Stretched state budget makes Stadio good bet
PRIVATE EDUCATION
The number of tertiary students has more than doubled since 2000 across the globe. SA private enrolment rates stand at 15% and growing, still well below the global average of about 35%.
The inability of public tertiary institutions to meet this heightened demand has prompted private institutions to move in. AdvTech and Stadio, which was separately listed out of Curro in 2017, fulfil just this purpose.
Greater accessibility, changing demographics, poor economic prospects and high rates of societal inequality have led to this increased demand. Unesco found that in 76 countries, 20% of the richest 25-29-year-olds had at least four years of tertiary education compared with less than 1% of the poorest.
Over the medium term the government will spend R111.2bn on tertiary education, projecting that enrolments will reach 1.7million in 2019/2020.
There were 28,280 students at Stadio in semester 1, and 42,829 at AdvTech at the interim reporting period. Profitability metrics tend to be better for tertiary offerings as seen in the profits of Avtech’s schools vs its tertiary division, with 15% and 22% margin, respectively.
Stadio has an impressive strategy to reach students in what eventually is to be a singlebranded Stadio Multiversity. This is through a large campus in Centurion in 2021 with plans to establish others in the Western Cape and KwaZulu-Natal; and online distance learning which caters to tech savvy students who require flexibility and conventional distance learning.
AdvTech has had much success with its satellite campus strategy as a complement to its larger campuses. There are still many opportunities in the fragmented private higher education market for acquisitions.
Public universities and private institutions are subject to the same oversight, regulation and accreditation. Both companies emphasise growing the course base. Increasingly, online education is being recognised.
The government’s stretched capacity presents an opportunity for students and parents alike, who seek the benefits of a tertiary education within an accepted framework.
LONG4LIFE
Long4Life has been under pressure of late. The counter is down more than 11% since the beginning of 2019. The young lifestyle-centric investment company, listed in 2017, focuses on three segments: beverages; personal care and wellness; and sport and recreation.
Cash at 30% of market cap and an ungeared balance sheet mean it has worthy capacity for acquisitions. I thought it would be interesting to try to see whether the growth industries for the future that have been touted by publications such as Entrepreneur Mag could be exploited by its management.
These include tiny houses, healthy fast food, delivery services, virtual reality (and accessories), ethical business consulting, website rentals, high-quality or raw pet food, ed-tech, activity bars and subscription boxes.
There’s a loose fit for Long4Life in at least three of these categories: healthy fast food, virtual reality, and pet food, which would be a full circle back to Bidvest’s predecessor.
The environment is challenging but the focus on defensive industries and turnaround ventures should help in growing Long4Life to the R10bn market cap company it aspires to be.