Wednesday, 1 March 2023
by Berkeley Lovelace
School is back, tertiary studies have resumed for Aussie students around the country and ASX education stocks appear to be embracing the new year optimisically with strong results in the recent February reporting season.
China’s recent decision to impose on-campus learning requirements is set to push tens of thousands of its students back to Aussie campuses.
Before the pandemic, Chinese international students accounted for ~40% of international students at Aussie universities, bringing in more than $10 billion annually across the education sector.
According to the latest data, student visa applications, considered an indicator of future student numbers, are at record levels.
Pac Partners head of research Stephen Scott told Stockhead recently international student numbers have only recovered to 60-70% of pre-Covid levels with plenty of upside and drivers for the education sector still to come.
“This returning student cohort is feeding into the introductory courses such English and then some of these students tend to look for vocation and university style courses after the English course, which is a positive,” he said.
“Improved visa processing is also structurally helping the sector.”
Scott said the warmer Aussie climate and lower AUD makes it an appealing destination for key markets in Southeast Asia.
“We are natural English speakers in well-regulated industry, in an economy with virtually full employment with high minimum wage rates,” he said.
“These are structural advantages that endure well beyond the post-Covid return of students.”
Schrole Group (ASX:SCL) CEO Rob Graham told Stockhead there is a senses of optimism within the education sector.
SCL targets teachers and educational organisations, combining recruitment, background checks, onboarding, relief teacher management, and professional development.
“In our business we’ve seen a lot more optimism in the education market,” he said.
“Borders have opened particularly with China and schools are going back to old hiring patterns so we are really pleased because we are seeing schools accelerating the use of our platform and use a variety of our services.”
SCL recently released its full FY22 results which included(compared to FY21):
“We are really positioned for growth and I think education globally is a really positive story,” Graham said.
Graham said the education sector is quite resilient and has weathered the Covid-19 pandemic quite well and despite economic challenges including inflation, rising costs of living and interest rates should continue to grow.
“Kids need to be educated and parents will put money into education,” he said.
“We are continuing to see growth in schools, growth in student numbers in Australia and worldwide and from our perspective because of that confidence people are willing to invest in finding the right teachers for their schools.”
Graham is confident of an uptick in many of the education stocks.
“You will get the rise in student enrolments coming in which is good for Australia and also, from our point of view, worldwide,” he said.
“There is a worldwide shortage of teachers so an increasing demand for quality teachers so reliance on platforms like ours will increase.
“We are coming into a buoyant period.”
KED, which made its ASX debut in 2021, runs online university courses (predominantly post-graduate) through its technology and data platform KeypathEDGE and is partnered with 32 universities across Australia, North America, Britain and Malaysia.
According to its H1 FY23 results, revenue was US$58.7 million, 3.1% higher than the pcp. KED has US$51.5million in cash with no debt as of December 31.
H1 FY23 revenue of US$31.3 million was 22.3% higher than H1 FY22.
During the half, Melbourne Business School signed on as new partner to launch its part-time MBA course online. Southeast Asia continues to perform in line with KED’s expectations with a strong pipeline.
“Keypath is well positioned across the globe to expand its technology and services to continue to help universities provide quality access to education in a digital environment including by continuing to grow our programs across partners and regions,” founder and CEO Steve Fireng said.
NextEd, which recently changed its name from iCollege, delivered record revenues and a strong balance sheet for H1 FY23 courtesy of record international student numbers, business expansion activities, a broader range of courses and operating leverage achieved from higher campus utilisation.
Key financial highlights included:
International student highlights for H1 FY23 included:
“We have delivered extraordinary H1 FY23 results and are excited about harnessing future growth opportunities through course range expansion, increasing our campus footprint and extending student lifetime value,” NXD CEO Glenn Elith said.
“The NextEd team is energised and committed to unleashing the potential of the organisation and its students.”
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