IEL - IDP Education

[Trav.]

I like the look of the chart here. Recovering nicely and momentum on the way up.

 

[Dona Ferentes]

Thirty-eight Australian universities stand to raise nearly $70 million each following a proposal for a restructure within IDP Education that would give each institution direct control over its stake in the company.

Under the proposal, the universities, which own 40 per cent of a holding company called Education Australia, would see 25 per cent distributed to each university with the remaining 15 per cent stake sold via a block trade valued at nearly $1 billion by December 11.

Shares in IDP dropped sharply after the announcement, ending the day 5.65 per cent lower at $22.86. At that price the company is valued at $6.36 billion, putting a price tag of $954 million on the parcel being put up for sale this year – or $25 million for each university – and $1.6 billion on the shares being retained.

Restrictions placed around the sale of shares by the 38 universities include that they would not be able to dispose of any IDP shares until May 2022, and in the following six months would be only able to dispose of up to 50 per cent of their stakes

Education Australia was created in the late 1960s as the Colombo Plan brought international students, particularly from Asia, into the country, as a measure in soft diplomacy. IDP Education was created in 2015, with universities retaining a 40 per cent stake.

IDP education owns the International English Language Testing System, along with the British Council and the University of Cambridge. IELTS, long considered the gold standard in English-language testing, is an international standardised test of English-language proficiency for non-native speakers wishing to study in another country.

since listing:

 

[Dona Ferentes]

Summary
• IDP has entered into a binding agreement to acquire 100% of the British Council’s Indian IELTS operations
• Post transaction IDP will be the sole distributor of IELTS in India
• Total consideration of £130m (A$238m) on a cash free, debt free basis

• The transaction will be funded from existing cash and debt facilities
• IDP will maintain a strong balance sheet post transaction


up more than 15% to a new high hitting $29.40; now settling around $28.80

 

[greggles]

Another great acquisition for IEL. India is a huge market for IELTS. This should be a real driver of revenue growth for the company.

The announcement outlined some of the key benefits of the acquisition.

The acquisition is highly strategic for IDP and provides several benefits:

• Increased exposure to the high-growth Indian IELTS market
• Simplified distribution arrangements providing the opportunity to simplify and improve the delivery of IELTS to test takers in India
• Ability to deliver continuity for IELTS customers by delivering a consistent, trusted test experience throughout the transition process from the British Council to IDP
• Scope for material combination benefits with estimated run-rate synergies of A$6 million – A$8million expected to be delivered within 24 months of completion
• De-risked integration given IDP’s existing leading market position and deep understanding of the Indian market
• A financially compelling transaction for IDP shareholders with EPS accretion of approximately 13% (pre-synergies) on a pro forma CY19 basis (reflecting the 12 months prior to the impact of COVID-19)

 

[Dona Ferentes]

and closed near high for the day... $29.44

 

[Dona Ferentes]

Another great acquisition for IEL. India is a huge market for IELTS. This should be a real driver of revenue growth for the company.

certainly the market thought that could be the case, but the story may be obscured by ongoing pandemic restrictions. Yes, there was enthusiasm, and that run from the mid $20s in July to nudge $40 in November has not been sustained. With H1 results announced on Wed, another 10% was taken off to close on Friday at $28.50. Costs/ "investing for growth" seem to be the issue. And all those valuation metrics ... off scale? And Intangibles !!

English language testing and international student placement group IDP Education is taking comfort from signs Australia’s foreign education market may be stirring, but it was India that drove growth in the December half. English language tests in India soared 97 per cent year-on-year, with total revenue from the country soaring 150 per cent. The acquisition of the British Council’s English language testing business has been a springboard for wider Indian expansion, with 27 new student placement offices opened during this financial year, taking the total to 67.

• Total revenue of $397 million, representing the highest half-year revenue ever recorded by IDP.
• IELTS volumes increased by 79%, with growth recorded across the majority of countries where IDP administers the test.
• Successful integration of the British Council’s Indian IELTS operations, following acquisition.
• A 36% increase in Student Placement revenue, highlighted by a 73% increase in Multi-Destination revenue.
• Digital Marketing revenue rose by 13% to $20 million as our institutional clients turned to IDP to support their rebound strategies.
• Ongoing digital transformation program for student placement and IELTS, with downloads of the recently released IDP Live app reaching 500,000

Costs/ "investing for growth" seem to be the issue.
• Overhead costs per month (preAASB16) averaged $22m in H1 FY22 v $16m in H1 FY21 and $18m in H2 FY21
• Marketing spend increased by 73% v pcp reflecting a focus on building the pipeline for future intakes
• Broad-based hiring resumed during the period with expansion of digital and customer facing roles designed to drive future revenue growth

 

[Dona Ferentes]

Barrenjoey’s equities desk moved an $84 million trade on Monday on the same day IDP Education’s university shareholders were allowed to sell for the first time in six months. It is understood the trade was made on behalf of three unis while a fourth uni sold half of its holding.

IDP Education’s 38 university shareholders, which collectively hold a 12.5 per cent stake, were long-time investors in the company via an entity called Education Australia; this was dissolved last year.
The 38 universities have since owned 25 per cent of IDP Education in their own names.

- but I could imagine the VCs are looking at their balance sheets and reprioritising.

 

[Dona Ferentes]

IDP Education’s profits have rebounded 159 per cent to $102.8 million as COVID-19 restrictions lifted.

• Revenue, compared to FY21, grew 50 per cent to $793.3 million,
• First half revenue growing 47 per cent primarily from the 62 per cent growth in International English Language Testing System revenue.
• Second half revenue grew by 53 per cent with Student placement revenue up 68 per cent and IELTS revenue up 52 per cent compared to the same period in FY21.
• EBIT rose 148 per cent to $158.9 million as a result of “strong revenue growth in our key revenue lines, student placement and IELTS”.

Market liked it; up 12% and now $30.00

 

[Dona Ferentes]

• IDP Education lost $1.1 billion in sharemarket capitalisation in one day.
• Canadian authorities are opening up English language proficiency testing to rival players.
• It is a baptism of fire for the new CEO, who has joined from Adore Beauty.
• UBS said the move could cut annual profits by 14 per cent

was $40 late 2021

 

[Dona Ferentes]

IDP Education lost $1.1 billion in market cap in one day.

• Canadian authorities are opening up English language proficiency testing to rival players.

was $40 late 2021

results out ... and uo 10 per cent at open
.
Key FY23 Highlights:
• Record revenue of $982 million, up 24 per cent vs FY22; driven by strong student placement revenue growth of 63 per cent vs FY22.
• Adjusted EBIT* of $228 million, up 40 per cent vs FY22 and Adjusted NPAT* of $154 million, up 45 per cent vs FY22, demonstrating strong operating leverage in the business model.
• Record student placement volumes of 84,600, up 53 per cent vs FY22, driven by the Australian market growing 77 per cent vs FY22, and other study destinations growing at 39 per cent.
• Record IELTS volumes with 1.93 million tests administered by IDP during FY23.
• English language teaching course enrolments of 94,300, up 35 per cent vs FY22.
• Final dividend declared of 20 cents per share taking full-year declared dividends to 41 cents per share, which is an increase of 52 per cent vs FY22.
.
And, recapturing some of May selling

 

[Dona Ferentes]

pushing ahead.

Key results for the six months to 31 December 2023:
• Record revenue of $579 million, up 15 per cent on H1 FY23, driven by strong student placement revenue growth of 44 per cent.
• Adjusted earnings before interest and tax (EBIT) of $159 million, up 25 per cent and adjusted Net Profit After Tax (NPAT) of $107 million, up 23 per cent, demonstrating strong operating leverage in the business model.
• Record student placement volumes of 57,300, up 33 per cent.
• English language testing (IELTS) volumes of 902,000, down 12 per cent.
• English language teaching volumes of 51,600 courses, up 15 per cent.

25c ff dividend (some 72% of NPAT)

 

[debtfree]

A snippet from tonight's Market Index Wrap

IEL is the piggy in the middle in today's ChartWatch! Rather than double-greens, it has the dreaded double-pinks! Add in consistent lower peaks and lower troughs, and predominantly supply-side candles, and it has been a tough time for IEL shareholders for the past 12-months.

Today's gap and run provides some hope the tide of excess supply might be changing. Investors saw something in today's results which changed their mind on the stock. Many decided it signals an improvement in IEL's earnings outlook, and therefore they either wanted to buy, or buy back their shorts! Either way, it's a fledgling step towards turning IEL's terrible trends.

There is a black mark hanging over the chart though. Literally. It's today's big black candle! Ordinarily, if the news is perceived to be unequivocally good, we would expect to see a long white candle after the gap up. Instead, today's candle demonstrates trepidation among investors to fully commit to the "this time it's different" mantra.

Despite it's bearish tinge, today's gap and black candle gives us an excellent point of no return for the current long term downtrend. I suggest if IEL can close above today's high of $23.33 – which coincides nicely with the top of the long term downtrend ribbon – it likely signals the end of the long term downtrend.

On the other hand, if it closes back below the start of the gap at 20.44, it likely signals the long term downtrend is very much intact.

IDP Education (ASX: IEL)​

Another fine example of technical analysis in action!​

 

[Dona Ferentes]

selling hasn't stopped

.

 

[finicky]

Not to be too pedantic, but actually to be just that, why is the open/close big gap up bar on 14 Feb coloured green on your software? It opens on the high of the day and closes on the low, therefore should be red? Actually I notice a few apparent anomalies like that.

Unless there is a confident view of growth ahead, IEL still seems wildly overvalued. It is trading at about 10x book and the last 4 years of ROE wouldn't justify anything like that. Not Held.

Down day shown below - 14 Feb:

 

[Dona Ferentes]

indeed it does.

 

[JohnDe]

Not to be too pedantic, but actually to be just that, why is the open/close big gap up bar on 14 Feb coloured green on your software? It opens on the high of the day and closes on the low, therefore should be red? Actually I notice a few apparent anomalies like that.

Unless there is a confident view of growth ahead, IEL still seems wildly overvalued. It is trading at about 10x book and the last 4 years of ROE wouldn't justify anything like that. Not Held.

Down day shown below - 14 Feb:

View attachment 172156

I put IEL on my Watch List about a year ago, with a extremely low figure. Today it hit that low figure, but now I think that you may be correct, there is still a bit of fall left. Unless the new CFO can do some magic.

 

[greggles]

IEL looks to have bottomed out at around $16. Goldman Sachs buying in at current levels. Saw a handy 7% share price gain today and a reversal could be on the cards.

 

[Dona Ferentes]

IEL looks to have bottomed out at around $16. Goldman Sachs buying in at current levels..

but then... , the macro world is turning agin a stock like this. Big trade on 3/06 but there's been a 40 per cent drop over the 12 months

.
Regulatory and Market Update
.
• A more restrictive policy environment in IDP’s key destination countries is reducing the size of the international student market
• This has negatively impacted IELTS testing and student placement volumes during H2 FY24
• For FY24 IDP expects a 15-20% increase in student placement volumes, a 15-20% decline in IELTS volumes and solid average fee growth versus FY23
• Adjusted EBIT for FY24 is expected to be broadly in-line with FY23
• Given the current policy settings and market trends, IDP expects that the size of the international education market will decline by 20-25% over the next twelve months
• In response, IDP is implementing a cost reduction program that is designed to align expenses to the near-term revenue outlook
• As the leading quality player in the sector, IDP remains very well placed to help students and institutions navigate these challenging market conditions and expects to grow its market share in student placement
• Despite the shorter dated cyclical dynamics, IDP remains confident in the long-term growth drivers for the industry
• IDP is strongly leveraged to the powerful long-term macro forces that will underpin the sector’s return to sustainable growth and is executing on a strategy to create a unique offering for students seeking a better life through international education

 

[Dona Ferentes]

the macro world is turning agin a stock like this. Big trade on 3/06 but there's been a 40 per cent drop over the 12 months
.
Regulatory and Market Update

and lost 10 per cent, hovering around $14

 

[Miner]

IEL appears to be rising through the ashes at last
MFG has constantly raising its holding and Citi joined the club too.
Though I must confess not to have any faith on MFG or Citi's analysis
DNH