{"id":2670,"date":"2023-12-04T11:33:37","date_gmt":"2023-12-04T11:33:37","guid":{"rendered":"https:\/\/economicherald.net\/?p=2670"},"modified":"2023-12-04T11:33:37","modified_gmt":"2023-12-04T11:33:37","slug":"moneytalks-this-educational-stock-could-profit-from-the-return-of-international-students-to-australia","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=2670","title":{"rendered":"MoneyTalks: This educational stock could profit from the return of international students to Australia"},"content":{"rendered":"<p>Academics Australasia could benefit from the return of international students<br \/>\nMaxiPARTS\u2019s valuation looks attractive at this level<\/p>\n<p>\u00a0<\/p>\n<h2>The return of international students<\/h2>\n<p><strong>Taylor Collison<\/strong> has a <strong>Speculative Buy<\/strong> recommendation on education stock, <strong><a href=\"https:\/\/stockhead.com.au\/company\/academies-australasia-akg\/\">Academies Australasia Group (ASX:AKG)<\/a><\/strong>, with a <strong>40c price target in 12 months<\/strong> (versus current share price of 27c).<\/p>\n<p>The $35m market capped AKG is a Higher Education and VET (Vocational and Educational Training) provider.<\/p>\n<p>Revenue is generated from the provision of tuition of predominantly international students. The business operates 17 licensed higher education colleges throughout Australia, and one in Singapore.<\/p>\n<p>The Australian tertiary education sector can be categorised into three sectors: VET, higher education, and English Language Intensive Courses for Overseas Students (ELICOS).<\/p>\n<p>These three sectors are large, complex and growing. Higher education accounts for the lion\u2019s share of Australia\u2019s international student arrivals, with 47% of all overseas student enrolments registering higher education courses in 2020.<\/p>\n<p>Taylor believes that continued return of international students to Australia will provide educational providers like AKG with a major tailwind.<\/p>\n<p>AKG\u2019s enrolled student base is heavily skewed to international students, with 75% coming from overseas to undertake study at AKG\u2019s colleges.<\/p>\n<p>\u201cThe return of international students post COVID-19 provides a near-term tailwind for student enrolment growth, a key driver of AKG\u2019s earnings,\u201d said the note out of Taylor Collison.<\/p>\n<p>\u201cWe believe AKG is in a strong position to capture the continued influx of international students given its compelling course range, strong agent relationships; and a high-quality product.\u201d<\/p>\n<p>Taylor also says that through its newly leased <strong>Goulburn Street premises<\/strong>, AKG has significantly expanded its student capacity and course offering.<\/p>\n<p>\u201cStarting in 2H24, we expect courses at the Goulburn Street premises to generate revenue upon the continued return of international students.<\/p>\n<p>\u201cThe majority of courses to be delivered at Goulburn Street are high margin, and given AKG\u2019s relatively fixed cost base, should generate operating leverage as enrolment numbers grow,\u201d said the broker.<\/p>\n<p>In the Australian tertiary education market, AKG has built a valuable position and Taylor believes this is not reflected in its current market capitalisation.<\/p>\n<p>\u201cTo realise this embedded value, it is conceivable that AKG enters into a part sale and joint venture agreement with a global sector participant. Any transaction would likely occur at a material premium to that ascribed by AKG\u2019s current equity value,\u201d said Taylor.<\/p>\n<p>In the longer term, Taylor believes that Australia\u2019s competitive advantage in the tertiary education is sustainable, and will always attract overseas students especially from Asia.<\/p>\n<p>Taylor cites Australia\u2019s established and globally regarded education sector, favourable student pricing, physical proximity to Asian markets, as well as attractive working rights.<\/p>\n<p>\u201cThese factors provide Australian tertiary education institutions, including AKG, with a long-term tailwind for growth,\u201d said Taylor Collison.<\/p>\n<p>\u00a0<\/p>\n<h2>MaxiPARTS\u2019 valuation looks attractive right now<\/h2>\n<p>Meanwhile, Taylor Collison has slapped an <strong>Outperform rating<\/strong> on <strong><a href=\"https:\/\/stockhead.com.au\/company\/maxitrans\/\">MaxiPARTS (ASX:MXI)<\/a><\/strong>, with a <strong>$3.40 price target<\/strong> (versus a $2.50 current price).<\/p>\n<p>MXI\u2019s core business is the supply of aftermarket truck and trailer parts, consumables, and accessories in Australia. Services provided include parts interpreting and procurement. The company thus runs a fully integrated distribution network that allows it to hold stock close to its customers.<\/p>\n<p>The $140m market capped company commenced trading on the ASX in May 2013, but has been operating for more than 30 years.<\/p>\n<p>Several strategic acquisitions have accelerated product and geographical expansion over this period.<\/p>\n<p>For example in June this year, MXI acquired F\u00f6rch Australia, a wholesaler of automotive supplies and workshop consumables. And in November, it acquired IP, which supplies general and heavy-duty truck and trailer parts to the mining and transport industry across WA.<\/p>\n<p>Meanwhile, data shows that the commercial vehicle aftermarket in Australia is worth more than $2bn per annum.<\/p>\n<p>According to Taylor, MXI trades at an <strong>appealing 10.1x our FY25 EPS<\/strong>, a substantial discount to peers and 47% discount to its nearest listed competitor, <a href=\"https:\/\/stockhead.com.au\/company\/supply-network-snl\/\">Supply Network (ASX:SNL)<\/a>.<\/p>\n<p>\u201cOur estimates assume an effective tax rate of 30%, but MXI has at least 2.5 years of carry forward tax losses.<\/p>\n<p>\u201cMXI has invested ~40% of the mCap over the past few years with Truckzone, F\u00f6rch and IP, which we are expecting will step change the earnings growth trajectory over the medium-term, and lift the ROIC from high single digits as at FY23, to low double digits by FY26.<\/p>\n<p>\u201cThis should translate into valuation re-rate,\u201d said the broker.<\/p>\n<p>Further, Taylor Collison believes that MXI could be a candidate for a buyback in the next 18-24 months if the valuation multiple remains depressed.<\/p>\n<p>\u201cA special dividend would not be a tax effective distribution (without pre-paying tax) given its franking account balance, and 2.5yr coverage in carry forward tax losses,\u201d said the note from the broker.<\/p>\n<p>\u00a0<\/p>\n<h2>Share prices today:<\/h2>\n<p>\u00a0<\/p>\n\n<p><span class=\"mce_SELRES_start\">\ufeff<\/span><span class=\"mce_SELRES_start\"><\/span>\u00a0<\/p>\n<p><em>The views, information, or opinions expressed in the interview in this article are solely those of the broker and do not represent the views of Stockhead.<\/em><\/p>\n<p><em>Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.\u00a0<\/em><\/p>\n<p><span class=\"et_bloom_bottom_trigger\"><\/span><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/experts\/moneytalks-this-educational-stock-could-profit-from-the-return-of-international-students-to-australia\/\">MoneyTalks: This educational stock could profit from the return of international students to Australia<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>Academics Australasia could benefit from the return of international students MaxiPARTS\u2019s valuation looks attractive at this level \u00a0 The return of international students Taylor Collison <a href=\"https:\/\/economicherald.net\/?p=2670\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":2671,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2670","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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