ADvTECH (ADH) is one of three listed commercial educational companies on the JSE, alongside Curro and its separately listed sister company, Stadio. ADvTECH operates two primary divisions: a schools division, which includes prominent names like Crawford, Trinity House, and Abbots, and a tertiary division, featuring institutions such as Varsity College, Rosebank College, and various specialist tertiary offerings. The group encompasses 109 schools and 33 campuses, serving approximately 78,500 students.
Historically, ADvTECH was predominantly supported by its schools division. However, in recent years, increased competition in this sector has squeezed margins, shifting the primary source of the company's profits to its tertiary division. A significant development in this shift was the company's acquisition of Monash College, which added 6,500 students and a state-of-the-art facility in the West Rand, complete with laboratories, residences, and sports facilities.
In its results for the six months ending 30th June 2024, ADvTECH reported a 9% increase in revenue and a 16% rise in headline earnings per share (HEPS). Total group enrolments grew by 6%. The company stated, "Group operating profit increased by 15% to R865 million (2023: R754 million) with the education division’s operating profit increasing by 16%. Resourcing’s operating profit increased by 3%, notwithstanding the decline in revenue. The group operating margin improved to 20.2% (2023: 19.2%). The operating margin in the education divisions improved to 23.5% (2023: 22.8%)."
Technically, the share has been in a strong upward trend since the end of May 2020. It is currently trading at a price-to-earnings (P:E) ratio of 19.12, which suggests there is still upside potential. In our view, ADvTECH is a solid, blue-chip company with strong medium-term prospects, and it remains relatively inexpensive. Any significant improvement in the South African economy will directly benefit this company, and it is poised to gain from the newly appointed Government of National Unity (GNU). Moreover, education is traditionally seen as a defensive sector, with parents often willing to make significant sacrifices to pay for their children's education, making this share resilient even in times of low economic growth.
Historically, ADvTECH was predominantly supported by its schools division. However, in recent years, increased competition in this sector has squeezed margins, shifting the primary source of the company's profits to its tertiary division. A significant development in this shift was the company's acquisition of Monash College, which added 6,500 students and a state-of-the-art facility in the West Rand, complete with laboratories, residences, and sports facilities.
In its results for the six months ending 30th June 2024, ADvTECH reported a 9% increase in revenue and a 16% rise in headline earnings per share (HEPS). Total group enrolments grew by 6%. The company stated, "Group operating profit increased by 15% to R865 million (2023: R754 million) with the education division’s operating profit increasing by 16%. Resourcing’s operating profit increased by 3%, notwithstanding the decline in revenue. The group operating margin improved to 20.2% (2023: 19.2%). The operating margin in the education divisions improved to 23.5% (2023: 22.8%)."
Technically, the share has been in a strong upward trend since the end of May 2020. It is currently trading at a price-to-earnings (P:E) ratio of 19.12, which suggests there is still upside potential. In our view, ADvTECH is a solid, blue-chip company with strong medium-term prospects, and it remains relatively inexpensive. Any significant improvement in the South African economy will directly benefit this company, and it is poised to gain from the newly appointed Government of National Unity (GNU). Moreover, education is traditionally seen as a defensive sector, with parents often willing to make significant sacrifices to pay for their children's education, making this share resilient even in times of low economic growth.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.