Patience may be key element

While way off its listing highs, tertiary education specialist Stadio may still be expensive if its ambitions don’t pay off

There appears to be a degree of uncertainty over the ambitious expansion plans by Psgcontrolled private tertiary education provider Stadio Holdings.

That may sound illogical, since Stadio’s shares are trading on a p:e multiple of nearly 41 times and a forward multiple of around 25 times — which would normally indicate that the market believes its strategy is capable of generating very rapid earnings growth.

But this rating, though rich, is modest when compared to the early development days at Curro Holdings, the private schools business that unbundled and separately listed Stadio in 2017.

Curro, which subjected shareholders to a regular series of capital-raising exercises, was tagged with earnings multiples of as high as 150 times with excitable punters lapping up the ambitious schools expansion programme.

Stadio did have a promising start, with its share price racing to over 800c when it listed.

At the time, sentiment was buoyed by two main factors. The first was a strong belief that former Curro CEO and founder Chris van der Merwe could replicate his private schools success at tertiary level as CEO of Stadio.

The second was that there was solid evidence that the private tertiary sector was tapping a viable niche, given the impressive profits chalked up by the more conservative private education conglomerate, Advtech, through its brands, including Varsity College and Rosebank College.

Stadio’s shares have since slumped to their present levels of 316c a share, notwithstanding its clearly defined short- and longer-term goals.

Curro excited the market by having to repeatedly upwardly revise its targets, and Stadio will probably look to do the same.