VET - Vocation Limited

[System]

Three established private providers of vocational education and training ("VET") in Australia, AVANA, BAWM and CSIA, and some ancillary businesses will be combined to form Vocation Limited.

Vocation Limited (VET) is expected to list on the ASX on December 9th, 2013.

http://www.vocation.com.au

 

[Freizeit]

what's will the impact be with the addition to asx 200?

 

[McCoy Pauley]

what's will the impact be with the addition to asx 200?

Should be an impetus for the stock price to move higher. A lot of funds managers have a mandate to only buy companies in a particular index, including the ASX 200. Accordingly, once the company is added to the ASX 200, they will have to buy enough shares to meet their weighting requirements.

IMO, the price movement will have no correlation with the company's underlying performance.

 

[skc]

6 months later, VET sitting just above a $1 after the Victorian DEECD's review basically said their services have been substandard.

The announcements were a bit unclear but from what I gathered, the biggest revenue earner (BAWM) is basically re-structured out of existence. I think everyone is still scratchin their heads on how they could say FY15 impact is only $5m.

The bad news doesn't stop there... imo.
- They will stop using 3rd party contractors... which takes time to implement and cost to supervise.
- Pretty significant reputational damage in front of students.
- Possible more scrutiny by the governemnt on other courses.
- They raised capital while the funding was withheld, while constantly re-assure the market that the review is expected to be immaterial, and that funding was only withheld on a subset of courses. The damage inflicted on the insto will take a long time to repair.
- There may be grounds of a class action for those who took up the placement @ $3.05.

There was no guidance beyond FY15... on paper the valuation is not demanding. But it might take some time for the market to embrace VET again.

 

[Wysiwyg]

$0.99 to $1.02 has soaked up a lot of supply with the 4 p.m. auction a likely decision time for the rest. There is another emotion that affects the share market and that is anger. What value is placed on VET after this I don't know but for now a round figure is holding.

IFL became a substantial holder before this event but their share price is not impacted.

 

[ROE]

I took a position today, risk reward justified.
management shake up wont be far away thought the board is supporting the CEO at this stage
but money talk and large holder if they want change they will get it

 

[VSntchr]

Is this a trading position ROE? Or an investment?

Looking at it from a trading position, you could say that the risk is about 10c based on the recent low of 76c. As for the upside --- I wouldn't have a clue..

Have never really looked into VET before but the revised guidance puts it on about 3.4x EBITDA.
Although, I guess relative value has gone out the window given the loss of trust that the company has encountered given their handling of the recent issues.

 

[ROE]

I expect management change wont be far away and clean out the system and they should have room to
move on and make a decent living

this is an attractive system as the government outsource education that TAFE use to do to private sector.
there are money here, it is a matter of doing it properly with governance in place.

investment holding but wont be shy to take profit if it recover fast.

 

[skc]

Is this a trading position ROE? Or an investment?

Looking at it from a trading position, you could say that the risk is about 10c based on the recent low of 76c. As for the upside --- I wouldn't have a clue..

Have never really looked into VET before but the revised guidance puts it on about 3.4x EBITDA.
Although, I guess relative value has gone out the window given the loss of trust that the company has encountered given their handling of the recent issues.

The announcement yesterday that the Board still supports the CEO is a slap on the face to all existing and potential investors imo.

The FY15 numbers will be "pre abnormal" galore. The steady state numbers probably won't be known for at least FY16. Then again, the numbers do look "cheap". ASH FY14 EBITDA was ~$23m has a market cap of $247m. While VET with forecast $55m EBITDA is valued at $192m.

What needs to take into account as well, is that VET was valued at a "cottage industry rollup model" multiple... now they won't have access to capital for quite some time. So they will never get back to the multiple they previously enjoyed.

 

[VSntchr]

The announcement yesterday that the Board still supports the CEO is a slap on the face to all existing and potential investors imo.

Yeah, it's clearly not something that shareholders wanted to hear and they are the ones who should be represented by the board. It just shows that no accountability has been taken for the poor disclosure IMO.
So what if Mr. Big Shot throws in another $500k...he already has $3.9m in the company. Maybe we could pull up a chart and get T/H to show how this is him protecting his position.

What needs to take into account as well, is that VET was valued at a "cottage industry rollup model" multiple... now they won't have access to capital for quite some time. So they will never get back to the multiple they previously enjoyed.

Another good example for downside scenario involved in this business model and the way market participants price them..

 

[skc]

Another good example for downside scenario involved in this business model and the way market participants price them..

I am going start another threads about this model... there are successes and there are failures. Please join there for more in depth discussion.

 

[AUSG]

Vocation faces 2 class actions, one from Slater and Gordon and another from Maurice and Blackburn

http://www.mauriceblackburn.com.au/...perts-to-examine-what-vocation-knew-and-when/

https://www.slatergordon.com.au/med...ass-action-against-vocation-limited-announced

 

[ROE]

alright I am all in today - wait another 5-10 years like ccp

 

[skyQuake]

alright I am all in today - wait another 5-10 years like ccp

I too am a believer, but for about 5-10minutes at a time

 

[hiddencow]

What worries me is that the forecast EBITDA is negative for the first half, which even they should be able to get right by now and a substantial improvement in the second half. Will that improvement eventuate. So far they've proven they can't forecast to save themselves.

At 15c though, you'll make a lot of money or lose it all.

 

[Wysiwyg]

Looks like the market is pricing in the low point of the revised fy15 midpoint guidance range.

 

[Wysiwyg]

From $3.40 down to 13.5 cents in less than 3 months reflects in one way the epic failure of this business. The optimist will hope for a full recovery while the pessimist will fear liquidation.

 

[Huskar]

Real interesting - looking at annual report key fears are funky things leftover from acquisitions like contingent consideration and put options in hands of vendor for part not sold. That was the sort of thing that made Photon Group (now EGG) really get dragged through the dirt, even though there may be some good businesses underneath..

 

[McLovin]

From $3.40 down to 13.5 cents in less than 3 months reflects in one way the epic failure of this business. The optimist will hope for a full recovery while the pessimist will fear liquidation.

Funny that yesterday John Dawkins was writing in the AFR about how he bought more VET shares after they fell.

http://www.afr.com/p/business/companies/why_john_dawkins_thinks_vocation_bPg2aJfgxAo7woCGe3Gz3I

 

[skc]

From $3.40 down to 13.5 cents in less than 3 months reflects in one way the epic failure of this business. The optimist will hope for a full recovery while the pessimist will fear liquidation.

Truely epic in deed... and it's all due to it's own undertaking. There's nothing else to blame.

Changing from market darling to an absolute thrashing in the blink of an eye.

P.S. Good trading today though.