{"id":5958,"date":"2024-02-16T06:37:51","date_gmt":"2024-02-16T06:37:51","guid":{"rendered":"https:\/\/economicherald.net\/?p=5958"},"modified":"2024-02-16T06:37:51","modified_gmt":"2024-02-16T06:37:51","slug":"criterion-dumped-these-education-stocks-lately-thatll-lern-ya","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=5958","title":{"rendered":"CRITERION: Dumped these education stocks lately? That\u2019ll lern ya."},"content":{"rendered":"

The federal government\u2019s crackdown on non-genuine foreign student visa applications has punished the valuations of the listed providers in the $40-billion-a-year sector, but the pain will not be felt equally.<\/p>\n

A year ago, the sector was enjoying a post-pandemic \u2018business as usual\u2019 fillip, but it\u2019s clear that foreign student numbers will decline from record levels as the government seeks to stem migration levels.<\/p>\n

The trend is not unique to Australia. A popular student destination, Canada has imposed a hard cap of 360,000 visas for 2024 \u2013 a reduction of 35 per cent on 2023. The UK is refusing work visas until students have finished their courses. <\/p>\n

Here, not all providers will suffer equally because of a ranking system that grades them according to the incidence of visa refusals, fraudulent applications and visa overstays.<\/p>\n

As Academies Australasia (AKG) chairman Lewis Schlederer explains: \u201cthe more the visa rejections, the lower the rating \u2026 and the lower the rating the more hoops the applicant has to jump through to get a visa.\u201d <\/p>\n

The glass-half-full take on the sector is that the enhanced visa scrutiny will be positive for the reputable players in the long term.<\/p>\n

Take this week\u2019s lesson from the $5 billion market cap gorilla IDP Education (ASX:IEL), which handles university student placements here and abroad.<\/p>\n

While the overall market swooned on Wednesday, heavily short-sold IDP shares gained 8 per cent after a better-than-expected half year profit (up 19 per cent to $97 million).<\/p>\n

Student volumes rose 33 per cent to a record 57,300, offsetting a downturn in IDP English language testing division.<\/p>\n

Notably, IDP claims that 91 per cent of its Australian visa applications were accepted, well above the industry average of 76 per cent.<\/p>\n

Due to report its half-year numbers next week, Academies Australasia operates colleges in the capital cities, as well as three regional towns and Singapore.<\/p>\n

The higher visa rejection rate means the company\u2019s refunds last year jumped 170 per cent to $10.6 million, but the company is doing all it can to ensure student applications are genuine.<\/p>\n

The amalgam of the listed iCollege and Redhill Education, NextEd Group (ASX:NXD) says its performance has been \u201cresilient\u201d, with new international student enrolments growing 7 per cent in the December quarter.<\/p>\n

NextEd teaches around 25,000 students across nine campuses.<\/p>\n

The company reports its interim numbers on Monday week but already has flagged revenue of $59.2 million, up 36 per cent. Bell Potter expects underlying earnings (ebitda) of $8.6 million for the half, as well as a small net loss for the full year.<\/p>\n

But listen up, class! NextEd shares have tumbled 61 per cent over the last 12 months.<\/p>\n

An alternative higher education exposure pertains not so much to nourishing young minds, but clipping the ticket on offshore tuition fees.<\/p>\n

In alliance with Convera, formerly Western Union\u2019s business-to-business arm, IODM (ASX:IOD) manages tuition payments for five UK universities, including foundation client the London School of Economics.<\/p>\n

The bursars were quick to latch on that the unis don\u2019t pay a penny, with IODM\u2019s revenue derived from the foreign exchange fee component of the student\u2019s tuition payments. IODM also \u2018reminds\u2019 students \u2013 more likely their parents \u2013 that an invoice might have been overlooked.<\/p>\n

IODM has unveiled an enhanced revenue-sharing compact with Convera, providing IODM with a 30 per cent clip of forex fees from students of new client universities and 25 per cent from extant ones. <\/p>\n

IODM gets minimum monthly fees, thus protecting it from the seasonal tuition cycle.<\/p>\n

IODM turned over $485,000 in the December quarter but the tweaked arrangement should boost revenue substantially.<\/p>\n

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
\nENDS<\/p>\n

<\/span><\/p>\n

The post CRITERION: Dumped these education stocks lately? That\u2019ll lern ya.<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

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