Ari Katz, CEO of Boston City Campus, joined BizNews Power Hour host Alec Hogg to look at the situation listed education companies find themselves in. With ADvTECH recently releasing results, Katz gives a different perspective into these companies, based on his experience. While he doesn’t analyse the results, he notes ‘behind the results is a story and you need to look at the context of that. This is a company that, I would imagine, [is] a lot more difficult to navigate and manage than the other listed education companies. It’s a complete city of schools, tertiary and resources’. Veteran stock broker David Shapiro also weighs in on the matter. – Jarryd Neves
Ari Katz on ADvTECH and the private education sector:
First of all, kudos to Roy Douglas and his team. I think they’ve done a great job on the results they have produced. Behind the results is a story. The context of the story is that this is a company that [is} a lot more difficult, I would imagine, to navigate and to manage than, for example, the other listed education companies – such as Stadio or Curro – because it’s a complexity of schools, tertiary and resources. It’s a much more complex environment.
In addition to that, the school environment is a very capital intensive environment which underwent a hiatus during the pandemic, with kids having been taken off-site and being taught remotely, which I think is a lot more difficult in the school space [than] it would be in the tertiary space because of the age of the kids.
One sees that by looking at the comparative of Curro, for example. Curro kicked off the year with a revenue increase of 16% and finished off with the revenue increase of only 5%. On the ADvTECH side, they also finished the year off with a 5% increase on their school side, but yet the operating profits were up 6%. Whereas Curro’s EBITDA was down -1%.
Ari Katz On Stadio:
I personally like Stadio, because I think it’s got the mix of the ability – as David was talking about earlier – the subscription economy. It’s a lot easier, I think, in the Stadio market to be getting that ratio between distance, contact and infrastructure right. It’s [also] a lot easier to manage those costs. Then, of course, that translates into your ability to pitch your revenue and pricing. If it was me, I would be betting on that one.
David Shapiro on ADvTECH:
I like ADvTECH. I just think they’re better placed. Mainly on the tertiary side, because I think they’re more entrenched than Stadio. Stadio has still got to build at that side, whereas I think – and I’m not an analyst and I haven’t got Ari’s background – but my understanding is that in the tertiary market, they’ve got Varsity College. They’ve got places, so they’re quite well-established in terms of where they are.
They also do a lot of business courses and so on. I think that’s where the money was made. I think they, if I recall correctly, outstripped the schools. There was for more revenue coming from the tertiary than from schools – and the schools weren’t bad. That’s an area I like about ADvTECH as well. They’re in the space which Stadio still has to kind of grow into, develop and get a name for.
Ari Katz on challenges facing ADvTECH, Curro and Stadio:
I think one of the challenges that ADvTECH – and Curro to some extent –Â is facing, is that ADvTECH have got quite a number of brands that are in the top end of the market. Crawford, for example. One of the problems with that – which they’ve mentioned themselves – is the immigration factor. Also, the fees are pretty high, and in a downside economy there’s pressure on the ability to collect fees.
One of the factors that was mentioned previously by ADvTECH management is the fact that quite a number of the people in the upper end of the market have actually been immigrating. Obviously, that will result in the loss of students in that sector.
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