IDP Education: Interim result 2019
Recommendation
- {{x.value}}
{{ twilioFailed ? 'SMS Code Failed to Send…' : 'Enter verification code' }}
{{ completedStep1 ? 'Authentication & Security' : content.trialHeading.replace('{0}', user.FirstName) }}
{{ content.upgradeHeading.replace('{0}', user.FirstName) }}
The email address you entered is registered with InvestSMART
Please login to continue
We have sent you an email with the details of your registration.
Looks you are already a member. Please enter your password to proceed
{{ upgradeCTAText }}
Updating information
Please wait ...
Your membership to InvestSMART Group recently failed to renew.
Please make sure your payment details are up to date to continue your membership.
Having trouble renewing?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
You've recently updated your payment details.
It may take a few minutes to update your subscription details, during this time you will not be able to view locked content.
If you are still having trouble viewing content after 10 minutes, try logging out of your account and logging back in.
Still having trouble viewing content?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
Please click on the ACTIVATE button to activate your Intelligent Investor 15-day free trial
Please click on the ACTIVATE button to finalise your membership
Unsuccessful registration
Registration for this event is available only to Eureka Report members. View our membership page for more information.
Registration for this event is available only to Intelligent Investor members. View our membership page for more information.
- You are already registered for this event.
- This event is already full.
- Please select a quantity for at least one ticket.
- {{ i }}
Forgotten password
Please enter your email address below to request a new password
- Indepth analysis of ASX listed shares
- BUY, Hold and Sell Recommendations
- Ideas Lab
- Special Reports
- Alan Kohler’s Weekend Briefing
- Interviews with CEO’s & top influencers
- Money Cafe and Talking Finance
- Super Advice and Q&A with Ask Alan
The term 'sweet spot' doesn't begin to describe it. Demand from international students for placements into Western universities and for IELTS English tests continued to surge in the six months to December. As a result, IDP Education's revenues rose 26%.
Pretty much everything went right. The company put through price rises for IELTS tests in Australia and India, with the computer-delivered version of the test to be available in 40 countries by the end of the financial year. The total number of IELTS tests delivered rose 18% to 660,000.
While IELTS testing generates close to 60% IDP's revenues, it's not where its fastest growth is coming from. Revenues from placing students into non-Australian universities - particularly Canada and the UK - rose 53% as the company's 'multi-destination' strategy ramped up. But even Australian student placement revenues rose 30% as more postgraduate students, who pay higher fees, headed to our shores.
| Year to Dec | 2018 | 2017 | /(-) (%) |
|---|---|---|---|
| Revenue ($m) | 304.3 | 242.0 | 26 |
| EBITDA ($m) | 66.8 | 50.3 | 33 |
| NPAT ($m) | 41.8 | 31.6 | 32 |
| EPS (c) | 16.6 | 12.6 | 31 |
| Interim div of 12c, up 41%, 50% franked, ex date 7 Mar |
|||
IDP might have very favourable tailwinds, but it's also benefiting from management revolutionising its business model. The company's investment in its digital platform is now largely complete, which suggests there's a lot more growth to come. Operating margins - already at 16% - look likely to expand.
With such a positive outlook, the market now prices IDP as a 'market darling' on a prospective 2019 PER of 55. There's a strong case for shareholders to sell down some of their holdings - our maximum recommended portfolio weighting is 6%. Be aware any disappointment will hurt the stock.
However, our experience is that high-quality companies often continue surprising, just as IDP historically has. Acquisitions are possible, or a restructuring of IDP's relationship with the British Council, with which it co-owns the IELTS test. Despite IDP's high price, there's a decent chance it's deserved.
The stock remains a long way from value territory. But we're lifting our recommended Buy price to $8.00 and our Sell price to $16.00, which means the recommendation remains HOLD.
Recommendation
Call 1300 880 160
Start a chat
Schedule a call
