Curro is a good company but Advtech is better – Anthony Clark
Veteran JSE small and mid cap analyst Anthony Clark, better known on social media as Small Talk Daily, dissects education provider Curro's earnings guidance announced this morning. Clark has vast experience in the education sector, having covered Curro, Advtech and Stadio since their respective listings. His understanding of Curro's business model is truly fascinating and gives great detail into the company's offering and runway. Clark remains bullish on the stock, despite Advtech being his chosen share in the sector. – Justin Rowe-Roberts
Anthony Clark on Curro's background, offering and target market:
Curro is probably one of the oldest established private schools in the country. For many, many years it was Advtech, which is best known for its high end schools such as Crawford College. There's some private interests like Reddam, which are again, very well-known. Probably about 15 years ago, PSG group, having met the founder of Curro Holdings, a gentleman called Dr Chris Van de Merve, who was operating a small school in Durbanville, in a church, basically saw the potential of affordable private schooling for the masses. I'm probably going back at least 10 or 12 years, PSG bought R50m for a 50% stake of Curro Holdings. And at that stage, they only had three schools and a few thousand learners. As it stands here today, we have a market capitalisation of some R7bn. PSG remain the dominant shareholder and Curro have about 66 000 learners across 200 separate schools in the country showing you that development of private education in this country, the affordable space and when I say affordable, they have different categories, ranging from R1 500 a month, up to R8 000 a month, there remains a consistent demand for private quality education, given the fact the state system isn't as good as it used to be.
On Curro's earnings guidance:
I saw the trading statement this morning, it's incredibly detailed, which I expected it to be. The share price, as you said – at one point the stock was down about 6%. It's now down about 4.3% percent trading at R11.20. To me, it came as no surprise. The small to mid-cap space is generally characterised by a lack of information to a wider audience. So you physically actually have to delve a lot deeper into the underlying narrative of a company to ascertain what's going on. And in Curro's case, I've been the prime analyst of that stock since even before it was founded because it was an asset hidden inside PSG, which I've covered for 20 years.
On whether Curro will at the forefront of disruption of eduction in South Africa:
Yes, I think most of the private schools – Advtech, Reddam and Curro Holdings have all issued their learners with tablets or PCs and or the varying bandwidth and Wi-Fi connections to enable the learners during this difficult period to actually continue their studies at home. And there will always be an element who will not wish to go back to school, they'll be very happy learning at home. But again, we forget that school is not just about learning, it's physically about engaging with other learners. It's building social networks, it's building friends. It's the basis of your entire life ahead of you. So if you're just stuck at home learning from a book or online, the very interpersonal skills that you would learn from school – discipline, for example, friendships and all the nuances that goes with a young person's life is lost. So I think going forward, I see online learning as being far more prevalent in what I would call the tertiary space. Where you finished your school, you're considering going to university or to a college, and perhaps you don't want to go to Wits or UCT or Stellenbosch.
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