because of its payout ratio - reality wins every time - its just a question of patience.


----------



## robusta

*Re: NVT - Navitas*

Listened to the results webcast last night. While NVT don't as a rule give much in the way of guidance cash flow is a leading indicator. Cash flow was higher in this half and they seem confident it will be higher again in the next half. Seems like a nice runway of growing profits ahead.


----------



## piggybank

*Re: NVT - Navitas*

Investor Presentation:- http://stocknessmonster.com/news-item?S=NVT&E=ASX&N=665516


----------



## robusta

*Re: NVT - Navitas*

Looking at the price tag of this business they need to grow, this should help
http://www.asx.com.au/asxpdf/20140617/pdf/42q7y77p1w3kzm.pdf


----------



## robusta

*Re: NVT - Navitas*

And the growth continues, 15% in the northern hemisphere.

http://www.asx.com.au/asxpdf/20140701/pdf/42qk91vqzdfwl8.pdf


----------



## Ves

*Re: NVT - Navitas*

There were a few key government contracts in the Professional and English Programs (PEP) division up for renewal on 1 July 2014 (refer investor presentation on 26 March 2014 page 35).

It's now 8 July 2014 and we have a trading halt mentioning "status of the negotiations."  I wonder if the government is playing hard ball or if another competitor has made an enticing bid.

PEP was about 14% of EBITDA in the 2014 HY.


----------



## VSntchr

*Re: NVT - Navitas*



Ves said:


> There were a few key government contracts in the Professional and English Programs (PEP) division up for renewal on 1 July 2014 (refer investor presentation on 26 March 2014 page 35).
> 
> It's now 8 July 2014 and we have a trading halt mentioning "status of the negotiations."  I wonder if the government is playing hard ball or if another competitor has made an enticing bid.
> 
> PEP was about 14% of EBITDA in the 2014 HY.




Potentially could be time for people like myself who don't hold NVT to sharpen the pencil and pull out the ruler, just in case any potential contract loss causes an over-reaction.

A few high quality businesses have been getting cheaper lately, hopefully (for me) this one joins the list...


----------



## JTLP

*Re: NVT - Navitas*



VSntchr said:


> Potentially could be time for people like myself who don't hold NVT to sharpen the pencil and pull out the ruler, just in case any potential contract loss causes an over-reaction.
> 
> A few high quality businesses have been getting cheaper lately, hopefully (for me) this one joins the list...




Indeed...this recent government shakeup on all things could make for an entry in to NVT.

Out of interest - others that you are looking at?


----------



## robusta

*Re: NVT - Navitas*

Seems Macquarie uni have decided to go it alone, the market reaction should be interesting this will be a hit to medium term growth.


----------



## Ves

*Re: NVT - Navitas*

The decision by Macquarie University to provide their own PEP services through an internally funded college, rather than in alliance with Navitas' college poses serious questions and threats to Navitas' business model in general, at least in that segment.  

The main question that most investors should ask,  notably, what does the Navitas structure provide that the universities cannot themselves via internal colleges?  Is it a matter of scale,  cost, or expertise in niche?  Navitas' competitive advantage has been very strong to date and has allowed them to generate massive excess returns.  

However,  any weakening or even loss to their competitive position,  would have massive ramifications to the intrinsic valuation of the company.

This is an interesting development,  because my understanding to date is that the market has previously focussed on student numbers (and threats to this, regulation or otherwise) rather than Navitas' relationship with the universities, which appeared to be rock-solid.

I often get the feeling that relationships to suppliers (which are often blindly not seen as competitors) are harder to get a grasp on than those with customers in most businesses.  It really highlights that businesses are part of dynamic "360 degree systems",  not just top-down.


----------



## ROE

*Re: NVT - Navitas*

they can go alone but I say they may not get the result they want ..

NVT is like FLT, they have agents and network every where anyone who act against this network may think they may do better but NVT stop recommending students going to Mac uni and sell them other Uni.

Uni best job is to teach and get students number when they want to run someone else business they may not do as well but only time will tell 

Buy today after got out during a hot run 

my 2c


----------



## McLovin

*Re: NVT - Navitas*

Got to love Sky Business...

"We can't really explain the SP fall, they've reaffirmed guidance and said they've extended their contract with Macquarie University..."


----------



## skc

*Re: NVT - Navitas*



Ves said:


> The decision by Macquarie University to provide their own PEP services through an internally funded college, rather than in alliance with Navitas' college poses serious questions and threats to Navitas' business model in general, at least in that segment.
> 
> The main question that most investors should ask,  notably, what does the Navitas structure provide that the universities cannot themselves via internal colleges?  Is it a matter of scale,  cost, or expertise in niche?  Navitas' competitive advantage has been very strong to date and has allowed them to generate massive excess returns.
> 
> However,  any weakening or even loss to their competitive position,  would have massive ramifications to the intrinsic valuation of the company.
> 
> This is an interesting development,  because my understanding to date is that *the market has previously focussed on student numbers (and threats to this, regulation or otherwise) rather than Navitas' relationship with the universities, which appeared to be rock-solid.*
> 
> I often get the feeling that relationships to suppliers (which are often blindly not seen as competitors) are harder to get a grasp on than those with customers in most businesses.  It really highlights that businesses are part of dynamic "360 degree systems",  not just top-down.




Can't seem to get a handle on SIBT's student numbers. My guess is something north of 2k. Anyone know better?

As far as trading is concerned... it's a gift this morning on open at $4.60. Looking to close a good part of it over $5. Probably has some chance of going back to $6 in the coming weeks. Shades of MMS.

Fundamentally...the bold part is a very good question. It will probably be reflected in a reduced PE multiple for some time.


----------



## ROE

*Re: NVT - Navitas*



skc said:


> As far as trading is concerned... it's a gift this morning on open at $4.60. Looking to close a good part of it over $5. Probably has some chance of going back to $6 in the coming weeks. Shades of MMS.




I got up late after watching the soccer just turn on the computer and see it sits at $4.88, missed the opening  that soccer match cost me a few K hahaha...


----------



## Ves

*Re: NVT - Navitas*



skc said:


> Can't seem to get a handle on SIBT's student numbers. My guess is something north of 2k. Anyone know better?




The SIBT website says that the figure is 3,160.   If this was correct,  NVT's previous investor communications have stated that this is an indicative EBITDA margin of about 40-50% for a college this size  (remember that due to operating leverage in this business EBITDA margins grow fairly quickly as student numbers start falling straight to the bottom line once the college reaches a certain size - somewhere near 1,000 students).


----------



## skc

*Re: NVT - Navitas*



Ves said:


> The SIBT website says that the figure is 3,160.   If this was correct,  NVT's previous investor communications have stated that this is an indicative EBITDA margin of about 40-50% for a college this size  (remember that due to operating leverage in this business EBITDA margins grow fairly quickly as student numbers start falling straight to the bottom line once the college reaches a certain size - somewhere near 1,000 students).




So are these 1 year programs? With 3 semesters per year? 

The student enrolment numbers in the last 3 semesters (globally for University Programs) were 50k. And these UPs are about 75% of EBITDA before corporate costs. So they potentially lost say 7-8% of students (albeit most profitable ones due to scale of the campus). So say 15% hit to EBITDA of $120m so $18m impact. That leaves group EBITDA of $125m. 

So the direct impact doesn't warrant a 30% fall in share price... but it's one of those priced mostly to continuous growth stories (again, shades of MMS) and the market definitely didn't see this coming, and asking if there'd be more internalisation of UP's.

Can't wait to hear Craft's input.


----------



## VSntchr

*Re: NVT - Navitas*



Ves said:


> The decision by Macquarie University to provide their own PEP services through an internally funded college, rather than in alliance with Navitas' college poses serious questions and threats to Navitas' business model in general, at least in that segment.



I think that situations such as this will serve to show the true strength of the model. If Macquarie does well, then it may start a trend with other Uni's thinking they can follow their lead.... however they may not do well at all as ROE points out aswell. Another factor to consider is Macquarie now carry a bigger burden whereas before part of the burden was on NVT to deliver. 

I think that the best way to strengthen a CA in the long term is to give it a thorough test, you know what they say about what doesn't kill you....but we still have to wait to see if this (albeit slowly) kills Navitas.



ROE said:


> they can go alone but I say they may not get the result they want ..
> 
> NVT is like FLT, they have agents and network every where anyone who act against this network may think they may do better but NVT stop recommending students going to Mac uni and sell them other Uni.
> 
> Uni best job is to teach and get students number when they want to run someone else business they may not do as well but only time will tell




I agree. I think the trend of the modern business is to focus on what you do well and to outsource the rest. Businesses trying to fight this trend are heading in the wrong direction IMO (with exceptions).

I wonder if this decision by Macquarie has anything to do with the budget measures released recently?



JTLP said:


> Indeed...this recent government shakeup on all things could make for an entry in to NVT.
> 
> Out of interest - others that you are looking at?




And it has for me, I am back on the register  Hence read my post knowing its now biased!
Have been watching FLT and BRG. No purchases yet but got pretty close when FLT got done to ~$43.



skc said:


> As far as trading is concerned... it's a gift this morning on open at $4.60. Looking to close a good part of it over $5. Probably has some chance of going back to $6 in the coming weeks. Shades of MMS.



I thought 4.60 on open was a gift too, got a trading parcel and looking for $5+ in the short term but am also prepared with proper risk mgt incase the market ignores what I want and keeps heading south

I am also looking forward to hearing Craft's input, perhaps he is busy backing up the truck :


----------



## Ves

*Re: NVT - Navitas*



skc said:


> So are these 1 year programs? With 3 semesters per year?
> 
> The student enrolment numbers in the last 3 semesters (globally for University Programs) were 50k. And these UPs are about 75% of EBITDA before corporate costs. So they potentially lost say 7-8% of students (albeit most profitable ones due to scale of the campus). So say 15% hit to EBITDA of $120m so $18m impact. That leaves group EBITDA of $125m.




Looking at the SIBT website they are generally "pathways" programs that substitute as the 1st year of a university course.   They are 1 year on average,  and can range between 2 and 4 semesters  (there are also advanced diplomas etc).  Fees can range between $25k-$50k depending on the course,  whether it's a domestic or international student, and how long the course lasts.

By the way, to add to my earlier comment of SIBT having 3,160 students:  NVT's website for SIBT says 3,600 students.    Another part of the MU SIBT website says 3,200.   So the total figure is around there some where.


----------



## McLovin

*Re: NVT - Navitas*



VSntchr said:


> I wonder if this decision by Macquarie has anything to do with the budget measures released recently?




That was my first thought. There was a ban on full fee domestic undergrads from 2008, iirc. Feeder colleges were a good way to get around this prohibition and at the end of it you could offer a weaker student a CSP. Maybe if the new uni laws have removed this and reduced Macquarie's need for feeder students and instead they'll just target full fee paying domestics and the same internationally?

I agree with ROE's sentiments too. These guys are more than just bums in classrooms, the biz model and their strength is about getting them in there. The strength is in marketing.


----------



## Ves

*Re: NVT - Navitas*



McLovin said:


> I agree with ROE's sentiments too. These guys are more than just bums in classrooms, the biz model and their strength is about getting them in there. The strength is in marketing.



Do you think that it would be impossible,  or in fact unrealistic for the more prestigious local universities, to replicate the marketing strength of a firm like Navitas, due to their scale? Is it something that would be far too painful for them to fund in the short to medium term, for an uncertain pay-off long-term? Macquarie Uni obviously do not think so...  and where there's one there are always imitators who just do it because their competition is doing it.   As you said,  the change in legislation,  may be enough incentive to convince some of the better funded / more profitable universities to become more vertically integrated.

I'm playing devil's advocate.   It helps me ponder.


----------



## skc

*Re: NVT - Navitas*



skc said:


> So say 15% hit to EBITDA of $120m so $18m impact. That leaves group EBITDA of $125m.




A macquarie research note is saying the impact is likely to be ~$31m at the EBITDA level. So a 25% hit

The bounce trade today seems to have stalled for now. 

Actually I think the situation is more similar to BRG and ORL when they lost a huge chunk of their business overnight. The market in those instances were able to brush off the price slide in a few months' time. But longer term, the performance of BRG and ORL have really diverged. 

Which path will NVT take?


----------



## Ves

*Re: NVT - Navitas*



skc said:


> A macquarie research note is saying the impact is likely to be ~$31m at the EBITDA level. So a 25% hit



Any chance you could send this to me?


----------



## McLovin

*Re: NVT - Navitas*



Ves said:


> Do you think that it would be impossible,  or in fact unrealistic for the more prestigious local universities, to replicate the marketing strength of a firm like Navitas, due to their scale?




The prestigious universities in any western country don't need NVT, but let's face it, NVT doesn't do pathway programs into prestigious universities. Macquarie was referred to as "the Paddock" by lecturers back when I was at uni. They target second and third tier universities who don't have the brand or the marketing budget to go out scouting enrolments. For every Macquarie, there's ten other UNE/Southern Cross/Notre Dame/University of Kentucky etc.




Ves said:


> As you said,  the change in legislation,  may be enough incentive to convince some of the better funded / more profitable universities to become more vertically integrated.




It could, but remember (as I know you know) NVT is an international education provider not just Australia.

Here's a list of campuses with contract renewals. There's Adelaid coming up, so it'll be interesting to see if this is a one off or a change in thinking in the industry. U Adelaide is the only "presitigious" university that they have a contract with.


----------



## ROE

*Re: NVT - Navitas*



Ves said:


> Do you think that it would be impossible,  or in fact unrealistic for the more prestigious local universities, to replicate the marketing strength of a firm like Navitas, due to their scale? Is it something that would be far too painful for them to fund in the short to medium term, for an uncertain pay-off long-term? Macquarie Uni obviously do not think so...  and where there's one there are always imitators who just do it because their competition is doing it.   As you said,  the change in legislation,  may be enough incentive to convince some of the better funded / more profitable universities to become more vertically integrated.
> 
> I'm playing devil's advocate.   It helps me ponder.




Hard to know, we all have to just based decision on our knowledge and common sense and stand by your conviction until the market proven you wrong... it could go either way

NVT has direct access to stream line student immigration and that is some serious benefit for someone who say from China who want a ticket to go to Australia to study.

Everyone who goes against NVT has to replicate their network, marketing and process ... all this of course can be done but at what cost and what return to those who wish to take this task on themselves.

In say 5 years we will know if NVT has a durable moat that other cant replicate with success and by that time if it is proven they are the FLT of Education the price wont be cheap but forever trades at a premium 

I think the risk and reward is justified with NVT


----------



## ROE

*Re: NVT - Navitas*



McLovin said:


> The prestigious universities in any western country don't need NVT, but let's face it, NVT doesn't do pathway programs into prestigious universities. Macquarie was referred to as "the Paddock" by lecturers back when I was at uni. They target second and third tier universities who don't have the brand or the marketing budget to go out scouting enrolments. For every Macquarie, there's ten other UNE/Southern Cross/Notre Dame/University of Kentucky etc.
> View attachment 58617




you are spot on, student wishing to take on higher education with NVT really after a ticket to migrate and they will go with someone who can easily get them there with the network and support in place.

I am a guy in China I have 2 choices go with NVT or go with some lone warrior ... a simple decision really


----------



## skc

*Re: NVT - Navitas*



skc said:


> The bounce trade today seems to have stalled for now.




Now trading below the open and looking to tag the day's low again. NOT what I expected. 

Would the universities now have better leverage to negotiate with NVT when contract is up for renewal? It seems the relative power could shift.


----------



## ROE

*Re: NVT - Navitas*

here we go I grabbed some more at 4.55  FLT and CCP here we go again


----------



## Klogg

*Re: NVT - Navitas*



ROE said:


> here we go I grabbed some more at 4.55  FLT and CCP here we go again




Even at the current earnings multiple, this company seems to have some of the best from ASF buying/holding... I really have to check this out properly!

Have only had a superficial look at this point.


----------



## VSntchr

*Re: NVT - Navitas*



ROE said:


> here we go I grabbed some more at 4.55  FLT and CCP here we go again




Nice timing on that one ROE




NVT is certainly the star of the show today..lots of action going on.


----------



## robusta

*Re: NVT - Navitas*

I tend to agree with ROE however I did not buy as well as him, got my top up at $4.88 this morning.


----------



## ROE

*Re: NVT - Navitas*

Listen to the audio recording where Rod Jones explain how student go about get into university and this is important and I to some extend know that already ... Most agents recommend students what Uni to go to ... 

students usually rock up and say I want to go to Australia, US or UK 
what are my options? just like FLT agents talking to would be holiday makers 

No one has this agent network like NVT in education and if a lone university want to go against this network like Singapore airline with FLT some years ago, Singapore want to be cheeky and said we dont want to give you the commission higher than 5% as we can generate similar sale on our web site, wishful thinking, FLT said no pay the commission we want or go do it yourself 

we know who won Singapore airline vs FLT ... FLT took them off the list of recommended flight, their ticket sale drop, Singapore came away with a bleeding nose.


----------



## McLovin

*Re: NVT - Navitas*



ROE said:


> Listen to the audio recording where Rod Jones explain how student go about get into university and this is important and I to some extend know that already ... Most agents recommend students what Uni to go to ...
> 
> students usually rock up and say I want to go to Australia, US or UK
> what are my options? just like FLT agents talking to would be holiday makers
> 
> No one has this agent network like NVT in education and if a lone university want to go against this network like Singapore airline with FLT some years ago, Singapore want to be cheeky and said we dont want to give you the commission higher than 5% as we can generate similar sale on our web site, wishful thinking, FLT said no pay the commission we want or go do it yourself
> 
> we know who won Singapore airline vs FLT ... FLT took them off the list of recommended flight, their ticket sale drop, Singapore came away with a bleeding nose.




We don't often agree, but on this you have literally taken the words out of my mouth. The FLT example is very good. I might use it.


----------



## Ves

*Re: NVT - Navitas*

Thanks for the responses guys

Just listening to presentation now,  and they seem well in line with what has been said.

As an aside,  some of the questions from the representatives of the big international investment houses left a lot to be desired.  I am left with the impression that most of these big players don't bother doing any research into the company before phoning into the presentation.

I still don't understand the company's comment that it is not a hit to earnings,  but it is a hit to growth.


----------



## skc

*Re: NVT - Navitas*



Ves said:


> As an aside,  some of the questions from the representatives of the big international investment houses left a lot to be desired.  I am left with the impression that most of these big players don't bother doing any research into the company before phoning into the presentation.




Yes and no. You can see that every analyst was just trying to get a handle on the financial impact. They ask about student numbers, EBIT, how much will they shift to CBD campus etc etc, just so there can be more certainty than now. I have seen one note saying $15m and another $31m EBITDA impact. That's a big difference. I think they were deliberately asking more basic questions just to see if the CEO would drop them a hint.

Navitas never gave breakdown of performance by campus.. most probably so the University partners don't look at it and say "they are making $Xm profit from us".



Ves said:


> I still don't understand the company's comment that it is not a hit to earnings,  but it is a hit to growth.




It's an attempt to put a positive spin on a bad situation. EBITDA for FY13 was ~$130m and FY14 guidance was $138-148m. At the same growth rate, it'd be something like $170m by FY16. As the impact isn't coming until 2016, what they are saying (I think) is that the EBITDA at that time will still be higher than what it is now. So it's not a hit to earnings (i.e. earnings won't go backward, using FY14's figure as a reference), but to growth (btw FY14 to FY16). 

And to me it implies the impact for EBITDA is going to be less than the difference between FY16 and FY14 figures, assuming business-as-usual. In other words, <$27m. That's my interpretation of it anyway. 

P.S. My bounce trade was totally fk'd and I traded like an amateur. Still in profit, but barely worth the bother.

P.P.S. I did't buy it as a long term hold, as I decided to wait for analysts calls tomorrow to take a position. I imgaine there'd be a few downgrades, given the stock's high PE plus uncertainty around the direct and indirect impact. There may also be other incidentals like them investing more in other campus plus lower growth inherent within SIBT. I'd be happy to pick it up if it trades around PE in the high teens. But I highly doubt it'd get down there.


----------



## tinhat

*Re: NVT - Navitas*



McLovin said:


> We don't often agree, but on this you have literally taken the words out of my mouth. The FLT example is very good. I might use it.




Where? On your radio programme? Serious question. Do you publish something or do you have a securities license and advise clients or corporates?


----------



## McLovin

*Re: NVT - Navitas*



tinhat said:


> Where? On your radio programme? Serious question. Do you publish something or do you have a securities license and advise clients or corporates?




Figure of speech, tinny.


----------



## Ves

*Re: NVT - Navitas*



skc said:


> It's an attempt to put a positive spin on a bad situation. EBITDA for FY13 was ~$130m and FY14 guidance was $138-148m. At the same growth rate, it'd be something like $170m by FY16. As the impact isn't coming until 2016, what they are saying (I think) is that the EBITDA at that time will still be higher than what it is now. So it's not a hit to earnings (i.e. earnings won't go backward, using FY14's figure as a reference), but to growth (btw FY14 to FY16).
> 
> And to me it implies the impact for EBITDA is going to be less than the difference between FY16 and FY14 figures, assuming business-as-usual. In other words, <$27m. That's my interpretation of it anyway.



I agree and have the same interpretation.

I probably should have been clearer...   I understand the statement in a literal sense,  but I do not understand it in a cultural / management sense.

It definitely is a euphemism of sorts,  or as you put it spin,  and that is the part that irks me the most.  It clearly is a hit to earnings,  because without it, and the same growth,  earnings would be a lot higher in 2016 and 2017.

The part that bothers me is,  if they royally screwed up a new opportunity down the track, which does not impact other earnings,  but would add to those earnings,  it would still detract from potential shareholder value.  The statement is bothersome because it implies that maintaining current earnings (in any way) is fine,  regardless of whatever opportunities are missed.  

Maybe I am nit-picking.


----------



## ROE

*Re: NVT - Navitas*

I do agree they spins a bit on the contract loss and over emphasis play on the we are not moving backward

I be happy if they said we lost the contract we got 2 years to work out how to replace the earning loss and let the market decide  without getting defensive ..

Market will respond accordingly if you show them the money 

just tell it like it is..they got a good model and capital light business so much easier for them to navigate


----------



## Muschu

*Re: NVT - Navitas*

I have had shares in this company, on and off, since they floated.  Over the years I have been fortunate to have done very well with them.

Macquarie's decision took me by surprise but I doubt others will follow suit.  Time will tell of course but NVT is a global multi-faceted marketing machine.  Replicating their services will be no mean feat and Macquarie probably does not expect to do so.  31 other agreements may well become more, particularly overseas.

The gradual success of NVT in breaking into the USA market, particularly with Boston Universities, is testimony to their expertise in my view. 

They are experienced in sectors other than Uni pathways and have capacity to move into further innovations.

It's a guess but perhaps the comment above about a gradual move back towards the $6 region is not unreasonable.  Healthy ff dividend on the way too.  

I don't have the market analytical knowledge of others in this thread but certainly see no reason to panic or despair.


----------



## Faramir

*Re: NVT - Navitas*

Just read this post out of curiosity and realised that I missed the boat (again ) Congratulations to all those who brought shares yesterday (under $5). I was away. This morning it peak at $5.15. I was thinking about buying a small parcel but I should have logged on yesterday. Volumes peaked this morning and right now - it has quieten down.

I am listening to yesterday's audio recording. I am browsing their website. I guess I have missed the boat.


----------



## Faramir

*Re: NVT - Navitas*

I listened to the audio and it convinced me to buy Navitas. Got 400 shares at $5.05. I was not going to sit around wait for it to drop or rise. There were more buyers than sellers (around 1:10pm), so I said I better bite the bullet and take market price. Today's range has been $5.01-$5.16 (at 1:38pm). I guess that there would be a morning 'rush' and the volumes indicate it.

Its lowest point yesterday was $4.43. In theory one could say that I lost $248 but I so busy yesterday. Has anyone ever picked the low point of any stock?

After reading this thread last night, I did a bit of cramming of Navitas. I guess I can do more and more study but I wished I followed Navitas much earlier.

It is my fourth set of shares I own.


----------



## robusta

*Re: NVT - Navitas*



Faramir said:


> I listened to the audio and it convinced me to buy Navitas. Got 400 shares at $5.05. I was not going to sit around wait for it to drop or rise. There were more buyers than sellers (around 1:10pm), so I said I better bite the bullet and take market price. Today's range has been $5.01-$5.16 (at 1:38pm). I guess that there would be a morning 'rush' and the volumes indicate it.
> 
> Its lowest point yesterday was $4.43. In theory one could say that I lost $248 but I so busy yesterday. Has anyone ever picked the low point of any stock?




I have but it was more luck than skill thin I sold way below the peak so there are swings and roundabouts. The stock market is full of should have, could have, would haves...



Faramir said:


> reading this thread last night, I did a bit of cramming of Navitas. I guess I can do more and more study but I wished I followed Navitas much earlier.
> 
> It is my fourth set of shares I own.




It looks like you are on the right track, buy the highest quality businesses you can at the cheapest prices you can and sit back and relax. The returns will come from patience and that $248.00 opportunity cost at some point in the future should feel like a pittance.


----------



## ROE

*Re: NVT - Navitas*



Faramir said:


> It is my fourth set of shares I own.




You have a knack for picking up good business for a beginner, well done
most go for species and mining explorer in chase of quick bucks.

I think you will do well in the long run, time will smooth out the extra few percent you paid
for good business.


----------



## Faramir

*Re: NVT - Navitas*

Hi ROE
Thank you for your encouragement. Your input is greatly valued.

What is 'species'? Biotech? My first purchase was a biotech that crashed.

I am not into miners. Maybe energy but not miners.

Stocks like NVT. When they drop significantly, why does it take a long time to recover slowly? MMS is another one I hold. it's recovery process is slow and maybe non existent. I have to pretend I don't own them and keep them off my watchlist for a while.

I am going to write something in another post. Got to keep this one revelant to NVT. I will credit Aussie Stock Forums for raising my awareness of this company.


----------



## ROE

*Re: NVT - Navitas*



Faramir said:


> Hi ROE
> 
> What is 'species'? Biotech? My first purchase was a biotech that crashed.




Speculation stocks, high risk, high pay off scenario, they have no real cash flow, just trades on sentiment, burned cash and hopefully something good will come out at the end of it.
I classified specs stocks as the one that has no +ve cash flow doesnt matter who they are
miners, biotech, .com etc..

There are time and place for them and I do dabble in them when you have enough capital to spread but it aren't my core holding.

Most people I know start out buy going into them I caution them against it but it is their money
and most of them burned a whole lot of capital before they changed their way 

starting out buying good business you are probably ahead of the pack.


----------



## craft

*Re: NVT - Navitas*

Looks like there has been a little action in NVT whilst I have been having a bit of a holiday.

The contract lose with Macquarie is not insignificant. The association has been highly beneficial for NVT to date. But big picture and short version of analysis – Yaaawwwnnn – back to sleep.

Slightly longer version. 
_(Please note my basis for holding NVT may not match yours – for me I’m looking for a stock that accommodates a million $ investment and potential hold period of 20+ years.)_

Contract loses with partner universities is and always has been a business risk. Lose of one university is not a sign of a systemic change.

The environment in Australia with the new governments legislation allowing Uni’s  to set their own fees has freed Maquarie to become much more apparitional in where it wants to grow – ie a globally significant international university and good luck to them.  The prestige they are looking for means they need everything under their own umbrella and brand – The Navitas partnerships doesn’t fit with where Macquarie want to go but I bet has helped lift them to the launch pad they are at, and as such I’m sure there is good will still between the organisations.

With a bit of luck over the next few decades there will be a few more similar situations – partnering in the early days, Uni’s that eventually become powerhouses is beneficial for Navitas even if the relationship eventually ends.

SIBT holds all the rights to course material for the pathway program etc and students completing can still articulate to Macquarie on completion of the pathway program if they wish. What they lose is the facilities at Macquarie North Ryde and the pulling power of the Macquarie name which Macquarie will have and they will also have a competing pathway program.

Unknowns – how much Macquarie will compete against SIBT for business courses or do Macquarie want to focus on other more research intensive disciplines and higher regarded MBA’s etc.

How many students recruited by Navitas want to go to Macquarie and nowhere else?

On the assumption that Navitas won’t actually lose that many students because they go directly to Macquarie – how will they accommodate those students? Will the look for another partnering Uni in Sydney? Will they expand their own college in the CBD? They have two years to sort this out.

They have been adamant that they don’t see the transition causing a reduction in earnings on PCP – but growth may be impacted or non- existent for a couple of half’s during the transition.  That is the only real guidance they have given on the impact and that is not that significant in the big scheme. 

I did note they seemed to pee off a couple of the analyst in the conference call recording that wanted more detail, But I like that, the information the analysts wanted I didn’t need as an owner to make investment decisions and it shows they don’t bow to analyst pressure. Probably an indication why little seems to leak into the share price pre- announcements with this company.    

I think NVT was around $3 bucks when I first posted on it in this thread a few years ago and it has since paid out basically all earnings as dividends. Now it has had a major setback and its trading around $5. Step back for a bigger perspective and you will see the strength of the company as a long term proposition. In the short term though I have no idea of what the price will do but I do know what I will do given opportunity.


----------



## robusta

*Re: NVT - Navitas*

Just listened to todays investor webcast.
http://www.media-server.com/m/p/3jxy3ozh

Cant see anything to be nervous about, investment in future growth is going ahead and earnings are being diversified across regions and divisions.
Looks like once again I'm in full agreement with the above post by craft. Share price fell today, they are running out of franking credits, yawn off to sleep.


----------



## Ves

*Re: NVT - Navitas*

It's extraordinary to think that they now spend circa $130m (and sharply increasing in-line with revenue) each year on what is classified as marketing expenses.

Now,  I don't know exactly what that spend entails,  but it's clear that there is probably no competitor in the world that can afford to spend such a substantial amount on their network. The big spend on the agency network, relationships with universities (both potential and current partners), and getting the name out across the globe as their expansion continues to build steam, probably caps profits in the short-and-medium term,  but it will help protect the franchise and maximise returns in the very long term.   I love it when companies with strong competitive positions flex their muscles.

Put it this way,  looking at the accounts,  if they decided for whatever reason that they did not want to grow, and that they were happy with the current scale,  profit would look a lot higher in the short term.

I've learnt a lot about this business since the Macquarie University "saga."


----------



## VSntchr

*Re: NVT - Navitas*



Ves said:


> It's extraordinary to think that they now spend circa $130m (and sharply increasing in-line with revenue) each year on what is classified as marketing expenses.
> 
> 
> Put it this way,  looking at the accounts,  if they decided for whatever reason that they did not want to grow, and that they were happy with the current scale,  profit would look a lot higher in the short term.




That's a very solid point. If you back out say $65m of that spend (conservatively assuming that some is required for stay-in-business purposes and it is not all for growth), the operating margins go well into the 20% range. Makes for some interesting decisions for the DCF inputs in the later years when growth tapers down...


----------



## skc

*Re: NVT - Navitas*



VSntchr said:


> That's a very solid point. If you back out say $65m of that spend (conservatively assuming that some is required for stay-in-business purposes and it is not all for growth), the operating margins go well into the 20% range. Makes for some interesting decisions for the DCF inputs in the later years when growth tapers down...




Hmm... I don't know how you can determine what portion of market expense is "business as usual" vs "growth".

My guess is that the vast majority is in the "business as usual" category. This is because their end customers are transient - students who enrol in a course and stay however long they stay to complete their study. Every semester you need to re-spend all the money to attract the new group of (potential) students. I think this is indicated by the fact that marketing expense has been growing perfectly inline with revenue over the last 5 years. 

Incidentally... NVT's top line growth has been consistent. But EPS growth has been pretty flat since 2010, and funny how the share price (after the recent slump) reflects that. This obviously doesn't take into account the dividends that have been paid out.


----------



## DeepState

*Re: NVT - Navitas*



skc said:


> Hmm... I don't know how you can determine what portion of market expense is "business as usual" vs "growth".
> 
> My guess is that the vast majority is in the "business as usual" category. This is because their end customers are transient - students who enrol in a course and stay however long they stay to complete their study. Every semester you need to re-spend all the money to attract the new group of (potential) students. I think this is indicated by the fact that marketing expense has been growing perfectly inline with revenue over the last 5 years.
> 
> Incidentally... NVT's top line growth has been consistent. But EPS growth has been pretty flat since 2010, and funny how the share price (after the recent slump) reflects that. This obviously doesn't take into account the dividends that have been paid out.
> 
> View attachment 58837




One way to think of this might be to regard the marketing expense as capex with some sort of rapid depreciation schedule.  The expense is not purely CODB as it contributes the brand value of NVT which requires maintenance.

The situation has the makings of strong network effects resulting in an effective monopoly.  Sort of like a Google or Facebook or Microsoft in the early days.  They ship.  People use them and as more people use them, more people have to use them and it is harder to leave.  If you are going for that and have not yet reached the inflection point, expenditure on capex (even if it is recorded as expense according to accounting standards) is pretty smart.  This firm is hitting high RoE and return on marginal capex (which is roughly the increase in EBIT before marketing less amortisation) looks well above cost of capital.  This thing has the power to grow profits via internal generation and has reasonable control over it if the franchise holds. Quite nice, actually.  Valuation concerns are to the side.  My view is that the reported EPS understates the true EPS if the accounts were re-stated.  I do not know enough of the franchise to know if the RoE can hold without shenanigans.

I wonder though, with the move to fully user pays style tertiary education, whether the top rated universities will become better funded and thus compete more directly for students.  There may even be a sense of premier league not to be challenged through a firm like NVT.  Does Harvard go through intermediaries?


----------



## Ves

*Re: NVT - Navitas*



Ves said:


> Put it this way,  looking at the accounts,  if they decided for whatever reason that they did not want to grow, and that they were happy with the current scale,  profit would look a lot higher in the short term.




Probably should have qualified this or at least written my post more clearly -  companies with light asset bases often have "growth costs" hidden in the P&L statement -  for NVT it is not just marketing (although my focus in the previous post was on how their ability to fund massive marketing expenses gives them a competitive edge),  but it is extra academic staff,  and additional administration costs,  that are carried in the form of lower margins until the new colleges reach their optimum scale.  There is a presentation slide that shows the forecast EBITDA of a college vs.  its student numbers  (note:  my calculations suggest that this does not include marketing).

I'm definitely not saying that there is some huge amount like $65m,   but the numbers are pretty conservative IMO,  and there's probably $10-15m EBITDA in funding growth of the newer schools that have not matured  (alternatively you may argue that there is no guarantee of them reaching scale).  You will note that they do disclose the EBITDA loss on the colleges opened in the current financial year in every investor presentation,  however this will not include colleges that were opened in prior years that are barely above break even etc.   It can take 3-4 years for some of these colleges to attract the initial 1,000 student inflow a year and start producing a steady profit (there was something on this in the 2009 presentations if I recall).  Any student growth past that point is very high margin, indeed.

I don't make these adjustments when doing a DCF,  but they do help in seeing where future potential growth lies.


----------



## skc

*Re: NVT - Navitas*



Ves said:


> You will note that they do disclose the EBITDA loss on the colleges opened in the current financial year in every investor presentation,  however this will not include colleges that were opened in prior years that are barely above break even etc.   It can take 3-4 years for some of these colleges to attract the initial 1,000 student inflow a year and start producing a steady profit (there was something on this in the 2009 presentations if I recall).  Any student growth past that point is very high margin, indeed.
> 
> I don't make these adjustments when doing a DCF,  but they do help in seeing where future potential growth lies.




Very good insight. Yes if they stop opening new colleges they will reduce those initial bleeding years and increase their EBITDA by some amount. At the same time, if they DO stop opening new colleges their share price multiple will get totally whacked. Hopefully by that stage (where they stop opening new colleges) the cashflow stream will be so large that it has paid for your investment return many times.



DeepState said:


> This thing has the power to grow profits via internal generation and has reasonable control over it if the franchise holds. Quite nice, actually.  Valuation concerns are to the side.  My view is that the reported EPS understates the true EPS if the accounts were re-stated.




Yes a very powerful model and a substantial market to grow into.



DeepState said:


> I wonder though, with the move to fully user pays style tertiary education, whether the top rated universities will become better funded and thus compete more directly for students.  There may even be a sense of premier league not to be challenged through a firm like NVT.  Does Harvard go through intermediaries?




Does Harvard need an intermediaries? Surely there are many more applicants than there are places..... we are talking about Harvard! On the other hand, NVT has a Cambridge college...the town, not the university attended by Sir Issac Newton and others). So I'd say Harvard is never the target partner for NVT. It's like me trying to date  [Insert your own favourite actress/model].

FWIW, I took a position @ $4.75. The market was kind enough to offer another opportunity to buy a great quality company at a reasonable price.


----------



## craft

*Re: NVT - Navitas*



skc said:


> FWIW, I took a position @ $4.75. The market was kind enough to offer another opportunity to buy a great quality company at a reasonable price.




Welcome aboard 

I hope a man with your outstanding work ethic can find within themselves the laziness required to handle NVT.


----------



## skc

*Re: NVT - Navitas*



craft said:


> Welcome aboard
> 
> I hope a man with your outstanding work ethic can find within themselves the laziness required to handle NVT.




Haha Craft... You read me well.

That is indeed the most important thing I need to work on as I start pretending to be an investor. 

I am used to wathcing 4 screen, 18 market depths and every tick on my positions. I keep my mouse pointer on the buy/sell button and drink my coffee with my left hand. It's my natural reaction to act quickly and you need to do that in the trading game.

But with my investments, I deliberately opened a brokerage account with Westpac... To execute an order with them I need to log in, find the trading page, find the stock, enter the details and hit submit... and hit confirm again! It takes 100 times longer and I need to pay about 10x more brokerage than I pay for trading. Hopefully that should slow me down and help me to not over-react.


----------



## Ves

*Re: NVT - Navitas*

Computershare registry question.   I was having a look at the NVT DRP before and there are no terms and conditions online that are linked to the registry (there are however some on the NVT site).  So apparently that means that you cannot register online through Computershare.

I can't seem to locate the DRP election paper form that I may or may not have been sent by the company.  Any idea how to get a replacement copy?  Preferable if I didn't have to go through those horrible computer automated telephone prompts that Computershare uses....


----------



## craft

*Re: NVT - Navitas*



Ves said:


> Computershare registry question.   I was having a look at the NVT DRP before and there are no terms and conditions online that are linked to the registry (there are however some on the NVT site).  So apparently that means that you cannot register online through Computershare.
> 
> I can't seem to locate the DRP election paper form that I may or may not have been sent by the company.  Any idea how to get a replacement copy?  Preferable if I didn't have to go through those horrible computer automated telephone prompts that Computershare uses....




Hi V

Just checked computershare and got the same "no terms and conditions available - please contact" message. NVT has only recently introduced a DRP and the original Documents were dated 7th Feb 2014 if that helps you track down the hard copy that was sent. 

Otherwise you're probably going to have to talk to the computer..... press 1 to be run around in circles..2 to be cut off. 3........


----------



## Ves

*Re: NVT - Navitas*



craft said:


> Otherwise you're probably going to have to talk to the computer..... press 1 to be run around in circles..2 to be cut off. 3........



Thanks for the encouragement,  I guess if I ring now I might be done before 5pm....


----------



## Ves

*Re: NVT - Navitas*



Ves said:


> Thanks for the encouragement,  I guess if I ring now I might be done before 5pm....



I eventually got through to a friendly young chap with quite a well imitated Australian accent.  He said they will email me a new form within 24 hours.  Relatively pain free!

craft,  I asked you a query about NVT and similar companies in the PVoFC thread, hope it wasn't too intrusive on the SWAG secrets.


----------



## Faramir

*Re: NVT - Navitas*

Recently received my dividend from NVT. It's small because I brought so few shares the day after everyone else grabed an absolute bargain. Only six of of eight shares I brought have dividends. Maybe when I get the rest of my dividends, might buy more of NVT? Feel happy that I managed to pick at least one very good company (at nearly the right time - only one day too late).


----------



## Muschu

*Re: NVT - Navitas*



Faramir said:


> Recently received my dividend from NVT. It's small because I brought so few shares the day after everyone else grabed an absolute bargain. Only six of of eight shares I brought have dividends. Maybe when I get the rest of my dividends, might buy more of NVT? Feel happy that I managed to pick at least one very good company (at nearly the right time - only one day too late).




I was holding this stock before its recent decline.  It's one of very few that I would continue to hold [as I do] under such circumstances.  International long term growth involvements continue to grow.


----------



## hiddencow

*Re: NVT - Navitas*

I notice there's a lot of interest and faith in the prospects of this company, especially from respected value investors here on the forum.

Could someone provide a little insight into why they think it makes a good investment at these prices. At an initial glance it's trading on a P/E of 22 and has not grown EPS for the last 5 years. What is going to change in the near future?


----------



## VSntchr

*Re: NVT - Navitas*



hiddencow said:


> I notice there's a lot of interest and faith in the prospects of this company, especially from respected value investors here on the forum.
> 
> Could someone provide a little insight into why they think it makes a good investment at these prices. At an initial glance it's trading on a P/E of 22 and has not grown EPS for the last 5 years. What is going to change in the near future?




A very desirable business model that enables them to receive tuition payments in advance and subsequently pay expenses such as staff and marketing expenses periodically throughout the period. This enables the company to grow and expand without needing to ask shareholders or the bank for funds. Look at the working capital to see how they manage this.

There has been a tough period for NVT with student numbers down since the GFC presumably for a variety of reasons. However this has been recovering and numbers are now hitting new highs. I expect earnings to grow proportionately quicker than revenue as growing student numbers allow NVT to achieve critical scale in their currently smaller markets.
It is very hard to get to where NVT is in terms of brand name and global network to source students..hence the competitive position is evident.

Some cons which have been discussed already include the potential of universities to replicate NVT and source their own students - this risk has materialised with one university and will have to be evaluated as a subjective opinion until we can see how Macquarie goes on their own - or if other uni's start to follow this path.


----------



## hiddencow

*Re: NVT - Navitas*

My experience from talking to international students is that they have very little knowledge about universities and will take the advice of the agent. The only decision is which country to go to and even then they will take the advice of the agent as to which country would be easiest/cheapest to suit their needs.

Still, I don't see a compelling investment case here. It looks to have performed very well through the GFC growing earnings substantially  and has continued to grow revenues since but without any profit growth. Is this because of increased investment? More scale should have translated to a greater profit margin but it has not so far.

At this price a fair bit of growth is already priced in. If it is already the dominant player in the market then it will rely on overall market growth to increase revenues and profits. I see this being dependent on government Visa policies and exchange rates effecting Australia's attraction for international students. 

I am fairly new to investing though and have never really been interested in stocks which are loved by the market.


----------



## VSntchr

*Re: NVT - Navitas*



hiddencow said:


> Still, I don't see a compelling investment case here. It looks to have performed very well through the GFC growing earnings substantially  and has continued to grow revenues since but without any profit growth. Is this because of increased investment? More scale should have translated to a greater profit margin but it has not so far.




The profit margins have been held down as they are expanding into the US and other markets where they are yet to form the scale that Australia has.

As for no profit growth, are we looking at the same numbers!? 

EBIT from 2008-2014
54.43	70.39	89.09	98.68	111.72	113.65	119.59

If your looking at the NPAT line, keep in mind this year had a ~$30m impairment after the loss of Macq. Uni.


----------



## hiddencow

*Re: NVT - Navitas*

I was looking at the EPS line

19.40 19.49 19.87 21.85

Only starting to see growth this year but as you mentioned there was the $30m impairment.


----------



## robusta

*Re: NVT - Navitas*

Good growth in the northern hemisphere, it will be interesting to see how the new regulations in the UK will play out long term.
http://www.asx.com.au/asxpdf/20141029/pdf/42t8yrsp3dg9rw.pdf


----------



## skc

*Re: NVT - Navitas*



robusta said:


> Good growth in the northern hemisphere, it will be interesting to see how the new regulations in the UK will play out long term.
> http://www.asx.com.au/asxpdf/20141029/pdf/42t8yrsp3dg9rw.pdf




Got sold down on the back of this I think...



> This is an overall increase of 12% in EFTSU compared to the prior corresponding period
> (pcp) which in turn had grown by 25%.






> “We are committed to recruiting genuine students and to complying with Streamlined
> Visa Processing requirements. As such, growth rates in Australia may temporarily slow
> compared to pcp as these measures aimed at ensuring quality impact.”


----------



## Muschu

*Re: NVT - Navitas*

The Northern Hemisphere opportunities are, imo, the growth key.  My hold is minor but does not trouble me. 
NVT and GEM  have served us well.


----------



## ROE

*Re: NVT - Navitas*

Price run way ahead of itself, healthy correction with the current earnings.
EPS probably around 21-23 mark for the year so do look expensive


----------



## galumay

*Re: NVT - Navitas*



ROE said:


> Price run way ahead of itself, healthy correction with the current earnings.
> EPS probably around 21-23 mark for the year so do look expensive




Based on the  ½ yearly I reckon they will be lucky to make EPS of 20c this year, i think there might be some more 'corrections' to come!


----------



## robusta

*Re: NVT - Navitas*

Just watched the results presentation.

University programs 14% growth (10% volume, 4% price. Have to love the pricing power.

SAU revenue up 27% but need to control costs. NVT have taken action on this issue.

Debt reduced by 30 mil and new debt facilities in place at very favorable terms.

This is the comment the market must have reacted to; "We are looking at flat growth for University Programs moving forward" So they are saying any growth will come from SAE and be in low single digits at group level.

Should be interesting times ahead for Navitas, I'm holding for sure and thinking about buying more around current prices or cheaper.


----------



## galumay

*Re: NVT - Navitas*



robusta said:


> This is the comment the market must have reacted to; "We are looking at flat growth for University Programs moving forward" So they are saying any growth will come from SAE and be in low single digits at group level.




Who knows what Mr Market reacts to! But surely the reaction is more likely simply to the drop in EPS, its pretty significant and negative growth in earnings is not what the market would have expected.


----------



## Muschu

*Re: NVT - Navitas*

A while back somebody put up a post showing when all NVT University Partnerships are up for renewal.  I can't locate this info but would be grateful if someone can supply this data.

Some company announcements have been about re-structuring and I am now curious as to whether NVT has become somewhat too ambitious.  If the USA is not well-managed then who knows what may follow?

My most recent post expressed confidence... Thar is waning and my comment now seems premature.  There could be worse to come.


----------



## Ves

*Re: NVT - Navitas*



galumay said:


> Who knows what Mr Market reacts to! But surely the reaction is more likely simply to the drop in EPS, its pretty significant and negative growth in earnings is not what the market would have expected.



Steady state business.... NPAT grew 12%,  EBITDA 13%.      What negative growth?   Yes,  there was a goodwill impairment and some acquisition costs,  but they are one-off expenses. Cashflow looked very impressive to me:  the balance sheet continues to expand.

The reference to "flat growth" in the UP segment is after considering the loss of the Macquarie contract.  If they completely replace that profitability by the end of next year I believe that is a very good result IMO.


----------



## notting

*Re: NVT - Navitas*



Ves said:


> The reference to "flat growth" in the UP segment is after considering the loss of the Macquarie contract.  If they completely replace that profitability by the end of next year I believe that is a very good result IMO.




Market seems to think they have Buckley's of replacing that big contract loss by the end of next year. Even if they did it will be ensuing weakness till then. Two years is a long time in the market place, to get back to where you were, if you can!


----------



## Ves

*Re: NVT - Navitas*



Muschu said:


> A while back somebody put up a post showing when all NVT University Partnerships are up for renewal.  I can't locate this info but would be grateful if someone can supply this data.



See  post here.


----------



## Muschu

*Re: NVT - Navitas*



Ves said:


> See  post here.




Many thanks... I see 3 UMass contracts are not far away...

The West Australian, this morning, states that it was the profit reversal in the SAE arm that sparked the sell-down.


----------



## ROE

*Re: NVT - Navitas*

NVT is a good business no doubt but everything has a price, buy and sell accordingly


----------



## galumay

*Re: NVT - Navitas*



Ves said:


> What negative growth?




EPS, but now I check I am confused! EPS fell significantly for the half ending 12/14 according to the half year report, down to 8.3c, yet the Investor Presentation for the same period says EPS up 11% to 10.7c.

I was working off the report rather than the Investor Presentation, now I wonder why the discrepency - its a massive difference in terms of impact on the business

EDIT - its the NPAT reporting that is way different, $30m on the report and $40m on the presentation.
I must be having a blonde moment and missing something!

EDIT @ - looks like another case of using unreported NPAT for Investor Presentation as opposed to reported NPAT in Financial Report, its goodwill impairments that have been excluded from presentation.


----------



## skc

*Re: NVT - Navitas*



galumay said:


> EPS, but now I check I am confused! EPS fell significantly for the half ending 12/14 according to the half year report, down to 8.3c, yet the Investor Presentation for the same period says EPS up 11% to 10.7c.
> 
> I was working off the report rather than the Investor Presentation, now I wonder why the discrepency - its a massive difference in terms of impact on the business
> 
> EDIT - its the NPAT reporting that is way different, $30m on the report and $40m on the presentation.
> I must be having a blonde moment and missing something!
> 
> EDIT @ - looks like another case of using unreported NPAT for Investor Presentation as opposed to reported NPAT in Financial Report, its goodwill impairments that have been excluded from presentation.




Just a difference between normalised and reported statutory numbers. I think they put $9m one-off goodwill impairment on the Macquarie U withdrawl.


----------



## galumay

*Re: NVT - Navitas*



skc said:


> Just a difference between normalised and reported statutory numbers. I think they put $9m one-off goodwill impairment on the Macquarie U withdrawl.




Thanks skc, so how should I interpret the results, it seems to me the impairment is real, and has a real impact on NPAT and therefore EPS, should I largely ignore the impact because it is expected to be a one off? That seems to lead down a dangerous path to me! Would be grateful to hear your thoughts.


----------



## skc

*Re: NVT - Navitas*



galumay said:


> Thanks skc, so how should I interpret the results, it seems to me the impairment is real, and has a real impact on NPAT and therefore EPS, should I largely ignore the impact because it is expected to be a one off? That seems to lead down a dangerous path to me! Would be grateful to hear your thoughts.




Well there is no right answer. Many companies make up excuses to put into one-off's when they actually occur semi-regularly. E.g. a construction company calling cost blowout in a project "one-off", but they have a history of blowing out costs every 2-3 years. 

In NVT's case, the event that happened had not really happened before.... and it would be wrong (for now) to assume that it will happen at regular intervals in the future. So while it reduces current year NPAT and EPS (although much of that is non-cash), it wouldn't be wrong to consider it as a true one-off (for now).

If, say, you are using a PE multiple valuation method, then you certainly shouldn't take the lower reported EPS (you'd be too conservative). You might choose a lower PE multiple, however, to account for the increased uncertainty.


----------



## galumay

*Re: NVT - Navitas*



skc said:


> .....
> 
> If, say, you are using a PE multiple valuation method, then you certainly shouldn't take the lower reported EPS (you'd be too conservative). You might choose a lower PE multiple, however, to account for the increased uncertainty.




Thanks skc, I dont use a PE valuation, and as I already hold I am not so interested in the impact on price as I am in gauging the real impact on the business. From that perspective I need to consider whether it is a genuine one off, or a new pattern developing in the business. I will assume for now that it was an outlier and keep an eye out for evidence to the contrary!


----------



## ROE

*Re: NVT - Navitas*

you now got to discount for this probability that more universities will want to go down this path and more hit to earning and impairment.

it may not happen and I don't think many would  (due to its network of agents and contacts to bring in students for the uni) but this stock can no longer command the same premium it once has.

I sold out with the price run up before the result and now watch with interest and not cheap enough for me 
because now I give it 50% chance that more impairment may happen to be on the safe side 

have taken this impairment into my discount model and price has to be under $4 for me to get interested.


----------



## galumay

*Re: NVT - Navitas*

Thanks ROE, appreciate your thoughtful contribution, as always!


----------



## craft

*Re: NVT - Navitas*



ROE said:


> you now got to discount for this probability that more universities will want to go down this path and more hit to earning and impairment.
> 
> it may not happen and I don't think many would  (due to its network of agents and contacts to bring in students for the uni) but this stock can no longer command the same premium it once has.
> 
> I sold out with the price run up before the result and now watch with interest and not cheap enough for me
> because now I give it 50% chance that more impairment may happen to be on the safe side
> 
> have taken this impairment into my discount model and price has to be under $4 for me to get interested.




Now ROE I'm going to start thinking your related to RM if your keep making these belated disclosures.


Contract renewal risk is not new for NVT -  crikey, they were warning about it in the IBT prospectus. Nothing for me in the half yearly regarding Macquarie contract that wasn't already known and fully expected.


Disclosure, I wasn't clever enough to sell before the drop - but then I'm still more than happy to be exposed to the business and hope to be so for a lot longer.


----------



## craft

*Re: NVT - Navitas*



galumay said:


> Thanks skc, so how should I interpret the results, it seems to me the impairment is real, and has a real impact on NPAT and therefore EPS, should I largely ignore the impact because it is expected to be a one off? That seems to lead down a dangerous path to me! Would be grateful to hear your thoughts.




I know you didn't ask my thoughts but its an interesting question so I hope you don't min if I give you my perspective.

SAE had a 2.7 Million restructuring cost and a 1.2 million acquisition cost which are both tagged as non-recurring expenses. They however didn’t adjust underlying earnings by theses amounts – many company’s do – so NVT is conservative on this front.

As far as I understand the SIBT goodwill is on the books because of the company consolidation in preparation for listing (when it was IBT).  It was effectively created by the stroke of an accountants pen as the consolidation triggered business acquisition accounting requirements. Similar assets built since listing do not show any good will in the books, and hence would not show any impairment if earnings relating to them decreased.

The earnings impact is important – but the impairment charge is just ink on paper, reversing the previous recognition through the consolidation process. If SIBT subsequently gets a standalone campus or new partner up and running the goodwill that creates will not be shown in the books but will exist in an economic sense. 

Based on the above – I think the impairment should be excluded when looking at the economic reality of the business – and the other 3.9million of non-recurring for SAE should be duly noted but not excluded.  This is exactly what NVT did in their presentation.


----------



## galumay

*Re: NVT - Navitas*



craft said:


> I know you didn't ask my thoughts but its an interesting question so I hope you don't min if I give you my perspective.




Craft, you are one of the members here that I am most grateful to hear input to any discussion from. You always post with thoughtful and carefully considered ideas, clearly and well expressed.



> ...Based on the above – I think the impairment should be excluded when looking at the economic reality of the business – and the other 3.9million of non-recurring for SAE should be duly noted but not excluded.  This is exactly what NVT did in their presentation.




Thanks, so on that basis, the business should not suffer much negative impact in the longer term and the market has probably over reacted. (surprise, surprise!)


----------



## peter2

*Re: NVT - Navitas*

Thanks Valuesnatcher NVT is an interesting chart that recently popped up in one of my daily scans (those blue bars).

I like the higher lows with the rising OBV, TMF. IMO this indicates accumulation after the latest price shock. 

As the weekly/daily trends are down I would treat this as a reversal setup, but it's not for me as price is still below a lot of price action (July14 - Jan15). There will be a lot of unhappy holders that would love the chance to sell near break-even if price moves higher. 

A clean break and close above 5.50 would be the first level I'd look for a low risk buy signal as the first target would be the gap fill to 7.00.


----------



## galumay

*Re: NVT - Navitas*



peter2 said:


> There will be a lot of unhappy holders that would love the chance to sell near break-even if price moves higher.




I am not sure about that assumption, NVT is very popular with long term value investors because of the business model and the fundamentals, most of them would believe its well under valued at current prices and I doubt many would sell just because the price moves higher again.

There might be some traders that got caught when it dropped due to some short term, less than ideal news, and they might well want out if it goes back up, but on the other hand wouldnt you expect traders to get stopped out when it fell?


----------



## Muschu

*Re: NVT - Navitas*

I held NVT for many years from the float and then, off and on, until some months ago.

I now consider the risks, particularly competition and contract renewals, too high.

NVT may well go up but I see no reason to expect any major growth.  For myself I decided to look for growth and potential elsewhere.

Just my thoughts.


----------



## notting

*Re: NVT - Navitas*

Well it stabilized for the last few weeks then updated the market and fell 4.29% today.
Guess that's a confirming vote down after a little think.


----------



## galumay

*Re: NVT - Navitas*



notting said:


> Well it stabilized for the last few weeks then updated the market and fell 4.29% today.
> Guess that's a confirming vote down after a little think.




I thought it looked a bit oversold, the news was hardly unexpected nor particularly bad. Wont be surprised to see it retrace fairly quickly.


----------



## So_Cynical

*Re: NVT - Navitas*

Added NVT to my superfund today, im limited to the ASX300 so a certain level of underperformance is locked in, NVT is the only Education stock i hold and i do like the currency mix and current price.


----------



## notting

*Re: NVT - Navitas*

On a positive start to a new week NVT continued to fall after a fairly strong down turn last week.
Not a good sign.


----------



## VSntchr

*Re: NVT - Navitas*

An interesting update from Navitas yesterday.

Entering an agreement with the Uni of Western Sydney. This should assist in filling the hole left by the loss of the SIBT contract.
What interests me is the the fact that, for the first time, they have actually gone 50:50 in the establishment of the college. Previously, they lease premises from third parties or have premises provided by institutions under various partnership agreements.

So the question I am trying to answer is: why?
Do they think that this capital investment will produce superior returns to the previous model? Will the seats on the board give them better control and allow them to refine the operations to skew profitability further in their favour?
 -or- 
Does this show a loss of negotiation power? Would UWS only sign based on the agreed terms?

Or perhaps the answer lies somewhere in the middle, i.e. Navitas is happy to proceed in this fashion but is somewhat forced to because UWS does not have sufficient budget to complete on their own.


----------



## galumay

*Re: NVT - Navitas*



VSntchr said:


> An interesting update from Navitas yesterday.




I had a similar line of thought, the market certainly seems  to have its doubts!


----------



## Klogg

*Re: NVT - Navitas*



VSntchr said:


> So the question I am trying to answer is: why?
> Do they think that this capital investment will produce superior returns to the previous model? Will the seats on the board give them better control and allow them to refine the operations to skew profitability further in their favour?
> -or-
> Does this show a loss of negotiation power? Would UWS only sign based on the agreed terms?
> 
> Or perhaps the answer lies somewhere in the middle, i.e. Navitas is happy to proceed in this fashion but is somewhat forced to because UWS does not have sufficient budget to complete on their own.




The way I see it, incentives are now completely aligned. There's absolutely no reason for UWS to pull-out from a Navitas agreement, given they have a 50% share of it already. 
If UWS were about to walk-away from the previous agreement, this should lock them in.  (I'm assuming they were previously a client)

Does this set a precedent for future clients that may not renew such contracts?


----------



## ROE

*Re: NVT - Navitas*



galumay said:


> I had a similar line of thought, the market certainly seems  to have its doubts!




I think the risk becomes a little clearer
NVT I think now realise there are risk to renewal of their contracts so they move to mitigate the risk


----------



## So_Cynical

*Re: NVT - Navitas*

Contracts come and go and come again, that's the business of contracts, the day after a business signs a supply contract is the day that they are 1 day closer to losing the contract...nothing lasts forever.


----------



## Ves

*Re: NVT - Navitas*

I think these are JV agreements are both with universities that they haven't partnered with before.    

It's entirely possible that they are signing with universities using JV agreements to mitigate contract risk.  

However it is also entirely possible that they are (also) using them to access partnerships with universities that would not partner with them using a completely Navitas controlled operation. If that's the case they it probably opens up a raft of new domestic opportunities.


----------



## robusta

*Re: NVT - Navitas*

Northern hemisphere up 6% despite UK being down 13%

http://www.asx.com.au/asxpdf/20150630/pdf/42zhtpdcyn3fz9.pdf

Later this month we will find out how the south is performing then it should be a short wait to see if SAE is improving.


----------



## robusta

*Re: NVT - Navitas*

Results out today, the numbers look good to me. Macquarie situation will mean the growth will however be flat in F/Y 16

I just listened to the podcast. My main points of interest are;

The J/V model seems to be the strategy from Navitas to stop universities leaving in the future. There is a lot of interest from current universities to move over to the joint venture model. This will impact the value NVT gets out of future agreements. It should be many years before this becomes material. They are looking at 1 or 2 a year. From the point of view of start up they are sharing the costs. The other advantage of the J/V is if a Uni wants to leave they will have to buy Navitas out for a full and fair value. 

UK regulations seem to be impacting enrolments significantly. Australian regulations should have a positive impact in F/Y 17

UP may be down F/Y 16 and F/Y 17 due to the calendar year impact of Macquarie.

US growth is looking good with a number of new initiatives on the horizon.


----------



## Faramir

*Re: NVT - Navitas*

Can anyone comment on this latest news release?

Navitas and Curtin University to refocus partnership on WA and Singapore colleges - Curton University Sydney campus to close
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01662464

Curtin University Sydney (CUS) is closing in February 2017. This is a cost saving measure.

Combining La Trobe and Curtin smaller campus into one larger campus should consolidate expenses.

The news release states:


> Given the alignment of operations in Sydney it is not anticipated that the gradual closure of CUS will have a material earnings impact.



Any comments?


----------



## Klogg

*Re: NVT - Navitas*



robusta said:


> Northern hemisphere up 6% despite UK being down 13%




Yesterday's investor day presentation suggested that the rate at which education providers reject visa applicants will change from 10% to 5%... If numbers have to be that tightly managed, I can see some providers being unable to meet that requirement, making student numbers drop further.

Surely this runs counter to the intention of introducing these regulations. I can understand the government wanting to accept as many students as possible, but if the provider can't manage the workload, they're just going to play it safe and aim to reduce advertising/applications. It seems that after a few providers either exit or start shrinking, the government will change their approach and those that are ready will be able to accept larger numbers of students.

The other approach is that providers, wanting to reduce demand, simply elevate their prices to find the level of supply/demand required...


Just thinking out loud.


----------



## Klogg

*Re: NVT - Navitas*



Klogg said:


> Surely this runs counter to the intention of introducing these regulations. I can understand the government wanting to accept as many students as possible




Sorry, no it doesn't. Clearly misunderstood the intention of the regulation. Ignore my the crap I wrote...

Nevertheless, the outcome of more efficient providers surviving remains in place.


Just finished listening to the Investor Day presentation. The SAE CEO raised an interesting point of focusing on ROCE and EPS, rather than growth for the sake of growth (suggesting that less schools may lead to better financial outcomes) - Like.


----------



## craft

*Re: NVT - Navitas*

NVT is on the periphery of Vocational education - just cooling their heels.

If you go to about the 3 Hour 5 Minute mark there is a interesting answer to a question regarding the VET sector. If you want to know what quality and ethics in education and looks like and you have three hours to spare you could watch from the start.

http://edge.media-server.com/m/p/2nj6h35o

ps

Buying quality is boring compared to the swings in this sector lately but if you are looking for a passive long term investment there is no substitution for quality. 

For mine (a very long term view) - Association with VET sector, Macquairie contract loss and Various governments around the world playing around with visa entry requirements has produced a good environment for accumulating more NVT.


----------



## Faramir

*Re: NVT - Navitas*

I still hold. Brought in around $5.08 July 2014 when they lost that Macquaire contract. The smarter ones sold while NVT hit their highs many months ago (just before last year's VET crisis). (I am not smart). I haven't topped up because I spent what I had on CCP. Topping up now would seem sensible if only I had the funds?

With the fall of Aussie dollar, wouldn't our educational system be more attractive? I think that NVT is doing OK overseas as well.

I saw Rod Jones on a Peter Switzer interview last year. I was impressed with him. The world needs more education and some will pay for it. Some will need bridging courses and additional assistance - this is what NVT does best.

Damm you VET - I was tempted to buy you. All you did is bring the whole sector down. Some of us are not smart to know the difference between VET and NVT. Some people must think that you are all one and the same. So let the market punish NVT as well. NVT might be tertiary and VET might be vocational educational providers but what is the difference when someone can send all of them on a downward slide.

Now I will have to wait a very long time. I am not smart enough to know when to sell. Too dumb and poor to buy in the dips.

Sorry for my rant. Everyone can provide expert commentary. Please let me provide simple man's commentary.


----------



## Muschu

*Re: NVT - Navitas*



Faramir said:


> I still hold. Brought in around $5.08 July 2014 when they lost that Macquaire contract. The smarter ones sold while NVT hit their highs many months ago (just before last year's VET crisis). (I am not smart). I haven't topped up because I spent what I had on CCP. Topping up now would seem sensible if only I had the funds?
> 
> With the fall of Aussie dollar, wouldn't our educational system be more attractive? I think that NVT is doing OK overseas as well.
> 
> I saw Rod Jones on a Peter Switzer interview last year. I was impressed with him. The world needs more education and some will pay for it. Some will need bridging courses and additional assistance - this is what NVT does best.
> 
> Damm you VET - I was tempted to buy you. All you did is bring the whole sector down. Some of us are not smart to know the difference between VET and NVT. Some people must think that you are all one and the same. So let the market punish NVT as well. NVT might be tertiary and VET might be vocational educational providers but what is the difference when someone can send all of them on a downward slide.
> 
> Now I will have to wait a very long time. I am not smart enough to know when to sell. Too dumb and poor to buy in the dips.
> 
> Sorry for my rant. Everyone can provide expert commentary. Please let me provide simple man's commentary.




I've met Rod Jones and he is very committed to Navitas.  However I see several issues ahead.. Succession planning when Mr Jones retires; vastly increasing competition in North America; poor USA staffing retention; developing Asian nations being more likely to  cope with their own aspirational students at home; visa uncertainties; currency fluctuations; ....

I bought NVT at the float.  I increased my hold as they grew but then sold off over a period and have had none for the past 2 years.  

Not for me anymore.


----------



## tinhat

*Re: NVT - Navitas*

The problem I have with the Australian tertiary education and vocational training sectors is I don't believe they are very good quality.


----------



## galumay

*Re: NVT - Navitas*



tinhat said:


> The problem I have with the Australian tertiary education and vocational training sectors is I don't believe they are very good quality.




Compared to what? A lot of our tertiary institutions have a very good reputation and rating in international terms. Not sure what objective ratings there are for our vocational training.

The secondary issue is whether that actually has any major relevance to the quality of the businesses from an investment perspective.


----------



## Klogg

*Re: NVT - Navitas*



tinhat said:


> The problem I have with the Australian tertiary education and vocational training sectors is I don't believe they are very good quality.




This is the problem most investors have at the moment, hence the industry wide declines on markets.

But finding educational institutions that do deliver quality should allow you to buy them at a cheap price. Do you think NVT fits the bill?


----------



## Klogg

*Re: NVT - Navitas*



craft said:


> NVT is on the periphery of Vocational education - just cooling their heels.
> 
> If you go to about the 3 Hour 5 Minute mark there is a interesting answer to a question regarding the VET sector. If you want to know what quality and ethics in education and looks like and you have three hours to spare you could watch from the start.
> 
> http://edge.media-server.com/m/p/2nj6h35o
> 
> ps
> 
> Buying quality is boring compared to the swings in this sector lately but if you are looking for a passive long term investment there is no substitution for quality.
> 
> For mine (a very long term view) - Association with VET sector, Macquairie contract loss and Various governments around the world playing around with visa entry requirements has produced a good environment for accumulating more NVT.




The one thing that I found very interesting in that presentation was management's confidence in the SAE business. They admitted it took them longer to get it to the same state as all other NVT units, but growth should be delivered from here.

Can't remember if I've mentioned this, but there was also a mention of closing some schools to increase returns to shareholders


----------



## Faramir

*Re: NVT - Navitas*

Hi klogg

Last sentence of Post 281 - top of this page. 29 October 2015
My post 279 - I commented on a news release as well. 17 Sept 2015


----------



## tinhat

*Re: NVT - Navitas*



Klogg said:


> Do you think NVT fits the bill?




I'll have a closer look. I did own NVT a few years back. I was not impressed by the SAE acquisition.

I wish I could say that the only stocks in my portfolio are those in which I have genuine belief in the quality and value of the business but alas that is so far from the truth it, in times like these, it makes me despondent. I want to profit from investing in businesses that genuinely do good. Perhaps I don't have enough capital to be so picky.

[edit]
I was involved in the tertiary education sector (universities only) quite a few years ago as a consultant for a bank providing finance to students and I was very disillusioned - and that was twenty years ago, well before the outrageous situation the entire sector is in now.


----------



## craft

*Re: NVT - Navitas*



Muschu said:


> poor USA staffing retention




Hi Maschu.

What is the source of this information?


----------



## VSntchr

*Re: NVT - Navitas*

1H16 result out today. My quick summary:
UP margins begin to feel the heat with the Macquarie loss. Next half will bear big loss. 

SAE and PEP seem to be firing at just the right time for NVT, with margin expansion looking like it will give them a very good chance at hitting FY guidance. 

The buy back is interesting. I wonder whether they intend to buy straight away, or to keep it as firepower in the event of any short term implosion come the full impact of the MQC loss.

EDIT: just rewatched the question time from the linked investor day video (thanks craft). The explanation on the journey of SAE is fantastic and certainly gives confidence going forward. This 1H result is certainly evidence of what Rod says "We expect significant improvement in margins going forward (SAE) and this year will be the first year where that is quite obvious".


----------



## notting

*Re: NVT - Navitas*

The market likes the buy back and also the English teaching and professional services for globalizing emerging markets as a potential expanding money spinner.


----------



## Muschu

*Re: NVT - Navitas*



craft said:


> Hi Maschu.
> 
> What is the source of this information?




Just noticed this... 

I have visited some of their campuses in the States, around Boston in particular.

[Don't work for them  ]


----------



## Muschu

*Re: NVT - Navitas*

I felt very uncomfortable with the growth in North America announcement.

It would have been more transparent to "divide" the USA from Canada - as I suspect most of the growth is in Canada.

Better still would be an announcement outlining the growth in each and every partnership, but NVT does not seem to want to do that.... Commercial confidentiality perhaps?

But certainly a Canada / USA breakdown is a reasonable ask....


----------



## craft

*Re: NVT - Navitas*



Muschu said:


> I felt very uncomfortable with the growth in North America announcement.
> 
> 
> It would have been more transparent to "divide" the USA from Canada - as I suspect most of the growth is in Canada.
> 
> Better still would be an announcement outlining the growth in each and every partnership, but NVT does not seem to want to do that.... Commercial confidentiality perhaps?
> 
> But certainly a Canada / USA breakdown is a reasonable ask....




Not sure why 18% YOY growth would make you very uncomfortable.

What exactly in the announcement re-enforces your suspicions?

The announcement does say  a full update on Northern Hemisphere University Program enrolments will be released in early March. From memory its not unusual for NVT to release market sensitive enrolment numbers upfront with more detailed information presented later in analyst presentations. I have always found NVT forthcoming with the information I feel I need as a shareholder, but I don't need the minute detail of specific university breakdowns.


----------



## Muschu

*Re: NVT - Navitas*



craft said:


> Not sure why 18% YOY growth would make you very uncomfortable.
> 
> What exactly in the announcement re-enforces your suspicions?
> 
> The announcement does say  a full update on Northern Hemisphere University Program enrolments will be released in early March. From memory its not unusual for NVT to release market sensitive enrolment numbers upfront with more detailed information presented later in analyst presentations. I have always found NVT forthcoming with the information I feel I need as a shareholder, but I don't need the minute detail of specific university breakdowns.




Specific detail would show strength of current contracts....

There are far more competitors in the USA than was the case when NVT finally got into this market some years ago.

Anyway just my opinion... NVT is headquartered in Perth WA and will need to be right on the ball to maintain their current position in a massive North American market.  Maybe they will...

Not holding and don't plan to... As said before, I got in at the float and did well.  I do follow the stock as a result.


----------



## Klogg

*Re: NVT - Navitas*

Ultimately, nothing to see here... But for those that are interested, here's a few points I found noteworthy:

- UP: "Equivalent full time student units (EFTSU) grew by 0%, 2% and 0% globally for each semester respectively in the year compared to pcp. Excluding these transitioning colleges EFTSU grew 2%, 4% and 11% globally for each semester. Average fee growth was ~5% across the Division."
Inflation is so low throughout the world, yet NVT can grow fees by 5% a year without any issues...

- SAE: Strong revenue growth, EBITDA growing by the same amount. Some operational leverage not showing here as a result of:
"SAE announced the proposed closure of four sub-scale colleges."

- A reversal of negative working capital structure shown in the closure of two large UP agreements, ultimately effecting cash flows:
"Operating cash flows of $125.8m for the year ended 30 June 2016 were down by 11% on the prior year (FY15: $141.8m) principally due to increased payments for teaching and marketing only partially offset by higher customer receipts. "
This is also shown in the "Deferred Revenue" line, which decreased by $8m ($272m from $280m the previous year)

- DRP back in play: " The Navitas Dividend Reinvestment Plan (DRP) will again be offered at no discount to market."

- Dividend amount maintained at 19.5cps. They're capping the dividend to the amount they can pay out with required franking credits. I like this, as it forces them to re-invest the remainder at higher ROC (21.6% currently, as listed below)

- Not sure if these are significant efficiencies, but overhaul of IT systems:
"An overhaul of the Group’s core IT infrastructure is being pursued to enable faster decision making, powerful analytics, efficient processes, and improved operations. This includes the global upgrade of learning management systems, and the continued rollout of Navigate, a Navitas student management system. "
(Navitas have a good track record in this area, as has been discussed in previous webcasts)

- Even though the competitive advantages are maintained and shown through ROC, the Incentive targets were not met:
"Whilst Navitas achieved an increase in EBITDA during the year, the growth in EVA by the Group fell short of the target set by the Board. As a result the Group’s return on capital employed for the year to 30 June 2016 fell to 21.6% "
(If I ran a company that achieved an ROC of 21.6%, I'd be happy to pay bonuses - Rod has high standards it seems)


Guidance seems to indicate a similar result next year. However, once the UP closures are completed, I can only see them increasing earnings...


----------



## Faramir

*Re: NVT - Navitas*

Still happy to hold. Thank you Klogg for your comments. I did nothing when NVT sat beneath my purchase price. I didn't average down, didn't buy the dips. Now it sits above my purchase price. When they did those Share Buybacks early this year, it convinced me stay still and hold.


----------



## robusta

*Re: NVT - Navitas*

Thanks Klogg, NVT is still a high quality business with a long runway of growth ahead in my opinion. I also like the way they have operated the buy back, $5.18 highest price paid $4.51 lowest price.

As a long term holder I actually hope it dips back into 'the buy back zone'


----------



## Muschu

*Re: NVT - Navitas*

It might interest some to research the progress of Shorelight Education and others who have entered the UP realm in North America in recent times.


----------



## icemanmelb

*Re: NVT - Navitas*

They are down 7% on their Australian figures while only up 3% on their US figures.

I'll put a small test short on this.

Ive


----------



## Klogg

*Re: NVT - Navitas*



icemanmelb said:


> They are down 7% on their Australian figures while only up 3% on their US figures.
> 
> I'll put a small test short on this.
> 
> Ive




You might want to check out why they're down 7% on their Aus figures... There's a reason they're quoting two sets of figures (with and without SIBT).


----------



## Ves

Anyone know if the $17m (or so) EBITDA boost from moving an agreement to a JV arrangement (non PR speak:  it's accounting bull****)  was included in the original full-year guidance figure they gave last year?

Off the top of my head guidance was something along the lines of 2017FY being around the same as the 2016FY results.

However,  clearly the accounting entry of $17m has nothing to do with the underlying EBITDA,  and given its not an insignificant amount if looking at a single year in isolation,  was there a bit of underhanded trickery here?  Or are they saying that 2017 will be similar to 2016 if the $17m is excluded. I doubt this is the same,  they'd need to achieve a fair bit of growth than reported for the continuing colleges than in the first half to make up for the colleges closed (ie. SIBT) this year.

There is nothing else unexpected in the report (and I've probably missed mention of the $17m previously) but it's definitely interesting to look at the cash flow strain on the business model when colleges close.


----------



## So_Cynical

UBS has a buy rating on Navitas, released yesterday after the sell off...just sayn.


----------



## Klogg

Ves said:


> Anyone know if the $17m (or so) EBITDA boost from moving an agreement to a JV arrangement (non PR speak:  it's accounting bull****)  was included in the original full-year guidance figure they gave last year?



The investor presentation for 1H17 says:
"FY17 EBITDA result expected to remain broadly in line with FY16 (on a constant currency basis and including the addition of EBITDA from the new ECU Joint Venture)"

I was surprised when I read that to be honest, but I'm not sure if that means including the one-off $17m accounting hit, or including the EBITDA the JV generates...


As for today's announcement - interesting to say the least. I didn't really expect it and it's likely management didn't either, given one of the directors bought recently, and the buyback is on-going.

Nevertheless, it doesn't break the model longer term. UP (the cash-cow) is still generating cash and opening colleges.


----------



## VSntchr

Klogg said:


> Nevertheless, it doesn't break the model longer term. UP (the cash-cow) is still generating cash and opening colleges.



Starting to feel like NVT is just taking hit after hit! Just when the UP news is starting to become distant, now PEP has a 35% earnings hit....

There was a warning on tender negotiations in the 1H result but I also doubt this was strongly expected.


----------



## Klogg

VSntchr said:


> Starting to feel like NVT is just taking hit after hit! Just when the UP news is starting to become distant, now PEP has a 35% earnings hit....
> 
> There was a warning on tender negotiations in the 1H result but I also doubt this was strongly expected.




To be honest, it's only two. Significant hits, but two nevertheless.
It just seems much more because of the impact of the first and how long ago we found out about it.


I do hope they continue with that share buyback. Given there's little capex for the 2nd half (they mentioned this on the webcast for 1H17), they should have more cash to continue with buying back shares.

EDIT:
FWIW, I just received confirmation from Investor relations that the ECU EBITDA amounts included in guidance only refer to earnings from that particular college, which are generally not included in EBITDA as it's part of a JV. (Added as "Share of net profit/(loss) of joint ventures accounted for using the equity method" on the P&L).
Hence, the reported EBITDA figure, not including the JV conversion accounting earnings of $17m, will be lower. But if the ECU college is included, it should be 'broadly in line with FY16'


----------



## VSntchr

Klogg said:


> To be honest, it's only two. Significant hits, but two nevertheless.
> It just seems much more because of the impact of the first and how long ago we found out about it.
> 
> I do hope they continue with that share buyback. Given there's little capex for the 2nd half (they mentioned this on the webcast for 1H17), they should have more cash to continue with buying back shares.



True, although I think to a lesser extent we can include some of the regulation tightening that has crimped enrolment growth to make it three.


----------



## skc

VSntchr said:


> Starting to feel like NVT is just taking hit after hit! Just when the UP news is starting to become distant, now PEP has a 35% earnings hit....
> 
> There was a warning on tender negotiations in the 1H result but I also doubt this was strongly expected.




I read the news this morning and for some strange reason I read "$12-14m decrease in revenue".... so I decided it'd be 1-2% impact on profits at most... so I couldn't believe where NVT was matching and for the first 10 minutes keep thinking there'd be a bounce soon.

Common sense prevailed eventually and I decided to have a re-read of the announcement.

I feel like a total idiot...


----------



## Muschu

The USA is also now proving a major challenge for NVT.  Far more competitors for them than when they first entered that market - and that number of competitors growing annually.


----------



## Klogg

Muschu said:


> The USA is also now proving a major challenge for NVT.  Far more competitors for them than when they first entered that market - and that number of competitors growing annually.




This is true, but I hardly see this as an issue. They're still growing using the same cash cow of a model, although some colleges have some time before reaching critical mass. Further, if you look at the percentage of international students in comparison to the entire higher education sector, the US is well under other regions (3.9% compared to 7% Germany, 10% France, 18% Aus). Granted they may not want to get to that sort of ratio, but there is clearly demand for it.
Slide 5 on the full year presentation has decent stats around eligible students per placement, per region.


----------



## Ves

Klogg said:


> FWIW, I just received confirmation from Investor relations that the ECU EBITDA amounts included in guidance only refer to earnings from that particular college, which are generally not included in EBITDA as it's part of a JV. (Added as "Share of net profit/(loss) of joint ventures accounted for using the equity method" on the P&L).
> Hence, the reported EBITDA figure, not including the JV conversion accounting earnings of $17m, will be lower. But if the ECU college is included, it should be 'broadly in line with FY16'



Thanks for that mate.

I don't think the $17m would form part of the JV earnings any way.  Correct me if I'm wrong,  but because it's from the creation of the JV so the paper profit would be at NVT's group level?

I'm assuming at the creation of the JV,  there was some kind of independent valuation done.  Some of these would be physical assets and the rest is intangible value.  An artificial accounting value is struck upon transfer from NVT to the JV entity and as NVT probably wouldn't have much in relation to this on their balance sheet before the valuation, the difference is treated as a $17m paper gain.  $17m goes to the P&L and the difference is added to NVT's investment in the JV on their balance sheet.

I don't think we get the underlying details of this until the full-year accounts are released in Aug/Sept 2017.  But that'd be my guess.


----------



## Ves

Ves said:


> I don't think we get the underlying details of this until the full-year accounts are released in Aug/Sept 2017.  But that'd be my guess.



There's actually some information on this at Note 6 of the half yearly accounts.   It looks like what I sloppily described above is what has happened.


----------



## Muschu

Klogg said:


> This is true, but I hardly see this as an issue. They're still growing using the same cash cow of a model, although some colleges have some time before reaching critical mass. Further, if you look at the percentage of international students in comparison to the entire higher education sector, the US is well under other regions (3.9% compared to 7% Germany, 10% France, 18% Aus). Granted they may not want to get to that sort of ratio, but there is clearly demand for it.
> Slide 5 on the full year presentation has decent stats around eligible students per placement, per region.



USA competition not an issue to a company based in Perth?  Not a risk I fancy any more...


----------



## icemanmelb

skc said:


> I read the news this morning and for some strange reason I read "$12-14m decrease in revenue"
> 
> I feel like a total idiot...




Not as big an idiot as me. I worked that that it's eps is about 18-19c but didn't put a short in until much much later. It was a matter of too little too late.. coffee money...


----------



## MrChow

Share Price is the same as November 2009, not sure why I mention it just seemed like an interesting fact.


----------



## icemanmelb

MrChow said:


> Share Price is the same as November 2009, not sure why I mention it just seemed like an interesting fact.




Things are different now with a different sent of circumstances. Loss of contracts + gaining others.

Ice


----------



## So_Cynical

Screaming buy if your a believer at all.


----------



## galumay

So_Cynical said:


> Screaming buy if your a believer at all.




Yep, even factoring in the impact on cash flow and profit, NVT looks cheap, I have added more to signifcantly average down my holding.


----------



## Muschu

So_Cynical said:


> Screaming buy if your a believer at all.




Could easily be more contract losses on the way.... Universities may be investigating doing this recruiting themselves, or through agents, and not have to give away profits to Navitas... The number of recruitment agencies is growing exponentially... And based almost everywhere. 

I could easily be wrong and have been before.  This is a stock I have watched since it opened and frequently held - until  2 or 3 years ago.


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## JTLP

Navitas has been showing a little strength lately, not sure why really? Maybe a few contracts signed / resigned.


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## galumay

I think NVT is slowly closing the gap between price and fair value, its been a bumpy ride for the last couple of years, but the structural advantages and strengths of the business largely remain intact.


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## JTLP

galumay said:


> I think NVT is slowly closing the gap between price and fair value, its been a bumpy ride for the last couple of years, but the structural advantages and strengths of the business largely remain intact.




I agree. So long as they can add more/maintain universities and continue to bring in students (education isn't cyclical right?) they should do ok.


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## Faramir

Faramir said:


> *Re: NVT - Navitas*
> 
> I listened to the audio and it convinced me to buy Navitas. Got 400 shares at $5.05. I was not going to sit around wait for it to drop or rise. There were more buyers than sellers (around 1:10pm), so I said I better bite the bullet and take market price. Today's range has been $5.01-$5.16 (at 1:38pm). I guess that there would be a morning 'rush' and the volumes indicate it.
> 
> It is my fourth set of shares I own.



That was 10 July 2014.

Just sold my 425 shares at $5.15. 25 shares came from DRP. Why did I sell?

1): I am desperate for money. My partner is not working due to health problems. She was retrench Aug 2016. She commenced Breast Cancer radiation treatment that month. Then she developed a knee problem Feb this year. Now a knee operation 2 weeks ago and her knee is better. Now she has another problem. So saving money is extremely hard.
2): Did a very simple calculation early this year: Debt/Equity and Current Asset/Current Liabilities. Those numbers suck. Current values are even worse than 2016 annual report numbers. Either something changed or I was dumb to choose this stock back in 2014.
3): Now I own 8 stocks. Once I own 10. The biotech spec was virtually a total write off. Jan this year, I said I would sell NVT at break even point. I know "hoping" is a really BAD strategy but I just waited 10 months for NVT to break even. I know NVT is on the upward trend but I have no more patience. I need money now and NVT is not one of my better companies I own.
4): Rod Jones mesmerised me. Maybe his replacement will be a better CEO??  Since I was so busy, I did not monitor NVT 'simple things'. Actually, I think I monitor virtually nothing due the stress of this year and last year. I need to own less stocks.
5) I still like what NVT does. I really like NVT. I like its business. I am just struggling to understand stocks I own, so NVT - you had to go. Maybe I will buy NVT again but I can not see that happening in the near future.

NVT is on the upward trend and recent news from NVT - I have been sort of happy with. I felt that I failed with NVT. Either I sold too soon or I should have sold at 2016 highs. At that time, yeah upward trend, lets take someone to hospital - I can forget about NVT for now.

I cannot think rationally. I will appreciate advice or "you should of done this" but at this point of time - I won't care. I will thank you later once I can collect my thoughts.


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## luutzu

Faramir said:


> That was 10 July 2014.
> 
> Just sold my 425 shares at $5.15. 25 shares came from DRP. Why did I sell?
> 
> 1): I am desperate for money. My partner is not working due to health problems. She was retrench Aug 2016. She commenced Breast Cancer radiation treatment that month. Then she developed a knee problem Feb this year. Now a knee operation 2 weeks ago and her knee is better. Now she has another problem. So saving money is extremely hard.
> 2): Did a very simple calculation early this year: Debt/Equity and Current Asset/Current Liabilities. Those numbers suck. Current values are even worse than 2016 annual report numbers. Either something changed or I was dumb to choose this stock back in 2014.
> 3): Now I own 8 stocks. Once I own 10. The biotech spec was virtually a total write off. Jan this year, I said I would sell NVT at break even point. I know "hoping" is a really BAD strategy but I just waited 10 months for NVT to break even. I know NVT is on the upward trend but I have no more patience. I need money now and NVT is not one of my better companies I own.
> 4): Rod Jones mesmerised me. Maybe his replacement will be a better CEO??  Since I was so busy, I did not monitor NVT 'simple things'. Actually, I think I monitor virtually nothing due the stress of this year and last year. I need to own less stocks.
> 5) I still like what NVT does. I really like NVT. I like its business. I am just struggling to understand stocks I own, so NVT - you had to go. Maybe I will buy NVT again but I can not see that happening in the near future.
> 
> NVT is on the upward trend and recent news from NVT - I have been sort of happy with. I felt that I failed with NVT. Either I sold too soon or I should have sold at 2016 highs. At that time, yeah upward trend, lets take someone to hospital - I can forget about NVT for now.
> 
> I cannot think rationally. I will appreciate advice or "you should of done this" but at this point of time - I won't care. I will thank you later once I can collect my thoughts.





Sorry to hear about your partner man. Hope treatment and medical care goes well. 

Being with your partner at these times are more important, not that you need that kind of advise. Stocks and money can wait. 

Maybe look into Sirtex. It mainly treats Liver cancer, getting into colon/kidney soon if not already. Might serve both purposes.


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## luutzu

JTLP said:


> I agree. So long as they can add more/maintain universities and continue to bring in students (education isn't cyclical right?) they should do ok.




It could be cyclical. I don't have the facts and figures but read some analyst before saying that education business does better when the economy is tough.

Doesn't make sense but maybe it's true. People getting laid off and need to upskill or learn to move into another area?

Though international student numbers would likely go down during economic busts.


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## Wysiwyg

Also sorry for your partner. If it helps, I also had family grief earlier this year and I am sure you will find the human spirit that keeps us moving beyond what circumstance life hands us.


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## Faramir

luutzu said:


> Being with your partner at these times are more important, not that you need that kind of advise. Stocks and money can wait.
> 
> Maybe look into Sirtex. It mainly treats Liver cancer, getting into colon/kidney soon if not already. Might serve both purposes.



Thanks luutzu. I brought Sirtex March 2015 and Jan 2017. If I buy more, I will over weight in it. Not sure what to do with ex-NVT funds other than cover 1 or 2 expenses. Then maybe top up a stock I already own.


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## luutzu

Faramir said:


> Thanks luutzu. I brought Sirtex March 2015 and Jan 2017. If I buy more, I will over weight in it. Not sure what to do with ex-NVT funds other than cover 1 or 2 expenses. Then maybe top up a stock I already own.




If you ask me, those entry are quite reasonable prices. Though I got a bit luckier but I'd pay $16 to $20 if I heard of it before that... then have the nice feeling of watching it go to $10.50 at one point. 

Yea I don't know where to put my money either. Been hoping for a correction but yea, the market tend to wait for me to be empty than crash.


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## McLovin

Sorry to hear about your partner, Faramir. I hope she makes a quick recovery.


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## VSntchr

Nice sale Faramir.. 
Another year of "one-offs" for NVT will further suppress the share price, looks like you got out at the best time given your situation!
Hope your partner is doing better.


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## galumay

galumay said:


> I think NVT is slowly closing the gap between price and fair value, its been a bumpy ride for the last couple of years, but the structural advantages and strengths of the business largely remain intact.




I got this totally wrong, fell for the narrative without understanding the business fudamentals. Luckily I got out last year without too much damage, and a lesson about business analysis!


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## Faramir

43z3h0vlbzv9qj.pdf

Takeover offer. $5.50 at around 3pm. Up from $4.25 opening price. Looks like I didn't have the patience to hold on for another 11 months. Well, I needed money desperately and things were not looking crash hot for Navitas.

AustralianSuper must see something of value that I can not see.


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## JTLP

Faramir said:


> 43z3h0vlbzv9qj.pdf
> 
> Takeover offer. $5.50 at around 3pm. Up from $4.25 opening price. Looks like I didn't have the patience to hold on for another 11 months. Well, I needed money desperately and things were not looking crash hot for Navitas.
> 
> AustralianSuper must see something of value that I can not see.




The founder is part of the bid too. Maybe sees better efficiencies?


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## So_Cynical

So_Cynical said:


> (7th March 2017) Screaming buy if your a believer at all.



`





`
Nailed that bottom, i would be selling into this as well.


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## fiftyeight

craft said:


> *Re: NVT - Navitas*
> 
> NVT is on the periphery of Vocational education - just cooling their heels.
> 
> If you go to about the 3 Hour 5 Minute mark there is a interesting answer to a question regarding the VET sector. If you want to know what quality and ethics in education and looks like and you have three hours to spare you could watch from the start.
> 
> http://edge.media-server.com/m/p/2nj6h35o
> 
> ps
> 
> Buying quality is boring compared to the swings in this sector lately but if you are looking for a passive long term investment there is no substitution for quality.
> 
> For mine (a very long term view) - Association with VET sector, Macquairie contract loss and Various governments around the world playing around with visa entry requirements has produced a good environment for accumulating more NVT.




First post from Craft in sometime coinsides with a buy out of NVT.  

Maybe Craft can share some thoughts on recent events?


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## greggles

Navitas has spurned a $1.4 billion takeover offer from its co-founder and local private equity firm BGH, saying it undervalues the company.

https://www.news.com.au/finance/bus...d/news-story/7b7c0cb93c4c3d8eb9ac0b7cc1fe111d


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## galumay

Brave! It values it higher than my valuation!


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## JTLP

galumay said:


> Brave! It values it higher than my valuation!




I’m glad my NVT are free carried. There’s just too much risk atm - would have sold up if I were the directors.


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## MrChow

What's the future of online competitors?

If you're an international student in the future could you find a course online that acquires the same credits to be able to study without the cost of moving country?


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## barney

JTLP said:


> I’m glad my NVT are free carried. There’s just too much risk atm - would have sold up if I were the directors.




Know basically nothing about this one, but if the Directors are recommending a "no deal" …. the first thing I would look at is how much skin in the game the Directors have

Lots of skin …. inclined to trust their judgement as it affects their personal bottom line.

Little skin …. tread carefully ….. Directors notoriously like collecting their pay cheques for as long as possible


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## System

On July 8th, 2019, Navitas Limited (NVT) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between NVT and its shareholders in connection with the acquisition of all the issued capital in NVT by BGH Bidco A Pty Ltd.


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## craft

craft said:


> *Re: NVT - Navitas*
> 
> 
> 
> They issued 27 Million shares via placement/SPP and 6 Million to SAE vendors all at $3.80. They listed with 346.5 Million shares and now have 375 Million shares – Hardly chronic dilutors.
> 
> When one cash cow buys another they aren’t going to have too much trouble paying down the debt. Net interest cover for the last half was 12.3 – Hardly demanding. More like efficient use of a very robust cash flow.
> 
> Nothing here for a long term investor to be fussing about. Buy right - hold tight.
> 
> 
> 
> 
> Looks like we are in total disagreement twice in the same week.  That is one of the most powerful wealth creating business models that you are going to see.
> 
> I don’t really have much to add to my previous posts about NVT except for TIME. Lets revisit this in 10 years time. The proof will be in the pudding.
> 
> ps. If I was a medium term trader this is still in a down trend despite the last few weeks.






> I don’t really have much to add to my previous posts about NVT except for TIME. Lets revisit this in 10 years time. The proof will be in the pudding.




I found a note in my NVT file whilst preparing the SMSF return to revisit this post in April 2022. Unfortunately, NVT has been bought out, facilitated by its founder and a few others. Those guys get to remain holders of the private company. I’m disappointed that the option for other shareholders to buy shares in the private company was removed in the second bid as I believe NVT best days lay ahead. The insiders know it, the market is too impatient and voted for the cash.

Fair to say most people lost interest/faith in NVT as could be seen later in the thread. Personally, I always saw it as a superior business and never saw anything other than business as normal. Business is not always easy and there are periods of consolidation and grind even with good businesses. I accumulated NVT not long after it listed, more during the time of the posts in this thread and more again 2017 & 2018.

I recall being accused of not giving examples when I posted here previously. It’s a bit hard when my investment time frame is longer than everybody is interested in. Any rate lets revisit NVT now it is no longer listed as an example based on the first day, I posted on NVT. (no cherry picking)

Remember the idea is to buy businesses for their cash flow. Buy right, hold tight.

I held NVT in accumulation mode within SMSF so have presented the after-tax cash flows accordingly.








11.5% per annum after tax on that parcel for just buying right and doing nothing else strikes me as an acceptable return and an outperformance of the All ords accumulation index, especially given the risk of buyout prior to full investment potential realisation has occurred.

The best thing about investing for cashflow based on the business performance rather than reacting to price performance is the scalability. 11.5% after tax for 7.5 years turns each 1M into 2.3M Many of the parcels I held, especially the early ones did better and often significantly better than the example detailed.  (time is the friend of a good business)


Ps. this is NVT's price chart since listing and is what a business with a sustainable competitive advantage looks like on a long-term chart. Lots of squiggles, as at times it invests for the future and at other times it reaps the benefits of those investments. The short sightedness of the market reacts to the near-term outcomes but long term the business manages to muddle its way on a north-east journey.






Happy journey's - I hope you have all made your fortunes. Times have been great.


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## Klogg

craft said:


> I found a note in my NVT file whilst preparing the SMSF return to revisit this post in April 2022. Unfortunately, NVT has been bought out, facilitated by its founder and a few others. Those guys get to remain holders of the private company. I’m disappointed that the option for other shareholders to buy shares in the private company was removed in the second bid as I believe NVT best days lay ahead. The insiders know it, the market is too impatient and voted for the cash.
> 
> Fair to say most people lost interest/faith in NVT as could be seen later in the thread. Personally, I always saw it as a superior business and never saw anything other than business as normal. Business is not always easy and there are periods of consolidation and grind even with good businesses. I accumulated NVT not long after it listed, more during the time of the posts in this thread and more again 2017 & 2018.
> 
> I recall being accused of not giving examples when I posted here previously. It’s a bit hard when my investment time frame is longer than everybody is interested in. Any rate lets revisit NVT now it is no longer listed as an example based on the first day, I posted on NVT. (no cherry picking)
> 
> Remember the idea is to buy businesses for their cash flow. Buy right, hold tight.
> 
> I held NVT in accumulation mode within SMSF so have presented the after-tax cash flows accordingly.
> 
> View attachment 96493
> 
> 
> 
> 11.5% per annum after tax on that parcel for just buying right and doing nothing else strikes me as an acceptable return and an outperformance of the All ords accumulation index, especially given the risk of buyout prior to full investment potential realisation has occurred.
> 
> The best thing about investing for cashflow based on the business performance rather than reacting to price performance is the scalability. 11.5% after tax for 7.5 years turns each 1M into 2.3M Many of the parcels I held, especially the early ones did better and often significantly better than the example detailed.  (time is the friend of a good business)
> 
> 
> Ps. this is NVT's price chart since listing and is what a business with a sustainable competitive advantage looks like on a long-term chart. Lots of squiggles, as at times it invests for the future and at other times it reaps the benefits of those investments. The short sightedness of the market reacts to the near-term outcomes but long term the business manages to muddle its way on a north-east journey.
> 
> View attachment 96491
> 
> 
> Happy journey's - I hope you have all made your fortunes. Times have been great.




Funnily enough, I thought of you @craft when the takeover offer was announced. I gained more understanding than money from this one (roughly 15% CAGR on my small investment), but it's been very useful. 

I did think this takeover was a long time in the making, given Rod's move away from NVT and then an offer not long after... I don't think anyone understood the business better than it's founder/CEO, so the buyer knew what they were getting.


----------

