Curro shares get update boost

Shares in private schools group Curro Holdings, which have been punished in recent months, responded positively on Monday to a solid trading update for the half-year to end-June. At market close Curro had raced up more than 6% to R31.39 in vibrant trading volumes. /

Shares in private schools group Curro Holdings, which have been punished in recent months, responded positively on Monday to a solid trading update for the half-year to end-June.

At market close Curro had raced up more than 6% to R31.39 in vibrant trading volumes.

The shift, though, is off a low base with Curro shares touching a 12-month low of R27.50 in late June. The share price weakness was prompted by market concerns around student enrolment numbers, especially at its lowcost Meridian school offering.

Curro indicated that headline earnings would come in between 32.3c a share and 34.2c a share. This would be an increase of between 20% and 27% compared with the headline earnings of 26.9c a share recorded in the six months to end-June 2017.

Curro reminded shareholders that the upcoming interim results did not reflect the contribution from private tertiary education business Stadio, which was unbundled and separately listed in October 2017.

Curro’s continued operations – stripping out the contribution from Stadio – will report interim headline earnings and earnings of between 32c a share and 34.2c a share compared with the 27.6c a share recorded for the corresponding period in the previous year. This would mean a rise of between 17% and 24%.

Vunani Securities analyst Anthony Clark said the trading update was a welcome departure from the abysmal profit numbers released in the previous financial year.

“The first-half trading update indicates that the J-curve [growth trajectory] might be kicking back in.”

Although sentiment has cooled slightly for Curro, the market still expects sustained above average growth, with the company’s shares still reflecting a demanding earnings multiple of more than 60 times on a trailing basis and more than 40 on a forward basis. Clark said it was clear Curro’s management had worked hard in moderating the student number losses seen in the last financial year.

“Overall, it’s a commendable result in a fairly difficult private education market. I also expect that Curro could pay a maiden dividend in financial 2018.”

At the Curro annual general meeting in early June, CEO Andries Greyling estimated that by the end of 2018 the company would accommodate more than 53,000 pupils in 148 schools spread across 60 campuses.