Protests a boon for private colleges?
Parents look for alternatives as public varsities are disrupted
● Student protests at public universities may boost enrolment at private institutions as parents, worried about disruption to the academic year, look to alternatives for their children’s tertiary education.
And despite the hard-hit economy, enrolments in AdvTech’s tertiary institutions remain robust.
JSE-listed AdvTech, one of the country’s largest private education groups, said this week that though it was too early to tell if the latest disruptions would influence student numbers this year, it believed that any impact would be positive overall for the group.
The group’s tertiary brands include Varsity College, Rosebank College and Vega School.
Speaking after the release of results for the year ended December 2020, AdvTech CEO Roy Douglas said: “I think the impact for us probably is going to be more positive.
“The problem we have this year is that the whole enrolment cycle was quite significantly delayed by the late start to the school and tertiary year, as well as delayed matric results. So the enrolment cycle is in fact continuing as we speak. This year, for the first time, we haven’t published our expectation of tertiary enrolments because we simply don’t know when they are going to finalise. “I wouldn’t say we have any empirical evidence that the latest round of disruptions has increased our enrolment flow at this stage. I think it’s too early to tell, but what I can say is our retention rates are very positive. We are happy with these.”
Douglas said the group’s retention rates of students at its tertiary institutions were in excess of 90% and “mostly exceeded or met our targets”. He said another key factor that affected enrolment at private institutions was how many students the public system was able to take up.
“People make multiple applications to different institutions in the hope of securing a place, and their final decision is made on the basis of whether they have been accepted to other institutions or not.”
But he said he had no doubt that disruption of any kind to any market resulted in people reviewing their options.
“I think that any level of disruption
through protest action that impacts the mode or delivery channel or a product offering is going to result in consumers looking for alternatives. I suspect there are those who are saying the principal goal here is their child’s education and they want them to have a good qualification they can then use to enjoy a good life and career. If there is a chance they are going to be disrupted by attending this particular institution, is there a better offering or opportunity elsewhere?”
AdvTech, which has more than 45,000 students at its tertiary institutions, says what makes its brands attractive is that they are “well established and respected”.
Small Talk Daily analyst Anthony Clark agrees that private tertiary institutions are in a good position to benefit from disruptions to the public university system.
“At the end of the day, if you are a parent splashing out big money to send your child away to a far-flung university, you are paying accommodation and the cost of fees, and when you realise that your child’s education
may be disrupted by protests, why on earth would you want to send your child to a state school when potential security would be a concern,” said Clark.
“Many private university and private college courses teach practical education which assists the learner in getting a job. At the end of the day, the stigma of perhaps going to a
private university because it doesn’t have the same prestige seems to be diminishing.”
AdvTech’s schools division has about 35,000 pupils and Douglas said “we believe that there are opportunities” in both tertiary and primary and secondary education sectors — “it just depends on the cycle”.
Overall, the group’s revenue rose 8% to R5.4bn compared to the prior corresponding period. Headline earnings per share rose 6% to 91.2c from 86c in the prior corresponding period.
The company also increased the full-year dividend to 20c a share from 15c in the same period in the previous year.
AdvTech’s bad and doubtful debts rose 94% year on year to R264m from R136m, which “tells you it was difficult out there”, said Clark.
And while 2020 was largely defined by Zoom calls and Microsoft Teams meetings for schools and other institutions, AdvTech says its bricks-and-mortar offering will be its mainstay for the foreseeable future.
Douglas said most pupils at its schools, which include Crawford College and Trinityhouse, had returned as they preferred the social interaction on the premises.
The group also reported a 5% increase in enrolment at its schools.
Clark said the AdvTech schools division had a “much better performance compared to the pedestrian performance it has had over the last few years”.
The group, in response to its schools division being an “underachiever” for many years, cut costs, centralised administration and “launched more affordable offerings” to retain and attract students.
“That has all worked and profits are starting to creep up, as is margin,” Clark said.
There will always be parents across demographic groups who are wary of the quality of state education and want to send their children to private schools, he said.
“That is why private schools have seen a net growth in numbers over the past 10 years.”
When your child’s education may be disrupted, why [go] to a state school? Anthony Clark
Small Talk Daily analyst