Reporting Season: Navitas revises strategy to revitalise earnings
Published 07-AUG-2018 12:45 P.M.
|
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Name: Navitas (ASX:NVT)
Market Capitalisation: $1.5 billion
Last Closing Price: $4.19
Navitas (ASX:NVT) reported an after tax loss of $55.3 million for the 2018 financial year with the result significantly affected by $123.8 million of one-off charges associated with the recently announced plan to rationalise the business portfolio of the Careers and Industry Division.
The performance of the global education provider prior to these charges was in line with market expectations with pro-forma EBITDA of $144 million.
Despite delivering a disappointing result, management noted that continuing operations performed well in fiscal 2018 reflecting the quality of its education businesses.
Importantly in terms of the company’s future performance, Navitas exceeded its enrolments target, renewed all key university partnership agreements and expanded its portfolio of partners.
Whether it continues on this trajectory is speculative and investors should seek professional financial advice if considering this stock for their portfolio.
Focus on university partnerships division
With Navitas taking the decision to rationalise and divest its careers and industry division, investors will be focusing on the performance and prospects of its university partnerships division.
Reflecting on fiscal 2018, the achievement of 84 per cent pass rates and 90 per cent retention rates suggest that this area of the business is tracking well.
Enrolments grew by 6 per cent over the year, but average fee growth was offset marginally by a change to lower priced courses.
New agreements were signed with Virginia Commonwealth University and with Murdoch University for a managed campus in Dubai.
Five existing partner contracts were successfully renewed in the year and the Swansea University partnership was converted to a joint venture to expand its strategic opportunities.
University Partnership equivalent full time student units (EFTSU) for the second semester of 2018 increased by 6% on the previous corresponding period.
This result includes enrolments from four joint venture colleges with combined enrolments of circa 1150 EFTSU.
With the company’s shares having fallen from about $5.60 at the end of 2017 to a recent low of $3.87, shareholders will be hoping that the business restructure sees a return to profitability, as well as a more predictable earnings model, as this is one of a number of occasions where the company has disappointed in the last few years.
The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.
General Information Only
This material has been prepared by StocksDigital. StocksDigital is an authorised representative (CAR 000433913) of 62 Consulting Pty Limited (ABN 88 664 809 303) (AFSL 548573).
This material is general advice only and is not an offer for the purchase or sale of any financial product or service. The material is not intended to provide you with personal financial or tax advice and does not take into account your personal objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by 62C, StocksDigital, any of their related body corporates or any other person. To the maximum extent possible, 62C, StocksDigital, their related body corporates or any other person do not accept any liability for any statement in this material.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.