In 2015 Education Related Travel Services jumped ahead of Natural Gas to claim the number three spot on the Top Ten List of Australian Exports with an $18.8 billion dollar boost to our economy.  The chart below shows the Top Ten from one year ago.

Note that the calculation of educational expenses includes tuition and living expense but not discretionary spending.  In short, the true value these international students bring to our economy may be higher.  As of 2015, there were approximately 650,000 international students enrolled in Australian schools.  The following graph from the Department of Education and Training breaks these students down by category.

Note that ELICOS stands for English Language Intensive Course of Study. These are students who need to learn sufficient English to successfully attend an English Language institution. As impressive as these numbers are, Australia’s place in the global market for International Students is dwarfed by the US where a reported $32.5 billion dollars pours into the US economy from higher education alone from more than one billion higher education students.

The dollar figure comes from NAFSA: Association of International Educators (formerly National Association for Foreign Student Affairs).  In addition, the Association estimates total student spending including discretionary expenses supports more than 400,000 jobs in the US.
The recently announced US Travel Ban could threaten US dominance in the global International Student market.  Here in Australia the CEO of ASX listed education provider Navitas Limited (NVT), Rod Jones, has raised the possibility Australia and Canada could see more students coming due to the temporary ban.  He stated:

• ‘There’s a whole lot of uncertainty in the US at the moment. What that means is probably anybody’s guess, other than students starting to back away from the US because of their concerns about potential issues they may face.’ 
The ban itself is supposedly temporary and affects only seven Middle-Eastern countries, but US administration officials have already commented the list could be expanded.  The reaction to the ban ranged from emotional to legal, with multiple US Federal Courts issuing temporary stays on the ban and several states in the US filing lawsuits against the federal government. 
Harvard University, arguably the most prestigious school in the US, has expressed concern and issued warnings to foreign nationals.  In response to the ban the school’s president stated the travel restrictions are both “posing barriers to scholars and students” seeking entry into the US and others from travelling outside the US because they are “fearful about their ability to return.”
Harvard’s International Office suggested foreign nationals should “carefully assess whether it is worth the risk to travel outside the country.”  The issue goes beyond the possibility of more countries being added to the ban.  In the avalanche of coverage about the ban the issue of renewing a visa once a foreign national has left the country has received less attention. Apparently the ban also requires “repeat travelers” to the US to go through a new in-person interview to get back into the country.  This cancels the US Visa Interview Waiver Program, which eliminated the need for the additional interview. It is unclear if this applies only to foreign nationals from the banned countries.  An official from the US State Department reportedly said it “could not immediately confirm the precise effects of suspending this program, but said that it would announce any changes affecting travelers to the US as soon as possible.”
Given the deteriorating relations between the US and Iran over the last few decades it is surprising to find there are currently about 12,000 Iranian students in the US.  These students now might not be able to get back into the country following a visit home.  Students around the world have to be wondering what will happen next as the new US administration grapples with the issue of immigrant entry and reentry into the US.

The legal maneuverings, clarifications, and refinements of the order may do little to counteract the perception the ban seems to have created.  Perception always supersedes reality.  Students perceiving these actions as a signal they are not welcome in the US will undoubtedly look elsewhere.
While the current concerns center on higher education students there is another category of international students at risk in the United States – students studying English as a second language. To gain entry into an English language college or university an applicant must pass an English language equivalency test.  To prepare, thousands upon thousands of students enroll in English Language schools in the US, Canada, the UK, and Australia.  Statistics for this student category are harder to find but the following table from the US Department of Education shows the breakdown for the US.

Obviously students from Arabic countries could be at risk.  Given the proximity and greater familiarity of Canadian educational institutions to the US business community, it would seem Canada has a decided edge over Australia as a destination for both English Language and Higher Education students.
However, there is another major threat looming over the US market for International Students that should give us here in Australia a major advantage.  That issue is the potential collision course the US and China may be approaching.
As of 2014 Chinese students represented 31% of the total population of International Students studying in the US.  Chinese students are third in the number of EL students in the US.  And now we have a top advisor to US President Donald Trump – Stephen Bannon – on record as of March of 2016 speculating the US and China would go to war over the islands in the South China Sea in five to ten years, according to the UK Guardian and other sources.
President Trump has yet to turn his focus on China but his campaign promises suggests a rocky road between two of the world’s economic giants.  Most would argue that the reality of war is unlikely but the perception of the US as China’s enemy could dramatically reduce the number of Chinese students seeking educational opportunities in the US.
The potential China turmoil gives Australia a major advantage over Canada in the English language education market.  English remains the international language of business and the most widely spoken language on the planet; and that is not likely to change
In a perfect world turmoil and global strife would not yield investing opportunities but it may be centuries before that becomes the case.  Right now it appears there is a long-term opportunity in the four ASX listed stocks that offer educational opportunities to International Students looking for an English language education.  The following table lists the stocks.

The smallest company in the table, Academies Australasia Group Limited (AKG) has been in business the longest – since 1908 – and has the dubious distinction of being the poorest performer in the group.  The company operates 18 licensed colleges across five states in Australia and an additional college located in Singapore.  Its offerings are well diversified, from Bachelor’s and Master’s programs to technology and vocational training and English Language training for international students. “Pathway” programs listing perquisites for education in specific fields are available. The company has partnership agreements with two universities in China and one in the US.
In 2015 AKG along with other ASX education providers were rocked by scandals in vocational training at for-profit institutions.  Academies profit fell between FY 2015 and FY 2016 and the dividend that had been slashed from $0.052 in FY 2014 to $0.014 in 2015 was eliminated. Subsequent government regulations have dampened investor enthusiasm for the sector.  AKG”s stock price has been in decline since.

The largest player on the ASX – Navitas Limited (NVT) – now has a new competitor in the spinoff from Seek Limited (SEK), IDP Education Limited (IEL).  IDP debuted on 26 November of 2015 with an issue price of $2.65 and a first day of trading opening price of $3.25.  The stock price is up about 20% since while over the same period the price of Navitas shares have remained flat.
Navitas serves both domestic and international students with a broad range of programs and services.  For internationals looking to study in an English language school the company offers English Language training as well as specific pathway programs to partnering universities.  The pathways can include English language training as well as course work to account for academic deficiencies preventing enrollment in the desired university.
The company has partnership arrangements with universities in Australia, United States, Canada, United Kingdom, Singapore, New Zealand and Sri Lanka.  Navitas has more than 80,000 students in 120 colleges across 30 different countries. 
The company’s disappointing Half Year 2017 results released a few days ago highlighted a weakness in the pathway university business model.  With the market for international students booming, two universities ended their partnership with Navitas, choosing to attract internationals on their own.  Revenues dropped and although net profit was up, this was due to an asset sale. 
IDP Education (IEL) operates in three business segments.  The company places international students into colleges and universities here in Australia, as well as in the United Kingdom, the United States, Canada and New Zealand. Placement services offered include academic counseling, application processing, and predeparture guidance.  In 2015 the company placed about 27,000 students through its 89 offices in 30 different countries.

IDP also administers and distributes an internationally recognized test of English Language proficiency, IELTS (International English Language Testing System.) Finally, the company operates English Language Training schools in Vietnam, Cambodia and Thailand.  
Revenues for the company’s first full year of operation as a publicly traded entity were up 26.81% while profits rose 16.7%.  On 17 January IDP acquired Hotcourses Limited, a company that owns and operates multiple websites that allow prospective students to search for global educational opportunities. 
Redhill Education Limited (RDH) operates three colleges in Australia and its own student recruitment agency for international students looking to study in Australia.
Greenwich College offers courses and examinations in the English Language Intensive Courses for Overseas Students (ELICOS) sector of the Australian post-secondary education market.  
The Academy of Information Technology offers courses in multimedia and gaming, digital design, and business information technology.  
Go Study Australia is the company’s portal to the international student market.  The company has agency offices in Italy, Spain, and France responsible for recruiting, placing, and supporting international students looking to study in Australia.  Go Study Australia provides its services to students free of charge, relying instead on commissions paid by the educational institutions selected by the Go Study clients.
Although Redhill’s revenues have risen in each of the last three fiscal years, profit has steadily declined. The company listed on the ASX in 2010 with an issue price of $1.00, closing its first day of trading at $1.20 and got off to a rough start, failing to meet its prospectus revenue forecasts and posting operating losses well into its second year on the ASX, but has recovered since.  Here is the price movement chart.

If you think international students will begin to drift away from the US as a point of destination, Navitas and IDP are the obvious choices.  IDP has partnership arrangements with more than 100 universities and community colleges in the US and about 80 in Canada along with a student recruitment agency in China. Navitas has arrangements with eight institutions in the US and two in Canada. Academies presence is minor and Redhill is still limited to Australian educational institutions.

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