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Top Gainer: Navitas (NVT)

 Closing price  $3.58
 Change  +0.08
 % change  +2.3%

On a dismal day on the ASX, just two stocks in the ASX200 managed to make gains – education provider Navitas and Cabcharge, up 2.3% and 1.1% respectively.

Earlier in the week education provider Navitas Ltd announced that it has increased its full year profit by more than 20 per cent to $77.39 million despite a steep fall in student enrolments in Australia (down 14%) and the UK (down 16%). Revenue increased 15.6 per cent to $643.8 million.

Shares in the company fell 10 cents, or 2.6 per cent, to close at $3.75 on Tuesday on the news, however it was interesting that in a bleak day on the market that shares managed to make a 2.3% gain.

Chief executive Rod Jones said Navitas’ English division had operated in a challenging environment while the company as a whole would continue to expand in new and existing markets. The English division experienced a 48 per cent fall in earnings before interest tax, depreciation, and amortisation.

“Although facing headwinds in several markets, the inherent opportunity for Navitas remains robust, with demand for quality education continuing to grow as more students seek education and training overseas and at home,” Mr Jones said.

He said instability from factors such as last year’s federal election, changes in government policy towards student visas and the strong Australian dollar adversely affected English division.

The Core university programs division underpinned the company’s growth, with six new colleges opening in 2010/11. Navitas’ main challenge in Australia and the UK was the uncertainty caused by changing government policies in relation to the issuing of visas to international students.

The company said weakness in UK and Australian enrolments had been partially mitigated by strong enrolment growth in Singapore, up 44 per cent, and Canada, up 36 per cent. The English division anticipated growth in full year 2012.

“The company remains confident in the long-term drivers of its growth, including continued growth of the international education sector, with steady long-term increases in enrolments,” Navitas said.

The company declared a final dividend of 12 cents per share fully franked, compared with 10.7 cents a year earlier.

While not exactly bullish on the stock, Andrew Inglis of Shadforth Financial Group does have a hold on the education provider that has been out of favour since the introduction of stricter immigration rules for overseas students and the fallout from racial attacks on foreign students in Australia. “The company business model provides strong cash generation, it has low capital requirements and there are significant barriers to entry into many of the universities where they have established on-campus colleges.

Peter Russell from Intersuisse regards Navitas as a global industry leader with strong prospects. “Growth remains exceptional due to a clear focus, strong campus relationships and a cash-generating model of up-front fees,” he says.

Based on Thomson Reuters data, six analysts have a buy on NVT.


Stock code: NVT

Charts: Navitas Limited

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Investor Centre: Navitas Limited