There’s a lesson here…
THE MARKET – at least the multitude of excitable retail investors – has gone completely gaga for newly listed private education group Curro Holdings. And rightly so. This PSG-controlled venture may well have some strong legs in its efforts to tap South Africa’s sprawling middle class private education sector.
The successful listing of Curro hardly seems to have rubbed off on AdvTech, a private education venture that listed in the late Nineties and has built an enviable niche around respected brands such as Crawford College, Rosebank College, Varsity College, Abbots and (more recently) Trinityhouse.
In fact, AdvTech remains well off its annual high of 640c seen in October last year. At current levels of around 560c, AdvTech is trading at an earnings multiple of around 15 times. Some may argue that’s quite demanding (although certainly not measured against Curro’s demanding forward earnings multiple) but AdvTech is arguably worth the modest premium.
Over the past decade AdvTech has shown it’s a business capable of churning the kind of strong cash flows that can back a generous dividend policy (close to 4%). The company also holds a reinforced balance sheet, there’s a tangible value underpin in the form of R880m worth of fixed property, the business is astutely managed and has brands consistently enhanced by enviable academic performance.
While Curro probably has the market captivated by some bold expansion plans, it’s not as if AdvTech is standing still. The recent expansion of Trinityhouse in the West Rand suggests that the recently acquired brand can be fairly easily replicated.
AdvTech also isn’t afraid to shift into niche ventures: The Design School Southern Africa being a prime example.
Probably one of the biggest selling points for AdvTech as an investment is the calibre of institutional shareholders it’s enrolled. Between Coronation (17,7%), Sanlam (13,8%), Old Mutual (10,3%) and RMB (7,7%) around 50% of AdvTech is in institutional hands.