Release Date: March 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stadio Holdings Ltd (JSE:SDO, Financial) achieved a significant increase in student numbers, surpassing the 50,000 mark, which indicates strong demand for their educational offerings.
- The company reported a 14% increase in revenue to ZAR1.6 billion, driven by an 8% overall growth in student enrollment.
- EBITDA margins improved from 27.6% to 28.4%, reflecting enhanced operational efficiencies.
- The company declared a 51% increase in dividends to ZAR0.151 per share, showcasing strong cash flow and financial health.
- Stadio Holdings Ltd (JSE:SDO) is expanding its program offerings with new accreditations in IT, commerce, fashion, and engineering, positioning itself for future growth.
Negative Points
- The company recognized an impairment of ZAR7 million on its Randburg property, which is now held for sale.
- Despite improvements, the loss allowance margin remains high at 8.7%, indicating ongoing challenges in debt collection.
- The macroeconomic environment, including high interest rates, continues to impact consumer spending and debt repayment capabilities.
- The Milpark business still faces challenges due to its historical dependency on the B2B segment, affecting overall growth.
- The company anticipates continued pressure on loss allowance margins due to external economic factors, making it unlikely to return to pre-COVID levels.
Q & A Highlights
Q: How likely are we to see loss allowance margins dropping towards the pre-COVID range given the ongoing improvements in your collection systems?
A: Ishak Kula, CFO, stated that it's unlikely for loss allowance margins to return to pre-COVID levels due to external factors like macroeconomic conditions and interest rate increases. The current range of 8.5% to 9.5% is considered realistic given the economic environment and the institution's focus on widening access without financial credit checks.
Q: Can you talk about contact learning trends going into 2025, specifically how the Centurion campus is performing?
A: Chris Vorster, CEO, expressed excitement about contact learning growth, particularly from the Stadio Higher Education brand. The Centurion campus is showing good growth as qualifications fill up in the second and third years, aligning with strategic goals.
Q: What are the trends pushing domestic tertiary growth, and what increase in learners do you anticipate with the 34 pipeline qualifications?
A: Chris Vorster noted that the trends are positive, and the institution is well-positioned to meet 2025 student targets. The 34 pipeline qualifications are expected to drive growth, with some potentially being game-changers for both contact and distance learning.
Q: Can you provide more details on the collection strategy and when collections are outsourced?
A: Ishak Kula explained that old debts older than one year are handed over sooner to third parties. Current year students are not handed over due to semester-based registration trends. The focus is on academic participation and restructuring debt schemes to target students earlier in the collection process.
Q: What impact will Milpark B2B have on distance learning for 2025, and is the strategy to eventually own 100% of Milpark?
A: Chris Vorster mentioned that Milpark is transitioning to be less dependent on B2B, with growth expected in 2025. Long-term, the strategy is to own 100% of Milpark, but the current minority shareholder situation is satisfactory.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
