Intueri Education IPO

[steve fleming]

http://stocknessmonster.com/news-item?S=AWN&E=ASX&N=669657

http://www.nbr.co.nz/article/200m-education-ipo-prospect-economic-complacency-warning-watercares-1m-cia-bill-paper-pointer

"A $200 million education listing may be in the pipeline.
In today’s National Business Review print edition, chief reporter Duncan Bridgeman reveals a roll up of New Zealand education providers could culminate in a sizeable equity raising and possible NZX-listing.
The entity will potentially be spun out of ASX-listed Arowana International – and Massey University chancellor Chris Kelly is being lined up for a key role."

Those who happened to read the NBR article on Friday , was there anything interesting to come out of it? (timing? structure? broker?)

thanks

[karen1]

Hi Steve,

Found the release info interesting reading, and will follow this. Surprised no one else has picked up on it. The prospect of a roll up of providers in this field would most certainly weed out some of the smaller, less able/satisfactory providers, and would at least offer more confidence to potential end users as what is envisaged will need to have very high standards across the board.

On the surface, the lineup of post merger management/advisory members looks impressive. The growing desire of international students to be coached here is positive, and will hopefully continue for many years.

[steve fleming]

- Revenue up 10% and EBIT up 23% versus 1H FY2013
- Primary focus has been on driving operational excellence (including rollout of Rockefeller Habits operating methodology)
- This has been across all facets of the group including sales, marketing, procurement, finance, administration & academic
- Results have been pleasing thus far in a short 6 month operational window, but full impact of initiatives not fully realised yet
- International enrolments +33% versus 1H FY2013''

So some nicely trending numbers

Agree, govt policy will always be a risk - but it would be a brave government that cuts funding to Quantum with its focus on 'second chance' education and upskilling of Maori and Pacfic Islanders

NZ government aims to double value of international education by 2025

[steve fleming]

The other big growth driver is the opportunities in online education:

"In New Zealand, the online education industry is less developed than in Australia. Overlaying an online education component for Intueri’s existing courses (including QEG’s courses) will enable Intueri to more economically take advantage of opportunities to expand its student intake capacity and deliver courses at a lower unit cost per student. This in turn will allow Intueri to invest some of these savings in enhancing the student education experience with potential to thereby further drive increases in course and qualification completion rates. There is also the opportunity to roll out the online courses that OCA already has in Australia to the New Zealand market."

[steve fleming]

http://intuerishares.co.nz

scheduled to list on 23 May

[Entrep]

I only trade online using Commsec and ASB Securities, I don't think ASB are involved in this IPO.

I might want around $10K of shares in this though. Will that be possible? Which broker would be easiest to use? Never been in an IPO to be honest.

[percy]

I only trade online using Commsec and ASB Securities, I don't think ASB are involved in this IPO.

I might want around $10K of shares in this though. Will that be possible? Which broker would be easiest to use? Never been in an IPO to be honest.

Most times lead broker will give other brokers an allocation.
I would register your interest with both Commsec and ASB.

[mark100]

Where is the priority for existing AWN shareholders?? Many of us invested in AWN for exposure to Intueri. Now it's been sold with AWN only maintaining a minority interest. And they can't even offer existing shareholders an allocation

[NZSilver]

Looked closer at this over the last few days - seems good with plenty of growth and a nice bonus 4-5% div

[SimonHouse]

Interesting company. There's much to like about spin-offs, they tend to appreciate in value in markets like the USA.

[Zaphod]

Agree, govt policy will always be a risk - but it would be a brave government that cuts funding to Quantum with its focus on 'second chance' education and upskilling of Maori and Pacfic Islanders


Cuts to PTE's that service the second chance sector have occurred progressively over the past few years as the TEC demands higher student outcome rates and pathways to further educational opportunities or getting them into workplaces. One large provider (900+ EFTS) was cut in the last few years, along with a number of smaller providers.

Although Quantum's student outcomes look highly appealing, you need to be careful of how they define a qualification. One method is to treat each unit as a qualification, thereby making results look much more favourable than those PTE's that define a complete set of units as a qualification. I do not know which method they are using.

I also note that the TEC announced that scaling the results of Maori and Pacific Islanders will return, after abandoning the practice a few years ago. This will probably result in much more favourable outcomes for those PTE's that are left servicing this market.

[Zaphod]

The other big growth driver is the opportunities in online education:

"In New Zealand, the online education industry is less developed than in Australia. Overlaying an online education component for Intueri’s existing courses (including QEG’s courses) will enable Intueri to more economically take advantage of opportunities to expand its student intake capacity and deliver courses at a lower unit cost per student. This in turn will allow Intueri to invest some of these savings in enhancing the student education experience with potential to thereby further drive increases in course and qualification completion rates. There is also the opportunity to roll out the online courses that OCA already has in Australia to the New Zealand market."

The NZQA placed a number of hurdles around online courses in New Zealand. Mostly, these revolve around assessment and requiring the use of proctors to validate the identity of the student. This obviously places some economic burdens on the provider. At one point I was involved with a trail of using various technologies (fingerprint scanner, webcams etc.) to verify student identity when taking examinations remotely.

Australia generally has a more favourable outlook towards online education, however it suffers from some other issues that we don't such as a lack of recognition of individual learning units between states.

I'm sure all these issue can be overcome though, especially once some of the technophobic NZQA staff retire!

[percy]

Zaphod.
Thank you for your interesting comments.

[Entrep]

After telling me they weren't getting any stock, ASB Securities have now said they might be getting some.

Perhaps demand for the IPO is not as expected?

Zaphod's comments also very interesting...

[percy]

To anyone who has considered this float,it would pay you to read what Tim Hunter has to say about it in an article on page D11 of this week's Sunday Star Times,headed Intuition says opportunism.
"This deal looks to me like a stinker."
"Investors are to pay between $169 million and $234 m for a stake of 75 to 85 per cent in Intueri,a group of businesses providing various sorts of training.The offer price implies Intueri would have a market capitalisation of between $225 and $275 m.The businesses comprising Intueri have mostly been gathered together since early last year for a total acquisition cost of up to $106.5 mil.Investors are,therefore,being asked to pay a premium of $125m to $175 m for a group of businesses that have yet to report a collective full year result."

[SimonHouse]

Wow, must get a copy of the SST this morning. Thanks for posting this Percy

[steve fleming]

To anyone who has considered this float,it would pay you to read what Tim Hunter has to say about it in an article on page D11 of this week's Sunday Star Times,headed Intuition says opportunism.
"This deal looks to me like a stinker."
"Investors are to pay between $169 million and $234 m for a stake of 75 to 85 per cent in Intueri,a group of businesses providing various sorts of training.The offer price implies Intueri would have a market capitalisation of between $225 and $275 m.The businesses comprising Intueri have mostly been gathered together since early last year for a total acquisition cost of up to $106.5 mil.Investors are,therefore,being asked to pay a premium of $125m to $175 m for a group of businesses that have yet to report a collective full year result."


Hi Percy,

haven't read the article but from your 'cut and paste' looks like the journo is pretty unsophisticated.

The whole point of the uplift is that it is private to public play, rolling up private education businesses and taking advantage of the uplift in multiples for what you can pay for private businesses (i.e. 4x) to what the public markets are willing to pay (say 10x etc).

Look at a company like GEM, one of the most successful aSX companies in recent times - paying 4x for childcare centres, then the market immediately re-rates it to 20x or something.

Also, Arowana have held many of the businesses for far longer time - its just that AWN only listed last year, that is why there is no full year earnings reported.

Looks like a typically ignorant business journalist trying to push an angle that he no real understanding of.

In the markets, it is the future earnings that drive valuations, the past is less relevant. A concept usually too hard for journos to grasp.

This is no hick business, it is NZ's largest private, provider of vocational services, going to be paying 5% + dividends and double digit growth.

Would have thought NZ would want to be falling over backwards to encourage these sort of businesses to list....never mind, if NZ'ers don't understand value, maybe the aussies will (i.e. look at NVT / VOC)

[noodles]

Percy,

I did read the article. He fails to mention the Intueri NPATA forecasts. This is really what the focus should be on. I don't think they are aggressive ratios for FY15.

I'm still undecided on the float. Even at the high end of the price range, it will be cheaper than aussie peers. My biggest problem is that I can't spell or pronounce the name of the company:)

Noodles

[Entrep]

Is the NZ Govt going to continue to subsidise a NZX listed company so that it can retain current big margins?

[heisenberg]

http://www.stuff.co.nz/national/9986060/Man-dies-at-diving-school-near-Huntly

Perhaps the listing price will be on the lower side of estimates....

[SimonHouse]

What a tragedy for that persons family. This is also really bad timing for Intueri. I wouldn't want to be one of their underwriters right now

[Harvey Specter]

Intueri to list at $2.35, the lower end of its range, as Arowana holds onto maximum amount (24.9%)
http://www.sharechat.co.nz/article/00fbb330/intueri-to-list-at-2-35-the-lower-end-of-its-range-as-arowana-holds-onto-maximum-amount

[noodles]

Intueri to list at $2.35, the lower end of its range, as Arowana holds onto maximum amount (24.9%)


http://www.sharechat.co.nz/article/00fbb330/intueri-to-list-at-2-35-the-lower-end-of-its-range-as-arowana-holds-onto-maximum-amount

So it looks like demand is a bit light as the price is at the lower end of the range and AWN is holding their maximum.

I've decided this is not a stag for me.

I may look for an entry post-listing if the company progresses as promised with a view to hold long-term.

Anybody taking the plunge?

[NZSilver]

So it looks like demand is a bit light as the price is at the lower end of the range and AWN is holding their maximum.

I've decided this is not a stag for me.

I may look for an entry post-listing if the company progresses as promised with a view to hold long-term.

Anybody taking the plunge?

Hi noodles - I called a guy running the offer at macquarie and it didnt sound like much demand and then I asked my broker if he could get any and if he had any requests - he said I was the only one, so I was a bit weary - I doubt it will move much and may go down. I like the looks of the company (grwoth + div) but then I did notice when I went on their website they have had a student recently die at their dive school (full respects) but for me after that I decided to stay sideline.

[macduffy]

A nice IPO result for those brave enough to brave this one.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11260466

[Harvey Specter]

I read somewhere they had to get a a NZX waiver as they only attracted 300ish investors. I'm guessing their was a bit of massaging of the price. No chance it will hold up.

Was anyone here brave?

[steve fleming]

A nice IPO result for those brave enough to brave this one.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11260466

Yeah, would be a shame if retail investors missed out on a nice stag here, because they had read some of the substandard, cowboy media articles in relation to the company.

Pretty much has all the characteristics that mum & dad investors should be encouraged to invest in - defensive sector, excellent forecast growth, strong dividend, very attractive pricing metrics.

Seriously, the SST article was school kid stuff - the author got it fundamentally wrong.

[steve fleming]

I read somewhere they had to get a a NZX waiver as they only attracted 300ish investors. I'm guessing their was a bit of massaging of the price. No chance it will hold up.

Was anyone here brave?

There was $56m traded (21m shares) - bit more than a massage

[steve fleming]

This is no hick business, it is NZ's largest private, provider of vocational services, going to be paying 5% + dividends and double digit growth.

Would have thought NZ would want to be falling over backwards to encourage these sort of businesses to list....never mind, if NZ'ers don't understand value, maybe the aussies will (i.e. look at NVT / VOC)

So looks like there was a fair number of Australian institutions that took up the issue.

Top 20 is dominated by Australian institutions/nominees

Interesting to see The Boat Fund, a leading small cap fund manager that has returned 51% for the year, is on the top 20.

[steve fleming]

So looks like there was a fair number of Australian institutions that took up the issue.

Top 20 is dominated by Australian institutions/nominees

Interesting to see The Boat Fund, a leading small cap fund manager that has returned 51% for the year, is on the top 20.


The Boat Fund has recently advised IQE is their number 1 holding in their portfolio.

Some comments from their latest newsletter:

"IQE presently representsapproximately 7% of the market and we believethat IQE has ambitions to achieve a market sharethat is 2 to 3 times this level in the next few years."

"IQE in particular, exhibits a number of attractivecharacteristics including:


• Capital light business model generating highmargins and high returns on equity;
• High barriers to entry through high levelsof government regulation;
• High earnings visibility;
• Strong cash flows with negligible bad debt levels; and
• Multiple earnings growth levers.

In regards to earnings growth in particular, we believethere are a number of strong levers to generategrowth including:


• Organic growth in the number of domestic andinternational student enrolments;
• The usual CPI + level increase in student fees;
• Further penetration of the rapidly growing online education market with initial plans to introduce online course delivery in New Zealand; and
• Through M&A opportunities presented by the highly fragmented nature of the PTE sector in New Zealand,the same scenario being exhibited in the vocationaleducation sector in Australia. "

[noodles]

WorkSafe New Zealand charges IQE in relation to Dive School incident.

But didn't we read in the prospectus...

"Based on initial internal investigations by NZSCDT and discussions to date with the investigating authorities, the Company considers the possibility of any improvement notice,
prohibition notice or prosecution to be very unlikely."

Not really a great start to it's listed life. It has certainly dented my confidence in the stock.

Does anybody else have some insight into this?

Still on my watchlist

[noodles]

Not withstanding my previous post, I did put IQE in my picks this year. Here is my analysis.

Assumptions
1. Cost of funds 5%
2. The company can make 2 more acquisitions during FY15. I've assumed that they are of the same size and cost of the FY14 acquisitions (Academy Group and OCA)

This is a copy of my worksheet.


PERIOD
TYPE
EBITA
extra debt (purchase price)
extra interest (assume 5%)
NPATA
eps
pe
Dividend (65% payout)
Imp credits
yield
Earnings growth


FY14
PFI
25,000


16,800
0.130
19.62






FY15
PFI
30,000


19,800
0.198
12.88







Add Academy Group
1,250
5,000
250
720









Add OCA
2,609
15,000
750
1,338








FY15
PFI + 2 acquisitions
33,859


21,858
0.219
11.67
0.142
0.055
7.74%
30.11%



2 more aquisitions of same size and cost
3,859
20,000
1,000
2,058








FY15
PFI +4 acquisitions (annualised)
37,717


23,917
0.239
10.66
0.155
0.060
8.47%
42.36%



It is a bit complex, but what I've shown is how IQE could be sitting on an FY15 annualised eps of 23.9c (pe= 10.6), earnings growth of 40%, and a gross yield of 8.5%. Even if they don't make any more acquisitions during FY15, they could still make 21.9c (pe=11.67) and eps Growth 30%

Now you might say that I'm being overly optimistic. But a broker yesterday published a report suggesting 25c per share for FY15.
http://www.reuters.com/finance/stocks/analyst?symbol=IQE.NZ
Note: I've used NPATA. This excludes amortization from eps figures. They have high amortization due to previous acquisitions.

I also hold IQE shares.

[noodles]

Since posting on the eps forecasts 2 days ago, the stock has risen 20c (8%) and has broken out of it's downtrend. My target price is still a long way away.

[Zaphod]

I think a strategy to acquire high quality organisations is a sound strategic move. Overall the PTE (and arguable the public) sector is in a period of consolidation. With a funding model that promotes outcomes over 'bums on seats' PTE's need to spend capital on initiatives to raise qualification attainment levels, so achieving economies of scale through consolidation and rationalisation is a natural path.

[Snow Leopard]

Not read the full year details yet but obviously the market was expecting better than the amount of "exceeding FY 2014 statutory and pro forma revenue and gross profit financial forecasts" they claim to have achieved.

Headline EPS: $0.0711 (P/E 35)
Divvy: $0.077 (100% Imp)

If they do do forecast EBITA of $30M or more next year then that P/E will look a lot better.

Best Wishes
Paper Tiger

[couta1]

Took a position in this company today, I like their potential and drive. The Dive School record keeping inconsistences arose pre Intueri but they now have to carry the can still that will be water under the bridge in a couple of months and they have made financial provision for it. Something quite different added to the portfolio with a nice maiden divvy to boot.

[percy]

Oh no couta1 you have done it again.!!!!
Wondered who brought the 6,344,280 shares for $13,900,318.
Great buying at $2.191 considering they had been trading during the day between $2.46 and $2.55.
The chart looks dreadful.

[couta1]

Oh no couta1 you have done it again.!!!!
Wondered who brought the 6,344,280 shares for $13,900,318.
Great buying at $2.191 considering they had been trading during the day between $2.46 and $2.55.
The chart looks dreadful.
No worries Percy just a 1% of portfolio position worth a punt don't you think, those large off market transactions at a discount do pop up out of the blue from time to time now don't they. I kinda like taking a wee position in companies like this adds a bit of spice to life .Disc- My wee may not be considered wee by others:cool:

[Baa_Baa]

And I have wondered about "wee'" for you Couta, particularly how a professed care home 'worker' can take large (self professed again) positions in the market. There's a difference between a worker, a nurse, a physician, a manager, the boss, an owner ... Do you own, have you inherited, perhaps imported, earned, money ... ? Why are you working? Just asking.


No worries Percy just a 1% of portfolio position worth a punt don't you think, those large off market transactions at a discount do pop up out of the blue from time to time now don't they. I kinda like taking a wee position in companies like this adds a bit of spice to life .Disc- My wee may not be considered wee by others:cool:

[couta1]

And I have wondered about "wee'" for you Couta, particularly how a professed care home 'worker' can take large (self professed again) positions in the market. There's a difference between a worker, a nurse, a physician, a manager, the boss, an owner ... Do you own, have you inherited, perhaps imported, earned, money ... ? Why are you working? Just asking.
Never professed to be a care home worker (Caregiver) Baa Baa, I've worked very hard all my life and even was a sheep shearer in my younger days before gaining my medical degree, I love working and helping people and like the market as a hobby adds a good balance( Often I find myself spending too much time following the market) and I imagine being a full time share trader would be an isolating experience if your a peoples person and love the interaction that comes with it.

[noodles]

This stock has ruined my chances in the share trading comp. 2 downgrades doesn't help. It is now half the price of it's all time high. Is it cheap yet?

FY15 pe 10.1
FY16 pe 9
FY17 pe 8.1

http://www.4-traders.com/INTUERI-EDUCATION-GROUP-L-16538055/financials/

I note that the highly respected Dame Alison Paterson has joined the board.

This company actually benefits from poor economic conditions in NZ (more people looking to upskill) and also enjoys a low NZD(attracts overseas students).

The average broker target is $3. That is nearly 92% from the current price. Even the most pessimistic broker has a target of $2.20. Current Price $1.56.

I have been buying recently.

[percy]

I have watched this stock from a distance.Was not sure that bringing together difference schools would achieve the projections they were aiming for.I thought I would wait and see their results, before deciding whether to buy or not.
That rather changed with the appointment of Dame Alison Paterson to the board.I made a good deal of money from her skillfull chairmanship of Abano Health.
Going back to the Chairman's address at IQE's agm, where he spoke of wanting another independant director;"We are seeking someone with a strong background to chair the Audit & Risk committee."
They have certainly achieved that.I am sure her appointment will make a lot of experienced analysts/investors/brokers sit up and take IQE very seriously.Attracting her, adds a huge amount to IQE's reputation.I expect were will see brokers coverage of IQE, as a result of her appointment.
I brought a few.

[janner]

I brought a few.

Perc. !!.. As the Official Literary member of this site.. ????

TUT.. TUT.. TUT..

Could be a good buy though :-))

[Hectorplains]

http://www.fool.com.au/2015/07/02/top-stock-picks-for-july-2/

[percy]

Perc. !!.. As the Official Literary member of this site.. ????

TUT.. TUT.. TUT..

Could be a good buy though :-))

Could be...should be....will be.!!!!
Dame Alison Paterson joining the board is "the game changer" for me.
She has nothing to gain by joining a second rate outfit.
The more I read about it,the more I feel the business is soundly based, in a growing sector.
As has been pointed out the ratios are very modest.

[noodles]

This stock has ruined my chances in the share trading comp. 2 downgrades doesn't help. It is now half the price of it's all time high. Is it cheap yet?

FY15 pe 10.1
FY16 pe 9
FY17 pe 8.1

http://www.4-traders.com/INTUERI-EDUCATION-GROUP-L-16538055/financials/

I note that the highly respected Dame Alison Paterson has joined the board.

This company actually benefits from poor economic conditions in NZ (more people looking to upskill) and also enjoys a low NZD(attracts overseas students).

The average broker target is $3. That is nearly 92% from the current price. Even the most pessimistic broker has a target of $2.20. Current Price $1.56.

I have been buying recently.
I forgot to mention a FY15 forecast gross div yield > 10%

[percy]

http://www.fool.com.au/2015/07/02/top-stock-picks-for-july-2/

Thanks for the link.
I think I read somewhere the NZ Government is allocating funds to help this important sector grow.

[percy]

I forgot to mention a FY15 forecast gross div yield > 10%

Noodles what am I ever going to do with all the dividends these high yielding stocks you are directing us all to are paying....? lol.

[noodles]

Noodles what am I ever going to do with all the dividends these high yielding stocks you are directing us all to are paying....? lol.

https://s-media-cache-ak0.pinimg.com/236x/d1/dc/6d/d1dc6dec8d9dd21ad1acb8d3ee7cb6d1.jpg

[Baa_Baa]

You guys have nerves of steel. I feel a lecture coming on. :confused:
7474

[noodles]

You guys have nerves of steel. I feel a lecture coming on. :confused:
7474

I know. It's bad. I broke my rules.

[Baa_Baa]

I know. It's bad. I broke my rules.

Good lord, you're human. I thought you were a Spreadsheet with an AI implant and a new theory of gravity. ;)

[couta1]

You guys have nerves of steel. I feel a lecture coming on. :confused:
7474
Those of us who bought in at around $2.50 and still holding must have nerves of titanium in that case:cool:

[percy]

You guys have nerves of steel. I feel a lecture coming on. :confused:
7474

Again the charts have been correct.
I expected the market to react immediately to the announcement Dame Alison Paterson was to join the board.
This has not happened,[yet].
So anyone thinking of investing in IQE, would be best to wait until the current prolonged downtrend turns around, and heads upwards.
At that time I will be adding to my holding.

[winner69]

This stock has ruined my chances in the share trading comp. 2 downgrades doesn't help. It is now half the price of it's all time high. Is it cheap yet?

FY15 pe 10.1
FY16 pe 9
FY17 pe 8.1

http://www.4-traders.com/INTUERI-EDUCATION-GROUP-L-16538055/financials/

I note that the highly respected Dame Alison Paterson has joined the board.

This company actually benefits from poor economic conditions in NZ (more people looking to upskill) and also enjoys a low NZD(attracts overseas students).

The average broker target is $3. That is nearly 92% from the current price. Even the most pessimistic broker has a target of $2.20. Current Price $1.56.

I have been buying recently.

Your GARP approach

If Intueri continues to trade at a PE of 10 you are essentially 'buying' the growth .....with less risk of a downward rerating than a stock with a higher PE

Is that how you see it?

[noodles]

Your GARP approach

If Intueri continues to trade at a PE of 10 you are essentially 'buying' the growth .....with less risk of a downward rerating than a stock with a higher PE

Is that how you see it?

At a pe=10 and a div yield > 10%, I think I'm buying a stock priced for zero growth. This is not the case. They have historical growth and significant potential for future growth from acquisition and organicly.

[winner69]

At a pe=10 and a div yield > 10%, I think I'm buying a stock priced for zero growth. This is not the case. They have historical growth and significant potential for future growth from acquisition and organicly.

So even if the PE remains at 10 your gains will be increased share price from growth plus dividends.

The original question was what is the significance of a PE of 10 (or a lowish number)?

[noodles]

So even if the PE remains at 10 your gains will be increased share price from growth plus dividends.

The original question was what is the significance of a PE of 10 (or a lowish number)?
I use a low pe as a shorthand to estimate value. Most stocks on the NZX are trading at much higher multiples. In my head, I'm wanting the pe to be less than the growth of the company. I.e.PEG <1

[Zaphod]

I've just had a quick look at the educational outcomes for each of the Inturi businesses, and on the whole they are all very successful at delivering outcomes either meeting or exceeding (by a few percentage points) industry averages, which is no small feat! Of course this is not withstanding my comments last year about how such outcomes can be manipulated by institutions, but let's assume all institutions are doing the same thing so direct comparisons are valid.

Aside from acquisitions (of which there are still plenty of candidates in an industry still undergoing consolidation), where do you see growth primarily coming from?

[NZSilver]

Took debt to pay dividend.. Bit worrying?

[percy]

Not trying to be clever,but I would prefer to hear where you think it will come from.
My own thoughts is the business is now better organized,and therefore better placed to advertise and chase organic growth.
And yes I would expect further acquisitions.

[noodles]

Took debt to pay dividend.. Bit worrying?
I disagree. They had operating cashflows of $11m and a dividend of $7.7m

I think it would be correct to say... "They took on debt to pay for acquisitions"

[noodles]

I've just had a quick look at the educational outcomes for each of the Inturi businesses, and on the whole they are all very successful at delivering outcomes either meeting or exceeding (by a few percentage points) industry averages, which is no small feat! Of course this is not withstanding my comments last year about how such outcomes can be manipulated by institutions, but let's assume all institutions are doing the same thing so direct comparisons are valid.

Aside from acquisitions (of which there are still plenty of candidates in an industry still undergoing consolidation), where do you see growth primarily coming from?
1.Online business is growing at a staggering rate.
2.International students due to a lower NZD

I have heard Rob Facer (CEO) speak at presentations twice now. He keeps on banging on about outcomes. In fact, he says what differentiates NZ and Australia is a focus on outcomes. In Australia, the focus is on enrollments.

[Hectorplains]

1.Online business is growing at a staggering rate.
2.International students due to a lower NZD

I have heard Rob Facer (CEO) speak at presentations twice now. He keeps on banging on about outcomes. In fact, he says what differentiates NZ and Australia is a focus on outcomes. In Australia, the focus is on enrollments.

However, most of their delivery is not online. Any advantage from a lower NZD could be mitigated by weaker foreign economies - the arse dropped out of foreign fee paying students in 2007-8. A re-occurrence is a risk.

There are some good institutions bundled up in here, I especially like the Academy. It's a very eclectic mix though - from foundation building to counselling to diving etc. They need to show the benefit of collecting this disparate group under one banner. While it's early days yet this hasn't shown through.

[Hectorplains]

Being a dual listed stock, they may also be experiencing the continued fall out of the Vocation train wreck in Aust? Education stocks were all the buzz last year but Vocation put pay to that last November.

They are starting to look over sold on fundamentals to me but that trend line is hard to ignore. I might just keep watching!

[Zaphod]

The International market in Australasia was decimated (as Hectorplains points out) circa 2008 due to the GFC and a perception that New Zealand and Australia were not safe destinations for Asian students. Our markets have recovered a bit since then, but we are still not generally regarded as a preferable destination for education purposes. The current anti-foreigner sentiment in the NZ housing market will not do our image any favours overseas, regardless of whether you agree with the premise.

The provision of online courses is a double-edged sword in terms of the international market. While this method allows access to an absolutely huge pool of customers, you are also competing with an equally large amount of other on-line course providers. The recognition of any awarded qualification can also be a major stumbling block; the qualification needs to be internationally recognised and hold significant weight in the international job market.

Profitability of the NZ domestic market is governed primarily by EFTS funding metered out by the TEC. Obtaining additional funding is typically a zero-sum game, given the national pool is relatively fixed (unless the Government supply a large amount of additional funding). However the very good of outcomes and the positive NZQA audit results obtained by all the Intueri PTE’s would lend significant weight to any application for further funding during their next funding cycle.

One other point to note is that although recessionary environments stimulate demand for education providers, it can be a mixed bag. My experience is that those individuals who turn up to your door during such times, require a much larger pool of resources to generate successful outcomes from.

So where do I think the main opportunities lie? My current thoughts are:
1. Acquisitions - there are no doubt some further high quality acquisition targets in the domestic market.
2. Growth in domestic student numbers (face to face & online) - given the successful results obtained thus far, further EFTS funding could be granted by the TEC in courses that are seen a strategic fit to NZ (Hospo, IT etc.) Partnerships could also be developed between higher tertiary institutions to provide educational pathways or to provide on-line delivered certificates & diplomas.

The international market (face-to-face and elearning) will likely see moderate growth, but could be aided by more targeted courses with higher levels of international recognition. That is likely to take some time.

[percy]

Zaphod.
Thank you for your informative post.

[winner69]

Chinesenstudentvarrivals to hold up

http://www.sharechat.co.nz/article/a6105a70/chinese-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slump.html?utm_medium=email&utm_campaign=Chinese+student+arrivals+expected+to+ hold+up+despite+slowdown+stock+slump&utm_content=Chinese+student+arrivals+expected+to+h old+up+despite+slowdown+stock+slump+CID_359c70721a 5031078200fb064266d4c7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlea6105a70chines e-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slumphtml

[winner69]

Chinese student arrivals to hold up

http://www.sharechat.co.nz/article/a6105a70/chinese-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slump.html?utm_medium=email&utm_campaign=Chinese+student+arrivals+expected+to+ hold+up+despite+slowdown+stock+slump&utm_content=Chinese+student+arrivals+expected+to+h old+up+despite+slowdown+stock+slump+CID_359c70721a 5031078200fb064266d4c7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlea6105a70chines e-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slumphtml

[Zaphod]

Chinese student arrivals to hold up

http://www.sharechat.co.nz/article/a6105a70/chinese-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slump.html?utm_medium=email&utm_campaign=Chinese+student+arrivals+expected+to+ hold+up+despite+slowdown+stock+slump&utm_content=Chinese+student+arrivals+expected+to+h old+up+despite+slowdown+stock+slump+CID_359c70721a 5031078200fb064266d4c7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlea6105a70chines e-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slumphtml

It's pleasing to see student arrivals from China holding up even though (as the article notes) "New Zealand isn't a study destination for Chinese students like the US and UK". Meanwhile Indian student numbers continue to rise substantially.

Currently, Chinese student enrolment numbers are almost equally split between PTE's and Universities, while Indian students are enrolling predominantly at PTE's. If you look back 10 years or so, the Indian student market was very small and was made up predominantly of those enrolling at Universities, seeking to supplement their existing qualifications with one that was more internationally recognised.

Times have, and continue to change!

[Zaphod]

Chinese student arrivals to hold up

http://www.sharechat.co.nz/article/a6105a70/chinese-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slump.html?utm_medium=email&utm_campaign=Chinese+student+arrivals+expected+to+ hold+up+despite+slowdown+stock+slump&utm_content=Chinese+student+arrivals+expected+to+h old+up+despite+slowdown+stock+slump+CID_359c70721a 5031078200fb064266d4c7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlea6105a70chines e-student-arrivals-expected-to-hold-up-despite-slowdown-stock-slumphtml

It's pleasing to see student arrivals from China holding up even though (as the article notes) "New Zealand isn't a study destination for Chinese students like the US and UK". Meanwhile Indian student numbers continue to rise substantially.

Currently, Chinese student enrolment numbers are almost equally split between PTE's and Universities, while Indian students are enrolling predominantly at PTE's. If you look back 10 years or so, the Indian student market was very small and was made up predominantly of those enrolling at Universities, seeking to supplement their existing qualifications with one that was more internationally recognised.

Times have, and continue to change!

[Zaphod]

Zaphod.
Thank you for your informative post.

You're welcome. I've been involved in the Tertiary sector for many years and despite recently leaving I still take a keen interest, so I'm happy to contribute by two cents if anyone wants to read it! :)

I'll defer any financial analysis to more qualified people that myself though!

[Joshuatree]

500,000 plus shares traded today ; biggest vol by far in a year. S/P down 8c. Not looking good chart wise either.

[percy]

500,000 plus shares traded today ; biggest vol by far in a year. S/P down 8c. Not looking good chart wise either.

What a wonderful way of putting a total disaster,"Not looking good chart wise either."
I would love it if I was sitting on the sidelines.!!
Just when you think the last big seller has finished, and the share price has bottomed,an even bigger seller drops an even bigger parcel, at an even lower price...
Just when I thought I was beating the market, and buying on the announcement, Dame Alison Paterson is joining the board,the market turns round and says,"Percy you still need to go back to basics,do not buy in a downtrend,"!

[Te Whetu]

500,000 plus shares traded today ; biggest vol by far in a year. S/P down 8c. Not looking good chart wise either.

Yes, quite interesting.
On market – 1,352 shares traded at $1.48 per share (only on market trade for the day)
Off market – 500,000 shares traded off market at a price of $1.40 per share.

Which indicates institutions do not consider there to be good value at the current market price (both the seller being prepared to sell at $1.40 and the buyer not paying more than $1.40 is telling).
Either that or a motivated seller (for whatever reason).

[percy]

Yes, quite interesting.
On market – 1,352 shares traded at $1.48 per share (only on market trade for the day)
Off market – 500,000 shares traded off market at a price of $1.40 per share.

Which indicates institutions do not consider there to be good value at the current market price (both the seller being prepared to sell at $1.40 and the buyer not paying more than $1.40 is telling).
Either that or a motivated seller (for whatever reason).

Bit like selling sun hats.When it is raining sales are slow.!
Buy one,get one free.!!

[Joshuatree]

Down re 9.6 % in two days. hardy any volume today though so hope its near a bottom for holders and fingers can be reattached.

[Hectorplains]

Down re 9.6 % in two days. hardy any volume today though so hope its near a bottom for holders and fingers can be reattached.

Yeah, Aust education sector stocks have had a good run in the last week and a bit. G8 and NVT inparticular have climbed sharply off 52 week lows. It'll be interesting if that sentiment extends to IQE and EVO.

[percy]

:rolleyes:
Percy, Percy, Percy - what were you thinking? IQE is miles away from even touching a moving average, let alone breaking through the 200 day MA. A downtrend is not over until a clear uptrend is established - even if it bottoms, it could still flounder around sideways for months or years. I hope for your sake this IQE is not your ARI :p

7479
No it is not my ARI .
I will not be adding until the charts turn round [if they ever will].
Yes I brought in because of Dame Alison Paterson's appointment to the board.
Yes I like IQE's balance sheet,
Yes I like IQE's cash flow,
Yes I like IQE's dividend yield.
Yes I like brokers projections for IQE.
Yes I see IQE having the capacity for further acquisitions.
Yes I think the NZ Goverment sees this sector as both a growth sector, and a good earner.
Yes I see more brokers covering IQE as a result of Dame Alison Paterson's appointment.
Yes I see Dame Alison Paterson's appointment adding to IQE's credibility,and reputation.
Yes I see the fall out in Australia of education providers having an affect on IQE's sp,but as we know eps growth does drive the sp.
I therefore see IQE's growing eps driving their sp upwards.Just don't know when.But when it does I will be adding to my holding.
And your nice CNW tip should keep me in groceries until IQE comes right,ie short term or long term.!

[winner69]

In that SSH notice from UBS the word borrowed popped up a few times.

Does it mean anything important?

UBS have a lot less interest now, that other outfit seems to increased by amount the same

[Joshuatree]

This looks positive for Holders? . Its at 5.5 times earnings ,NZ Insto Of Sport

IQE - Intueri Education acquires NZ Institute o... (https://www.nzx.com/companies/IQE/announcements/267305)

[Hectorplains]

This looks positive for Holders? . Its at 5.5 times earnings ,NZ Insto Of Sport

IQE - Intueri Education acquires NZ Institute o... (https://www.nzx.com/companies/IQE/announcements/267305)

Could be. 5.5 times expected 2016 EBITDA would be at the top end for purchase price?

[percy]

Could be. 5.5 times expected 2016 EBITDA would be at the top end for purchase price?
Always pleasing to see vendors having to work for "the icing on the cake."
Yes another positive acquisition.
Am looking forward to Noodle's acquisition adjusted forward eps.

[percy]

:rolleyes:
Percy, Percy, Percy - what were you thinking? IQE is miles away from even touching a moving average, let alone breaking through the 200 day MA. A downtrend is not over until a clear uptrend is established - even if it bottoms, it could still flounder around sideways for months or years. I hope for your sake this IQE is not your ARI :p

7479

Well if it is not you buying others are.! .
Looks as though I am not the only "rule breaker". lol.

[percy]

"NZCM is ... one of only two providers to offer a Bachelor’s Degree level Massage Therapy programme"

What is the world coming to? Have University standards fallen so low that you can now get a Bachelors Degree in Massage? FFS! :crying:
In the name of higher education, I will consider making my body available for advanced massage therapy students to refine their skills on.

[kiora]

Also positive is that immigrants up by 5000 students for this year,mainly from India & China

[Zaphod]

"NZCM is ... one of only two providers to offer a Bachelor’s Degree level Massage Therapy programme"

What is the world coming to? Have University standards fallen so low that you can now get a Bachelors Degree in Massage? FFS! :crying:

You're right, Batchelor degrees are much more common now, so they are certainly not as highly valued as they were a decade ago!

The NZCM isn't a university though. It's a tertiary instruction accredited to deliver unit standards on the NZQA framework up to level 7, and the course is a Bachelor of Health studies (admittedly) majoring in massage & neuromuscular therapy, which includes unit standards covering health, nutrition, psychology etc.

It's not my specialty, but looking the performance criteria it wouldn't be easy!

[kiora]

Tailwinds
http://www.interest.co.nz/opinion/76765/benje-patterson-says-stars-seem-aligned-strong-growth-international-education%E2%80%99s

[couta1]

"the stars seem aligned for strong growth in international education’s contribution to export earnings over coming years"

Well, at least until the Govt wakes up and bans foreign buyers of NZ property. Then watch the education sector dry up :D Won't happen at worst it will be a wet bus ticket kinda tax slapped on, why kill the goose that lays the golden egg.

[noodles]

Well if it is not you buying others are.! .
Looks as though I am not the only "rule breaker". lol.
Percy. You are in good company. Harbour Asset Management (First NZ Capital) now on the register.
https://www.nzx.com/companies/IQE/announcements/267683

[percy]

Percy. You are in good company. Harbour Asset Management (First NZ Capital) now on the register.
https://www.nzx.com/companies/IQE/announcements/267683

Hope I don't get banned again,but here goes;
I think we are "well positioned."

[noodles]

Always pleasing to see vendors having to work for "the icing on the cake."
Yes another positive acquisition.
Am looking forward to Noodle's acquisition adjusted forward eps.

Sorry for the late delivery. I see the acquisition as being 7% eps accretive

I calculate FY16 eps=25.2c


New FY16 eps
0.252


pe at $1.75
6.9




I don't know if there are any other stocks on the NZX with such a low PE. There can't be too many Aussie institutions left on the register after they decided to exit the sector.

[percy]

Sorry for the late delivery. I see the acquisition as being 7% eps accretive

I calculate FY16 eps=25.2c


New FY16 eps
0.252


pe at $1.75
6.9




I don't know if there are any other stocks on the NZX with such a low PE. There can't be too many Aussie institutions left on the register after they decided to exit the sector.

I think it is wonderful that we can help the Aussie intos, by taking these shares off their hands.
ANAC spirit is still very much alive.

[percy]

Sorry for the late delivery. I see the acquisition as being 7% eps accretive

I calculate FY16 eps=25.2c


New FY16 eps
0.252


pe at $1.75
6.9




I don't know if there are any other stocks on the NZX with such a low PE. There can't be too many Aussie institutions left on the register after they decided to exit the sector.

Today;
Share price $1.80.
EMA 30 day moving average $1.68.
EMA 50 day moving average $1.75.
MACD positive.
RSI positive.
Yes I added to my wife's holding at $1.80 today.

[winner69]

If you have some exciting on line learning stuff LinkedIn pays billions or it

http://www.businessinsider.com.au/linkedin-buys-lyndacom-for-15-billion-2015-4

[percy]

If you have some exciting on line learning stuff LinkedIn pays billions or it

http://www.businessinsider.com.au/linkedin-buys-lyndacom-for-15-billion-2015-4

Nice link thank you W69..
Owning IQE in NZ, and KME in Aussie, it could be said I am "well positioned."

[winner69]

Only skimmed the first couple of paragraphs but todays announcement seemed pretty positive
https://www.nzx.com/companies/IQE/announcements/267919

[Hectorplains]

Only skimmed the first couple of paragraphs but todays announcement seemed pretty positive
https://www.nzx.com/companies/IQE/announcements/267919

It's the third time in a row that they won't meet guidance. More detailed information on what is effecting Quantum performance and how it will be addressed would be good too.

[winner69]

It's the third time in a row that they won't meet guidance. More detailed information on what is effecting Quantum performance and how it will be addressed would be good too.

Should have read a bit more eh .... a profit downgrade

Haven't really followed but you seem to say they are a perennial downgrader

[Joshuatree]

Anticipates Ebitda $27-$29 mill down from $30-$31 mill guidance. Looks like 3 Instos got i wrong too,AMP,Harbour,Deutsche . Noodles and Percy in good company,Hard luck.

[winner69]

Anticipates Ebitda $27-$29 mill down from $30-$31 mill guidance. Looks like 3 Instos got i wrong too,AMP,Harbour,Deutsche . Noodles and Percy in good company,Hard luck.

So in a few short months guidance has gone from an optimistic $33m to probably $27m

Still $27m-$29m is quite a large range seeing the year has already ended and so close to announcing the result .... not on top of things methinks?

[couta1]

Good long term hold aye:cool:

[percy]

Anticipates Ebitda $27-$29 mill down from $30-$31 mill guidance. Looks like 3 Instos got i wrong too,AMP,Harbour,Deutsche . Noodles and Percy in good company,Hard luck.

Don't like the downgrade.
However the reason I brought in was Dame Alison Paterson was to join the board on the 18th June.A little over a month ago.
I would expect AMP and Harbour brought for the same reason.
I therefore expect [hope] that is the final downgrade, and from here on in we will have to get used to upgrades.
Maybe we all have the owner's eye,like the sector,like the future prospects?

[noodles]

Anticipates Ebitda $27-$29 mill down from $30-$31 mill guidance. Looks like 3 Instos got i wrong too,AMP,Harbour,Deutsche . Noodles and Percy in good company,Hard luck.
Not hard luck. We were fools because we bought in a downtrend. Baa baa and KW warned us. We should both know better.

[percy]

Not hard luck. We were fools because we bought in a downtrend. Baa baa and KW warned us. We should both know better.

Unfortunately correct.!!!
May be madness I have decided to hold.
Give Dame Alison 6 months to a year,and then review my holding.

[couta1]

Unconcerned about short term price drop I've got other stocks like TTk/SLi/KMD in a far worse state, beautiful day here in Queenstown looking out over the lake at the Remarks, too tired to ski today.

[Joshuatree]

Fools it is and lessons for all.DOHDOHDOHDOHDOHDOHDOHDOHDOHDOHDOHDOH:cursing:

6 months hard labour with dame alison with self lashings.

I stayed away after seeing KW's trend warnings across the ditch.

[IAK]

I would have hoped so :-(
We are only human though, and sometimes we all forget, but the beauty of the market is that it is quick to remind us of lessons we should already know. Think of it as a refresher course (haha, good pun considering we are talking about education providers LOL)

So here are the lessons:
You dont enter a stock until the turnaround situation has turned around - the share price will show when that has happened. Until then you are riding a loser that is likely to get worse.
One downgrade is more likely than not to be followed by another.
Don't buy shares in a downtrend - there is always a good reason for the falling price.
Don't average down by throwing good money after bad.
Avoid investing in a company that is in a poorly performing sector - it is rare for one company to avoid industry wide problems.

Now write those lines 50 times on a blackboard while humming the Simpsons theme :p

Some great advice right there! :)

Disc. not holding.

[winner69]

It is not a good look that 6 weeks after year end and 2 weeks before the interim is going to be announced they have such a big range in their EBITA guidance, the $27m-$29m

Would suggest they don't have control over their finances .......or maybe there are a lot of 'funny' amounts they are debating with auditors as to the treatment.

People sometimes talk about 'red flags' --- this to me is a 'red 'flag'

[neyney2010]

sold 50% today.
again, dun know y the fuk I didn't sell them all.

[Plutus]

Don't like the downgrade.
However the reason I brought in was Dame Alison Paterson was to join the board on the 18th June.A little over a month ago.
I would expect AMP and Harbour brought for the same reason.
I therefore expect [hope] that is the final downgrade, and from here on in we will have to get used to upgrades.
Maybe we all have the owner's eye,like the sector,like the future prospects?

I wonder if Dame Alison did enough DD ? Not a good look a month in, and so long after year end. And yes a massive range still.

[DarkHorse]

I have recently been tempted to buy on compelling value plus tailwinds from a falling dollar - IF the downtrend could be put down to sentiment regarding the sector in Australia which has far less relevance here. HOWEVER, in a commodified and competitive sector management is key. As a former PTE owner, I've looked through EER (NZQA) reports online for institutes they have owned for several years, and I see little evidence of improvement. I also note the prospectus contained a lot of hot air (eg the need to use a trust account helps cashflow??!!) The lack of clarity of earnings at this stage only adds to my scepticism. Moreover it is a very tricky sector with its own peculiar quirks. They may be a good bet for a small investment soon, but until management with an excellent track record in the sector is in place I would advise caution.

[winner69]

What caused iqe to fall to 140 a few weeks ago?

[Hectorplains]

What caused iqe to fall to 140 a few weeks ago?

It'd been drifting south on the back of profit downgrades and the Australian education sector stocks generally losing market support (it's dual listed.)

[winner69]

It'd been drifting south on the back of profit downgrades and the Australian education sector stocks generally losing market support (it's dual listed.)

But after dropping to 140 it rose to 190 before the downgrade .....from hence it has drifted south.

Was there behind the sudden fall to 140 or is it just volatility associated with illiquid stocks.

[Hectorplains]

But after dropping to 140 it rose to 190 before the downgrade .....from hence it has drifted south.

Was there behind the sudden fall to 140 or is it just volatility associated with illiquid stocks.

The jump from 140's to 180 was on news of their NZIS purchase.

[winner69]

The jump from 140's to 180 was on news of their NZIS purchase.

Thanks .....clear as mud now

Seems to react one way or the other to announcements

[Hectorplains]

Thanks .....clear as mud now

Seems to react one way or the other to announcements

The market seemed to like the NZIS buy - a 20% share price hike on announcement. They're paying 5.5 EBIT for it.

By comparison, G8 in Aust have a similiar model; albeit a different focus area (ECC.) Their aquisition plan is 4x anticipated EBIT.

Is Intueri paying too much?

I also wonder at some of the assumptions made in the update. NZ Youth unemployment is around 20 percent and is not falling. This does not tally with Intueri's comment that, "a strong local labour market [is] affecting domestic student recruitment in Foundation and Youth Guarantee courses." Youth Guarantees is being pushed hard by the Ministry - Academy and Quantum should be both well placed to take advantage of this. Instead Quantum 's poor preformance is put down to "more robust enrolment prerequisites and additional measures to ensure successful course completion." Enrolment prerequisites for foundation and YG courses would be minimal as they're targeted to students who have not succeeded in the mainstream. As to the second half of the excuse - if course completion rates were an issue this is something that should have been known at time of purchase.

[winner69]

Half year out

https://www.nzx.com/files/attachments/218897.pdf

Big positive numbers and outlook really bright

What a stunning result, really stunning !!!!!!!!!!

[Joshuatree]

Same full year EBITDA forecast as downgrade to $27 -$29 mill though
Debt from $11.3 mill to $34.9 mill now.

[Hectorplains]

Half year out

https://www.nzx.com/files/attachments/218897.pdf

Big positive numbers and outlook really bright

What a stunning result, really stunning !!!!!!!!!!

Market thinks otherwise, down 7% today.

I think they have glossed over why they missed projections.

[Joshuatree]

Im hoping w69 just forgot to add a face palm emoticon to that post.

[Joshuatree]

Im hoping w69 just forgot to add a face palm emoticon to that post :)
7537

[Plutus]

The irony of posting a better result because the acquisitions didn't perform as well as expected, and the earn-outs were not paid. How do you interpret that as positive ?

[winner69]

Way the share price keeps slip sliding away (even today) one would think they going broke

[couta1]

Way the share price keeps slip sliding away (even today) one would think they going broke
Another great long term kinda hold like TTK aye, I mean both pay divvys, what more could one ask for? Holding both of course.

[winner69]

You guys got me interested some time ago

Been watching ever since

[Hectorplains]

Another great long term kinda hold like TTK aye, I mean both pay divvys, what more could one ask for?

They might yet prove to be a great long term proposition. At the moment they sit on a big PE, a downward racing share price trend and a developing history of not meeting projections.

There is no evidence that they have brought any value to the providers they have bundled together. Hard to recommend...

[Hectorplains]

Reversal of July sentiment by Motley Fool (IQE was an ASX top 5 pick then.)

http://www.fool.com.au/2015/08/31/education-sector-slammed-as-headwinds-gather-steam

"Accordingly, I do not believe they are a buy even after recent weakness in their prices."

[Hectorplains]

Looks like a PR offensive: http://www.smh.com.au/business/intueri-ceo-calls-for-calm-to-restore-faith-in-listed-education-sector-20150922-gjss78.html

Maybe that's the source of the mini rally in the SP off a low of 1.05?

[Plutus]

What a stupid PR offensive. Calling for calm... Mr Facer, hit your targets and get the company running properly, rather than try and jaw-bone the share price. Actions speak louder....

[winner69]

at least the CEO said Mr Facer accepts that Intueri has some rebuilding to do among the investment community."We recognise there is a credibility problem and we are working hard on rebuilding the faith," he said, referring to the need to deliver consistent earnings growth and meet market forecasts.



But mud sticks, credibility may never return

Where's noodles gone - he fancied this

[Hectorplains]

at least the CEO said Mr Facer accepts that Intueri has some rebuilding to do among the investment community."We recognise there is a credibility problem and we are working hard on rebuilding the faith," he said, referring to the need to deliver consistent earnings growth and meet market forecasts.



But mud sticks, credibility may never return

Where's noodles gone - he fancied this

Good article in NBR (24.9) - outlining issues with their numbers. Sorry only have a paper copy so can't link -maybe someone could c'n'p from a digi copy of it?

This Board provides a rich mix of educational AND commerce goobledegook.

[winner69]

Hadn't realised IQE was worth about 3 bucks not that long ago.

Some fall from grace

Maybe they are super cheap at the mo?

[NZSilver]

Can anyone post the prospectus numbers or the prospectus link, I wanted to compare their results with their forecasts from the prospectus.

[percy]

Can anyone post the prospectus numbers or the prospectus link, I wanted to compare their results with their forecasts from the prospectus.

Go to www.stocknessmonster.com
in quick tools ; IQE....ASX....News. then go to right hand side of the page and clic onto 2014 and the 24th May Prospectus.

[Hectorplains]

Can anyone post the prospectus numbers or the prospectus link, I wanted to compare their results with their forecasts from the prospectus.


The misses on their financial forecasts are pretty obvious - fully covered in msm. More concerning are the recent allegations around cooked books for student numbers at Quantum (their biggest investment at IPO) - Hunter (NBR) is claiming that they said they had TWICE as many students on their books as they actually did (approx. 2000 not 4000) AND a 20% student enrolment growth for the start of this year. Worst still is that Arowana (who rolled this out) knew of these 'rumours.' Facer's double speak,“determination to deliver quality outcomes for students, including more robust enrolment prerequisites and additional measures to ensure successful course completion,” from the profit warning is as close as IQE have come to addressing this.

[percy]

Tim Hunter has had his facts correct right since the IPO.
It would appear Arowana have a [big] problem.!
A lot of water yet to flow under this bridge.!

[Hectorplains]

Tim Hunter has had his facts correct right since the IPO.
It would appear Arowana have a [big] problem.!
A lot of water yet to flow under this bridge.!

I wonder if the independent directors are advocating this be investigated by FMA?

[percy]

I wonder if the independent directors are advocating this be investigated by FMA?

Excuse my memory,but I sort of took from the article, Tim Hunter was going to bring it to the FMA's attention.
I would think IQE's directors would be failing in their duty to shareholders, not to bring it to the FMA's attention.
Not doing so they could find themselves liable.
Hunter's article means the matter can't be ignored.

[Hectorplains]

Sp on the skids again today.

This article from The Australian today:   Intueri Education (IQE) 95c

The head of the only trans-*Tasman-listed education provider concedes some players “might have got the balance wrong’’ in the strife-riddled training sector.
You’ll brook no debate there, Rob Facer. But the message he’s most keen to impart is the quality woes pertain overwhelmingly to this side of the ditch, where Intueri only operates an online business.
Last week’s Senate inquiry on the private training sector catalogued “harrowing and concerning evidence of misconduct’’ — we’ve all heard of the laptops *offered as inducements for 85-year-old pensioners to sign up to hairdressing courses and the like. Addressing the sixth annual Australian Microcap Investment Conference in Melbourne, Facer dwelt on the disparate regulatory regimes adopted by ourselves and the Kiwis.
In short, we have permitted the registered training organisations (RTOs) to tap the public teat, without any reference to whether the student completes the course and the resulting employment outcome.
In another case of NZ PM John “Wonderboy” Key getting it right, Kiwi subsidies are tightly aligned to “student outcomes”. The fewer students who pass, the fewer candidates a college can enrol in subsequent years.
Presuming the subject of education arose alongside with incarcerated Kiwis, here’s hoping Malcolm “Mr 67 per cent” Turnbull was taking notes with his Mont Blanc during his weekend chitchat with Key.
Intueri runs 11 colleges, 10 in NZ, with an Australian presence mainly through Online Courses Australia (anything from pet care to advanced diplomas).
Facer says there are more than 4000 RTOs in Australia, which poses a compliance nightmare. In NZ there are 450 — “but 100 would be a better number in terms of quality and compliance’’.
Facer maintains the few bad apples are creating the perception of an entirely rotten sector.
The trouble for investors is all Intueri’s listed rivals have foundered because of regulatory or quality-related issues — the hapless Vocation, Australian Careers Network, Ashley Services and Academies Group. Last year’s fatality at its dive school aside, Intueri hasn’t been the subject of systemic quality concerns, but it missed 2014 prospectus forecasts.
Intueri shares have declined from $2.84 in February to yesterday’s nadir of 95c, down 10c on the day — a lesson in pain for major backers Ellerston Capital and JCP Investment Partners.
Intueri disclosed first (June)-half revenue of $NZ42 million ($39.3m), up 75 per cent and EBITA of $NZ11.7m (up 6 per cent). About half Intueri’s revenue derives from its NZ operation, with a further quarter from the NZ international student business.
Facer says Intueri is keen to make further acquisitions in a sector ripe for consolidation, having recently picked up the NZ Institute of Sport and NZ College of Massage for $NZ19m.
Despite the strong language employed by the Senate inquiry, Facer reckons most Aussie reforms have already been enacted.
In a telltale sign of how politicised the issue has become, the inquiry recommended another inquiry. “What we need is a period of calm and stability,’’ he says.
On (downwardly revised) calendar year guidance of EBITA of between $NZ27m and $NZ29m, Intueri trades on an EBITA multiple of less than five times and a double-digit dividend yield.
Our learned guess is Intueri has suffered guilt by association and its shares shouldn’t be worth less than a pack of pineapple lumps. Buy.

[Toulouse - Luzern]

I have read in their newsletter that Australia's The Boat Fund (TBF) have exited their position.

[DarkHorse]

The work rights allow just a few part-time hours and some holiday work. It's only one factor in the rise in student numbers since 2013.
Foreign students also create a lot of employment and significantly boost government coffers through paye and GST. The policy won't be changed any time soon.

[Tomtom]

I would think IQE's directors would be failing in their duty to shareholders, not to bring it to the FMA's attention.
Not doing so they could find themselves liable. Just like all the other times directors have taken there duty seriously when there has been a bit of Spanish business? Hopefully however investors will treat future information provided by IQE with an appropriate level of skepticism.

[NZSilver]

announcement dosn't sound to good - a few bogie monsters in the closet? we know what happened in aus to education providers, hopefully nothing like that

[winner69]

announcement dosn't sound to good - a few bogie monsters in the closet? we know what happened in aus to education providers, hopefully nothing like that

Always seems to be something happening with IQE eh

Wonder what the fine is going to be re the diving school incident - providing for it but what?

The latest developments don't sound too good either

Seems doomed they do?

[trackers]

Taken a roughly $40mil or so (AUD) hit on today's news, relating to legacy issues primarily, and the only firm indication of costs is a $1mil dive school provision - Is there any real surprise that TEC has announced a review of the dive school?

The funding portability thing looks like more of a delay than a cancellation? If it is a delay, that money would be deferred to the 2016 accounts? I think the announcement has been poorly constructed

At the start of the day they had a market cap of $125mil, it is now $80mil. It has $100mil revenue and an EBIT of around $27mil (All AUD). Looking very cheap to me

[Zaphod]

TEC reviews can be particularly grueling. We endured one where all SAC funding was withheld until the completion of the review (it took one year), which found nothing wrong.

The death of a student is tragic and prosecution under the Health and Safety in Employment Act may be warranted, it does not necessarily mean that the TEC review will result in accreditation being pulled or any other punitive action.

[neyney2010]

I bought more at 90c today.


Disc: Think I'm ****ed now.

[Chaowee88]

I bought more at 90c today.


Disc: Think I'm ****ed now.

Oh man Intueri looks dead 69c now...

Dividend yield looks juicy though

[silverblizzard888]

This is an insane valuation with the dips its been having this week. Like what gives.

40 cent must be like a firesale!

A week ago this was at $1.30, now 40 cents. They expect reducation in profit by 3 million if issues aren't solved this year. That is still between 6-7 million in profits they can report for the financial year. Insane stuff happening or maybe theres bigger issues about to come out that I don't know about.

[silverblizzard888]

33 cents on offer now? Its like people jumping off cliff prices!

[goldfish]

40% dividend at these prices?

[goldfish]

Maybe I'm doing it wrong but got some on closing.

[silverblizzard888]

Maybe I'm doing it wrong but got some on closing.

Well I'm in the same boat, so we can't be doing too wrong. If they don't change dividends I'll be happy to just collect that haha.

[winner69]

Maybe they get a speeding ticket next week when the price shoots up over 50/60

Hope so

[Toulouse - Luzern]

Intueri has a nightmare chart.

Since last March ... it looks like

The right hand side of Rangitoto island viewed from Takapuna Beach.

Unlike Rangitoto it has a sheer cliff at the right hand end.

I wonder if any SSH notices will appear.

Sadly I think I may have a small share in it as Pie Funds held some and (shades of their TTN investment - Titan Energy Services) are sometimes slow to exit their total position.

[Chaowee88]

Took a punt and picked some up yesterday @ 60 and 35. Fingers crossed.

[winner69]

The market is truly irrational at times eh.

Might sell at 70 today ....or hold longer if t looks pretty strong

They did their own speeding ticket


IQE – Intueri Reaffirms Quality Strategy
8:30am, 30 Nov 2015 | FORECAST
30 November 2015

IQE – INTUERI REAFFIRMS QUALITY STRATEGY

• Intueri has today reaffirmed its quality strategy and its focus on quality student outcomes
• The company remains in a sound financial position with strong margins and cash flows, appropriate funding and the full support of its bankers
• The company continues to comply with its continuous disclosure obligations under NZX and ASX Listing Rules
• Intueri notes a number of significant sector events in Australia recently, which have impacted on overall investor confidence in the wider sector
• Intueri is committed to co-operating fully with the Tertiary Education Commission (TEC) reviews of two of its New Zealand schools, which it understands are primarily focused on legacy issues, and reiterates that none of the group’s other schools are subject to review
• Staff continue to focus on building enrolments for 2016 and delivering quality vocational education outcomes

Intueri Education Group (NZX/ASX: IQE) has reaffirmed its positioning as a high quality provider in the vocational education sector, with a focus on quality student outcomes. The Board believes Intueri’s commitment to quality, strong values and growth strategy will allow the company to benefit from the opportunities in the sector, generate sustainable profits and build enduring value for shareholders.

Following the significant share price movement on 27 November 2015, Intueri confirms that it continues to comply with its continuous disclosure obligations under both the NZX Listing Rules, including Listing Rule 10.1.1, and the ASX Listing Rules.

The tightening regulatory environment in Australia has resulted in a number of sanctions against vocational education providers in recent weeks, culminating in a high-profile listed Australian vocational education provider announcing it had been placed into voluntary administration on Thursday 26 November 2015. The Intueri Board believes these events have impacted on overall investor confidence in the wider sector, however it is important to note that Intueri’s business model is significantly different from those under review in Australia.

Intueri remains in a sound financial position, with strong margins and cash flows, appropriate funding and the full support of its bankers.

Revenue growth continues, particularly in Intueri’s International and Australian Online segments, which now represent half of total revenue. The company continues to generate strong EBITA margins and solid cash flows. Intueri reported EBITA of $11.7m for the recent 2015 interim result, which enabled the company to pay a 6.1 cent fully imputed interim dividend, equal to 63% of the NPATA .

The company’s bankers have recently reaffirmed their undertaking to provide debt facilities to complete the upcoming NZ Institute of Sport group transaction and the final acquisition payment for OCA group in Q1 2016, along with an increase in Intueri’s minimum debt/EBITDA banking covenant ratio.

As announced on 23 November 2015, Intueri is committed to co-operating fully with the TEC reviews of two of its New Zealand schools, which it understands are primarily focused on legacy issues, and reiterates that none of the group’s other schools are subject to review.

The TEC review is expected to have a one off impact on 2015 full year earnings of $4m - $5m (excluding any recourse received from vendors). EBITA margins are still expected to remain comfortably above 20%, generating a solid and stable cash flow. Intueri will update the market as necessary as the TEC review progresses.

The company’s focus is on maximising returns and realising opportunities in existing operations, and staff continue to build enrolments for 2016 and deliver quality vocational education outcomes.

-Ends-
Rob Facer
Chief Executive and Director
T: +64 27 675 3538
E: rob.facer@intueri.co.nz

[goldfish]

Up 74% since close Friday not to shabby a paper profit.

[Chaowee88]

Took a punt and picked some up yesterday @ 60 and 35. Fingers crossed.

Boom can go and take a nice fat lunch today.

[silverblizzard888]

I see more sense in these prices today, but I still feel its cheap.

13 cent dividend / 60 cents = 21.6 % return.

Of course earnings are being affected by 4-5 million
Expected cashflow was 30 million expected minus 11.7 million from 1st half = 18.3 - 5 million for affected earnings.
Earnings next quarter = 13.3 million cashflow minus say 2 million in interest expense = 11.3 million
1st half was 11.7 million so say its roughly similar thats still 6 million profit plus 6 milllion prior profit = about 12 million

12 million x .7 dividend payout = 8.4 cents annual payout.

On a 10% return basis (which I think is pretty good) 84 cents is a good conservative valuation in next 6 months. Long run 12 months should return to normal with 13 cents (using prior), gives a nice $1.30 12 month target.

[Toulouse - Luzern]

Well done Chaowee88.

[JayRiggs]

It's come back to 43c. A dead cat bounce happening right now?
Very interesting...

[silverblizzard888]

I think its just more profit takers coming in considering so many picked up a healthy amount in the 30s its pretty good money for a weekends hold. Should hold in the 40s and move back up slowly, currently not much confidence in the stock after its disappointing run. Might dip in the 30s tomorrow and rebound up with a close in the 40s. I'm thinking a lot of institutions are currently exiting but very slowly with their large volumes.

[Hectorplains]

...currently not much confidence in the stock after its disappointing run.
Not much confidence in the whole sector as the stories keep coming in: http://www.smh.com.au/national/top-vocational-college-aipe-may-be-shut-down-20151130-glbpli.html

[silverblizzard888]

Not much confidence in the whole sector as the stories keep coming in: http://www.smh.com.au/national/top-vocational-college-aipe-may-be-shut-down-20151130-glbpli.html

Your quite right about that, just looking at the whole Australian sector is a mess.

AIPE - signing students up without their consent or even knowledge, gaining 110 million in funding and only having 117 people graduate in 2014, talk about shocking. I think if you stick IQE in this area its definitely going to feel a bit tainted, though they didn't help themselves with their legacy issues. Usually things blow over when even times passes without something happening, but seems theres something new every week in Australia and its making people fearful for the industry. IQE has only one part of exposure in Australia and they feel it should not be impacted by reform in regulations.
http://www.smh.com.au/national/top-vocational-college-aipe-may-be-shut-down-20151130-glbpli.html

Vocational Ltd - collapses due to questionable quality education services and stripped of government funding, leaving 12,000 students without a place to study. I can see why some might be scared for IQE, but only 2 providers are being reviewed and it would be a harsh decision to management if the two places got stripped of funding. Government funding makes up 5% of revenues, so 5 million off earnings for IQE is still alright (reason why their high cash flows are a breath of relief).
http://www.smh.com.au/business/banking-and-finance/up-to-12000-students-in-limbo-after-vocation-collapse-20151126-gl8xfw.html

Australian Careers Network Ltd - Outperformed prospectus guidance by 75% and shares rose 170%, which sounds too good right? Apparently students were also being enrolled by brokers without really seeking much consent and questionable practices.
(The video in the link is quite informing)
http://www.smh.com.au/business/consumer-affairs/vet-an-industry-in-crisis-is-an-investors-worst-bet-20151112-gkxrrb.html

Australia seems to have some questionable funding policies, as they were providing:
-loans more easily causeing some greedy institutions to increase their original fees by 3 times the amount.
- institutions tried to gain more funding by focusing less on course quality and passing rates and more on new enrolments.
-students not liable to pay back their fees until their income exceeds $54,000, which some may never earn above that because basically anyone was being enrolled without having a strict criteria.
http://www.4bc.com.au/news/alan-jones-the-vocational-education-ripoff-20151111-gkwwy1.html


The issues that has plagued Australia are not as evident in NZ. I think the lack of a brokering system in NZ education providers means theres no questionable practices to sign people up, which has been the main concern in Australia. IQE management believe their business is in a good position and that its significantly different to its Australian counter parts, so I think I'll trust the horses mouth in this one.

[Zaphod]

The issues that has plagued Australia are not as evident in NZ. I think the lack of a brokering system in NZ education providers means theres no questionable practices to sign people up, which has been the main concern in Australia. IQE management believe their business is in a good position and that its significantly different to its Australian counter parts, so I think I'll trust the horses mouth in this one.[/SIZE][/FONT]

IMO, the NZ PTE sector has matured. We've been through the "questionable enrollment practices" & a "questionable courses" period and these have largely been dealt with. If you look back to around 2000, a large proportion of PTE's were doing exceptionally well as money thrown left right and centre at the entire sector with little real oversight. Things are quite different today, with more strategic and targeted funding, a greater depth of policies, and with the TEC board keeping a much closer watch on the sectors performance.

[silverblizzard888]

IMO, the NZ PTE sector has matured. We've been through the "questionable enrollment practices" & a "questionable courses" period and these have largely been dealt with. If you look back to around 2000, a large proportion of PTE's were doing exceptionally well as money thrown left right and centre at the entire sector with little real oversight. Things are quite different today, with more strategic and targeted funding, a greater depth of policies, and with the TEC board keeping a much closer watch on the sectors performance.

I think I agree NZ has developed better from previous questionable practices and constrains on funding. NZ's lack of ability to fund things means it has to use its resources in a better manner and being so small it can monitor it to a degree. It definitely seems TEC are doing their job right, I think as much as I don't like this review for IQE it is very much needed. I never liked the idea that the government was operating at a deficit to fund NZ, as investors we can understand that we must always operate within our means and through that we start to be more creative and strategic with our approach to the important matters, which includes the education system. I'm more in favour of 4 years high school as oppose to 5 (25% saving and an unnecessary use of time and resources), more flexible calenders say classes run from 9am - 6pm depending on what class you need to go to like unversity and reducing school time to 3 or 4 days (if a kid wants to learn they will learn and if they want to work and earn money then keeping a kid in the wrong system is worse), more apprenticeship programs and a mentoring system for kids between 15-18 years old, especially to the ones where parent oversight isn't there.

Theres 3 main points that has plagued Australia

1- The broking system is just corrupt, people sign up other people just to earn a quick buck and abuse of rights and knowledge.
2- Education providers focusing on enrolments to gain funding as oppose to quality of courses and students, leading to high fail rates. They used the broking system in a very grey area and thought such an arms-length practice where brokers aren't directly associated would be fine for them.
3- Government policies were not adequate enough to regulate good standards in the private area.

Which brings a point that education being trusted to private-for-profit institutions is hardly ideal for a country looking to build a good base of skilled and intelligent work force. I'd really love to see the Government taking initiative in acquiring an institution like the open polytechnic and pushing for more availability of online courses that can be certified and actually improving those who use it at a very low cost. I'd like to see more apprenticeships where people can work and learn on the job without needing high forms of qualifications in skilled areas which the government can foster with their branches, of course some argue they won't be efficient, but rather than spending it all on grants or funding, taking that under their own wing would provide more benefit. Imagine taking apprenticeships in the Reserve Bank, partially own companies like AIR or NZ Post, opening up platforms of a mentoring system (I think they have some of these in place but quite restricted). Theres too much focus on making the elite more elite and leaving behind the rest that don't always stack up. If you can build a system where the worse kid in the class can succeed, then we will have a very successful country.

[NZSilver]

well SSH - that wouldnt have helped the price + the other TEC news and the fact that AUS pet providers are in the S*#t. Seems IQE is having a few minor issues itself and has caught the rash. Really at these prices it is dirt cheap when you look at financials (as long as they persist).

[silverblizzard888]

Yes IQE had a few minor issues, which add along big issues in the sector it makes it very hard for institutions to hold them without breaking their investing policies. Better to sell because of rules than to hold or buy and risk their jobs I guess. If you look that Ellerton Capital has sold 4% or 4 million shares plus probably other small institutional holdings, you can see what effect that has had on the share price. Once institutions stop selling the price should bounce back up.

https://www.nzx.com/companies/IQE/announcements/274549

[NZSilver]

http://www.stuff.co.nz/business/74684110/new-zealand-is-increasingly-international-students-first-choice-of-study-destination

[silverblizzard888]

http://www.stuff.co.nz/business/74684110/new-zealand-is-increasingly-international-students-first-choice-of-study-destination

Nice find NZSilver, definitely shows IQE are in the right sector and right time to take advantage of this growing area.
If they can remain compliance on a regulatory basis they should perform very well next year and the foreseeable future.

[silverblizzard888]

Now producing a newsletter for shareholders for more transparency, I like where management is heading with this.

https://www.nzx.com/companies/IQE/announcements/274705

[ddrone]

This stock is all over the place. Hit 62c a few days ago. Closed at 48c then some bought everything up to 59 this morning. Now ~56c... Very tough to read. Anyone have any insight?

[goldfish]

Great isn't it, wish it was always this easy to make money.

[pennyacw]

There is a reason why this stock is all over the place.


http://www.theaustralian.com.au/bus...i/news-story/d8711772bf1ccd966ffa388e82762257

Anchorage runs the ruler over Intueri






Fresh from striking a $212 million deal to buy the listed
childcare company Affinity, Australian private equity firm Anchorage
Capital Partners is believed to be circling another business in the
sector — the troubled Intueri Education Group.



Anchorage is backed by former Macquarie boss Allan Moss and the bank’s
former executive director Phil Cave and appears to be positioning itself
to capitalise on the private education sector at a time it’s in deep
trouble.

It was the buyout firm that purchased Dick Smith from Woolworths for
$94m before floating the business for a value in excess of $500m.

The market value of Dick Smith has since fallen to about $85m.

According to sources, Anchorage has Intueri, which is one of the largest
private vocational groups in New Zealand, in its sights.

New Zealand private equity outfit Arowana International, which spun out
Intueri last year, is also said to be considering a re-privatisation. It
owns nearly a quarter of the company.

Others suggest Champ Private Equity could be running the ruler over the business.

But sources close to Intueri said the company had not engaged with
Anchorage or any other private equity firm about a potential
acquisition.



Intueri Education’s profile seems attractive to Anchorage, one of Australia’s most opportunistic deal-makers.

Its market value has fallen to $42.5m from the $236m it was worth around
the time it was floated by Macquarie Capital and UBS last year.

Its share price collapse was largely brought on by a number of
regulatory probes by New Zealand’s Tertiary Education Commission, but
also by the troubles throughout the sector, with rival provider Vocation
falling into administration in recent weeks.

An Intueri subsidiary is now under review by the TEC after a fatal accident involving a diver on one of its courses.

In Australia, Intueri operates its Online Courses Australia subsidiary,
which accounted for 22 per cent of group revenues in the first half of
the year.

That business is funded under the VET FEE-HELP loan scheme that has
attracted widespread criticism following revelations that hundreds of
millions of dollars were flowing to colleges with very poor student
outcomes.

The federal government last month introduced laws aimed at stemming the
flow of funds to colleges, with further clampdowns flagged.

Australian Careers Network is also under the spotlight after a
subsidiary was deregistered by the Australian Skills Quality Authority
over similar problems.

[Zaphod]

IMO a private equity purchase of Intueri would definitely not be a good fit, not would it be good for the long term viability of the company given the clash of priorities this would create.

[pennyacw]

IMO a private equity purchase of Intueri would definitely not be a good fit, not would it be good for the long term viability of the company given the clash of priorities this would create.

that seems like a puzzling conclusion to come to. Why would a PE not be a good fit? Surely if they are going through the process of unorganic expansion a good PE company can assist them with this.

It is all rather irrelevant if they buy the company off the current holders at a good price.

[Zaphod]

that seems like a puzzling conclusion to come to. Why would a PE not be a good fit? Surely if they are going through the process of unorganic expansion a good PE company can assist them with this.

It is all rather irrelevant if they buy the company off the current holders at a good price.

The clash of priorities occurs where PE's goal is to maximise profit in a relatively short period of time, while the TEC's goal is to maximise outcomes in a similar time interval. Given that the TEC is not renowned for their negotiating prowess, their word is gospel and failure to meet stipulated objectives results in a short & sharp readjustment of EFTS funding and/or removing accreditation.

A measured capital injection to fund key expansion goals (e.g. a targeted high-quality acquisition) would be fine, however PE control of the company is another story.

But as you say, it's all rather irrelevant if they buy the company in its entirety. At the end of the day as investors, most are after as big a ROI as possible.

[Blue Horseshoe]

IQE - Response to Takeover Speculation8:30am, 15 Dec 2015 | GENERAL

15 December 2015


IQE – RESPONSE TO TAKEOVER SPECULATION


Following media speculation in The Australian on Thursday 10 December 2015, Intueri Education Group (IQE) confirms that it has not been approached or had discussions with any other parties in relation to a takeover of the business.

[Meister]

Is it just me or is IQE highly undervalued right now based on what we know? Are people expecting a more significant loss due to the reviews than the 4-5M predicted? It feels like it is being priced as though it will only be making its half year profit from now on...

[Blue Horseshoe]

Is it just me or is IQE highly undervalued right now based on what we know? Are people expecting a more significant loss due to the reviews than the 4-5M predicted? It feels like it is being priced as though it will only be making its half year profit from now on...


Shush don't tell everyone.

[Hectorplains]

Shush don't tell everyone.

Same for ASH on the Asx, sitting on a forward PE of 2. After Vocation the market has no tolerance left for down grades or bad news in this sector.

On another note the prospectus issue has received a we bus ticket slapping.

http://www.scoop.co.nz/stories/BU1512/S00571/intueri-prospectus-could-have-been-clearer-fma.htm

[percy]

Same for ASH on the Asx, sitting on a forward PE of 2. After Vocation the market has no tolerance left for down grades or bad news in this sector.

On another note the prospectus issue has received a we bus ticket slapping.

http://www.scoop.co.nz/stories/BU1512/S00571/intueri-prospectus-could-have-been-clearer-fma.htm

That appears to leave the credibility of prospectuses at risk.

[trackers]

Is it just me or is IQE highly undervalued right now based on what we know? Are people expecting a more significant loss due to the reviews than the 4-5M predicted? It feels like it is being priced as though it will only be making its half year profit from now on...

Yeah it is to me.

This whole TEC review business (wiping out $100mil+ market cap) started from an NBR investigation which centred around some weird numbers reported in the prospectus for 2012 enrolments at Quantum, but IQE all but confirm that this is related to a legacy issue and not an ongoing one. In addition, they have taken no provision for losses (aside from a deferment to an unrelated matter which can't be sorted until the TEC review is complete) and lastly, FMA has concluded no wrong doing in the prospectus (but potentially a bit misleading) - Will TEC find fault where FMA did not?

Ultimately, where they were at $250mil market cap, and where they are now at $50mil cap, there's very little that's changed (mostly, a downgrade from $30mil profit p.a to $27mil profit) - If private equity was sniffing around, or Arowhena looking at re-privatising (list at $250mil and offload most of your shares, then buy the same company back a year later for $100mil.. Brilliant), I wouldn't be the least bit surprised, especially if OCA keeps growing

[Snow Leopard]

I bought into this after the price collapsed on the back of a very 'quick and dirty' calculation that valued IQE at $0.85 absolute minimum.

So having finally caught up with all that needs doing between getting off the airplane and going to watch the Snoopy movie I have done a few stabs at coming up with a decent valuation.

If I try really hard and take a short term (2 year) and fairly pessimistic view then I can get down to a current value of:
$0.930.

but looking ahead a few more years and still being pessimistic (which is not a natural state of mind for a Tiger) and the current value creeps up to:
$1.150.

Given that both these values are slightly higher than the current market price I am optimistic that there is no need to be any more optimistic.

Best Wishes
Paper Tiger

[Hectorplains]

I bought into this after the price collapsed on the back of a very 'quick and dirty' calculation that valued IQE at $0.85 absolute minimum.

So having finally caught up with all that needs doing between getting off the airplane and going to watch the Snoopy movie I have done a few stabs at coming up with a decent valuation.

If I try really hard and take a short term (2 year) and fairly pessimistic view then I can get down to a current value of:
$0.930.

but looking ahead a few more years and still being pessimistic (which is not a natural state of mind for a Tiger) and the current value creeps up to:
$1.150.

Given that both these values are slightly higher than the current market price I am optimistic that there is no need to be any more optimistic.

Best Wishes
Paper Tiger


Agreed PT, as a committed contrarian I'm now heavily over in both IQE and ASH.

[stoploss]

Agreed PT, as a committed contrarian I'm now heavily over in both IQE and ASH.
Going to have a bite at SGH to give you the Trifecta ?

[percy]

I bought into this after the price collapsed on the back of a very 'quick and dirty' calculation that valued IQE at $0.85 absolute minimum.

So having finally caught up with all that needs doing between getting off the airplane and going to watch the Snoopy movie I have done a few stabs at coming up with a decent valuation.

If I try really hard and take a short term (2 year) and fairly pessimistic view then I can get down to a current value of:
$0.930.

but looking ahead a few more years and still being pessimistic (which is not a natural state of mind for a Tiger) and the current value creeps up to:
$1.150.

Given that both these values are slightly higher than the current market price I am optimistic that there is no need to be any more optimistic.

Best Wishes
Paper Tiger

Welcome home.!!You have been really missed.
Tim Hunter warned of the dangers of the IQE float when he wrote for the Sunday Star Times.He was right then,and he has been right with his articles all along.
He now writes for the NBR.His latest article NBR page 2 December 11 is well worth a read.Your local library most probably has a copy.Here are some juicy bits;
"Evidence gathered over the last few months makes a strong case for enforcement action over the float of Intueri Education Group last year."
"Contrary to the sector's standard rosy rhetoric of educational opportunity what we appear to be looking at is a business that sells students a dream and just saddles many of them with debt."
"The revenue implications were confirmed to me by Intueri COF Rod Marvin,who says the dropouts contributed revenue roughly in proportion to their numbers-so from a third to a half of Quantum's revenue was generated from those students."
"We have surely not heard the last of this affair."

[Snow Leopard]

Welcome home.!!You have been really missed.
Tim Hunter warned of the dangers of the IQE float when he wrote for the Sunday Star Times.He was right then,and he has been right with his articles all along.
He now writes for the NBR.His latest article NBR page 2 December 11 is well worth a read.Your local library most probably has a copy.Here are some juicy bits;
"Evidence gathered over the last few months makes a strong case for enforcement action over the float of Intueri Education Group last year."
"Contrary to the sector's standard rosy rhetoric of educational opportunity what we appear to be looking at is a business that sells students a dream and just saddles many of them with debt."
"The revenue implications were confirmed to me by Intueri COF Rod Marvin,who says the dropouts contributed revenue roughly in proportion to their numbers-so from a third to a half of Quantum's revenue was generated from those students."
"We have surely not heard the last of this affair."

My local library is, in fact, Perpustakaan Negara Malaysia (National Library of Malaysia) which was closed both yesterday (Prophet Muhammad's Birthday) and today (Christmas Day). However I strongly suspect that they will not have the National Business Review lying around even when they are open.

Now it just so happens that my partner works in post-secondary education (and I am dragged into it more than I would like) and whether it be a university offering degrees and PhDs or a college teaching hair-dressing or hospitality & tourism they are all businesses selling the courses that the student will pay for, which is not necessarily the course that they should really be doing, and yes often dreams are shattered (my internet connection was installed by a young man with a law degree).

Dropout rates vary across the industry, but from a cold-hearted business point of view once their fees are non-refundable...

Anyway investing is about where the business, share-price and dividends are going in the future and at the current point of time I believe the potential rewards more than compensate for the possible risks.

That belief may change of course.

Time to eat some Christmas cake and drink some (duty-free) Japanese Whiskey.

Best Wishes
Paper Tiger

[silverblizzard888]

In this article today on institutional top picks Macquarie has picked Intueri with a $1.90 performance in 12 months.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11566121

[Arbroath]

Nice rise this morning. Holiday trading of course but lack of sellers. Word of private equity bid leaking perhaps?

[silverblizzard888]

Think confidence is rising back into the stock, its a matter of time since we haven't heard anything bad except takeover talks and Macquaries $1.90 target, who organised the float so if anyone is to understand them it would be them assuming they did their due diligence. Current prices are still under valued, so I wouldn't blame the lack of sellers, especially since most institutions that have wanted to exit have already done so.

[Hectorplains]

Think confidence is rising back into the stock, its a matter of time since we haven't heard anything bad except takeover talks and Macquaries $1.90 target, who organised the float so if anyone is to understand them it would be them assuming they did their due diligence. Current prices are still under valued, so I wouldn't blame the lack of sellers, especially since most institutions that have wanted to exit have already done so.

They have a NZX waiver from April for having fewer than the minimum of 500 public shareholders, at that point they disclosed they had 380. I have no idea what effect the recent rollercoaster had on this? It may help to explain the considerable movements in share price though.

[silverblizzard888]

They have a NZX waiver from April for having fewer than the minimum of 500 public shareholders, at that point they disclosed they had 380. I have no idea what effect the recent rollercoaster had on this? It may help to explain the considerable movements in share price though.

Its likely with the recent drop and unloading by institutional investors that the number of shareholders must easily exceed 500 now due to many retail investors hopping in for a punt. IQE was a illquid stock to begin with since a large shareholding is held by institutions. Being institutions they actually have less flexibility. e.g some institutions can't invest in small caps say companies below 100 million market cap so they will be forced to sell no matter what (no flexibility on their side) and some companies must avoid bad industries like education since the scandal in Australia. There is no point in a fund manager going against policies and putting their head on the line if they risk their job, keeping to policies if anything goes wrong they can say they were doing things by the book. My view is there is better liquidity now, but still not that good at lower levels, though the holding shareholder base would have increase, which why its trickling upwards at a steady pace.

[silverblizzard888]

A buy order for 45,000 at 68 cents and a sell order for 45,000 at 71 cents appearing at the same time? Is someone trying to accumulate?

edit: or never mind its been taken out by the other 45,000

[golden city]

it is looking good today.., looks like could jump back to dollar

[nextbigthing]

it is looking good today.., looks like could jump back to dollar

Yes, I think the chart is looking pretty good, maybe Hoop or someone might like to comment?

[boysy]

Bought a few yesterday at 70 cents hard to believe this hit $3 not too long ago

[nextbigthing]

At the rate it's going, it's about to hit $3 again

[boysy]

Like the positive thinking but they will have to announce some excellent results to get back to that level. Must be a tempting dividend play if they can maintain the existing dividend

[silverblizzard888]

Bought a few yesterday at 70 cents hard to believe this hit $3 not too long ago

Still good to bear in mind that past value does not equal future value. I still see intrinsic value around the $1.38 mark minimum though at the current situation and will assess later, right now too uncertain.


At the rate it's going, it's about to hit $3 again

Well lets not get too far ahead of ourselves haha, it will be quick to move when small, but as it gets up there in size its gonna move at snail pace, but good positive momentum right now.


Like the positive thinking but they will have to announce some excellent results to get back to that level. Must be a tempting dividend play if they can maintain the existing dividend

Expect dividends to be about half what it was previous years. I'd be a little shocked if they actually pay what they paid last year especially when they have such a large amount of debt now. I'd prefer they sort out their problems first and then repay debt, it might be cheap now, but that’s how good businesses lose competitve advantages when their expenses are too high.

[h2so4]

These are high margin businesses. I expect to see increasing revenues, dividends etc. In fact the whole darn shooting box....margins, ratios etc. etc.
I'm standing behind Tiger on this one.

[golden city]

I got in on time at 65c

[silverblizzard888]

I got in on time at 65c

Looks like I'll be seeing you on this thread a lot more, hope your as hopeful about this one as you were THL, think we both made a good choice on that one, lets see IQE do the same for us.

[golden city]

I am also very keen on cav ....both look opportunistic

[golden city]

Good day to add

[nextbigthing]

Had a look into IQE the other day.

To keep it all simple, in a nutshell;

The run education providers in NZ and online in Australia.

The last HY profit was $6.1M
Assume no growth (conservative) and double it, $12.2M FY.
Shares on offer - 100M
Ie 12.2cps

Shareprice was 65c yesterday. If they moved to a 100% payout ratio, that's a return of 18.77% to just keep doing what they're doing!!! But that's the beauty of it, they're making acquisitions and expanding. So at 65c, you can buy an effective return of 18.77% and any growth is 'free'.

Sound to go to be true? Of course an 18.77% return PLUS GROWTH comes with risk.



They had a death at their dive school approx two years ago
They are under investigation by the TEC (Tertiary Education Commision) for the dive school and Quantum Education side. This is expected to have one off costs of up to $5M (ie yield 11% for first year).
Australia is currently undergoing a purge of private educators due to some dodgy signup and charging practices at their schools. Some have been suspended. 22% of IQE's revenue comes from Australia and there's a chance they could be caught up in this. However they fact they haven't yet suggests they may well be ok, and their competition has been decimated. The Oz government has put a funding freeze on across the industry for next year which means no Australian growth and a potential change to drip fed funding instead of up front payments. After that it may be 'all on' however, so this MAY be a huge positive.
Management have under-delivered since the float. However they seem to have improved their performance. Growth is slower than expected but has good potential, and is backed by the yield in the mean time.
Their name is hard to spell.


Other positives however;


Huge potential upside. The stock could increase to $1.22 (an 87.69% increase in shareprice) and still pay a 10% return after this year with all the growth as extra.
Even if they got legislated against by government policy change, they could almost halve in size and still pay 10%, limiting any downside.
Recent funds management buying.


This is definitely a speculative stock with the risks, however it is 'covered' to an extent by the return. The chart is all over the place, having looked like it had finally turned and then having a bad day yesterday. But if you want something with the possibility of higher returns and are happy to accept risk, then I think this stock is worth researching.

DYOR

Disc; Trading in and out. This is not a recommendation to do anything other than research.

[Whipmoney]

Had a look into IQE the other day.

To keep it all simple, in a nutshell;

The run education providers in NZ and online in Australia.

The last HY profit was $6.1M
Assume no growth (conservative) and double it, $12.2M FY.
Shares on offer - 100M
Ie 12.2cps

Shareprice was 65c yesterday. If they moved to a 100% payout ratio, that's a return of 18.77% to just keep doing what they're doing!!! But that's the beauty of it, they're making acquisitions and expanding. So at 65c, you can buy an effective return of 18.77% and any growth is 'free'.

Sound to go to be true? Of course an 18.77% return PLUS GROWTH comes with risk.



They had a death at their dive school approx two years ago
They are under investigation by the TEC (Tertiary Education Commision) for the dive school and Quantum Education side. This is expected to have one off costs of up to $5M (ie yield 11% for first year).
Australia is currently undergoing a purge of private educators due to some dodgy signup and charging practices at their schools. Some have been suspended. 22% of IQE's revenue comes from Australia and there's a chance they could be caught up in this. However they fact they haven't yet suggests they may well be ok, and their competition has been decimated. The Oz government has put a funding freeze on across the industry for next year which means no Australian growth and a potential change to drip fed funding instead of up front payments. After that it may be 'all on' however, so this MAY be a huge positive.
Management have under-delivered since the float. However they seem to have improved their performance. Growth is slower than expected but has good potential, and is backed by the yield in the mean time.
Their name is hard to spell.


Other positives however;


Huge potential upside. The stock could increase to $1.22 (an 87.69% increase in shareprice) and still pay a 10% return after this year with all the growth as extra.
Even if they got legislated against by government policy change, they could almost halve in size and still pay 10%, limiting any downside.
Recent funds management buying.


This is definitely a speculative stock with the risks, however it is 'covered' to an extent by the return. The chart is all over the place, having looked like it had finally turned and then having a bad day yesterday. But if you want something with the possibility of higher returns and are happy to accept risk, then I think this stock is worth researching.

DYOR

Disc; Trading in and out. This is not a recommendation to do anything other than research.


I certainly think it's an interesting play however I don't believe that the dividend payout ratios will hold at anywhere near those levels as they will need to reinvest cash for growth and/or debt repayment.

That being said the retention of cash in the company shouldn't (in theory) have an adverse effect on the stock price, providing that the company can use this cash to create further value (i.e. positive NPV investments in their existing schools or via the acquisition of new schools at reasonable multiples).

They've made multiple acquisitions in quick succession so I think at this point it would be prudent of them to bed down the integration of all their existing schools before focusing on any further acquisitions however regardless I still think it's relatively undervalued.

PS: in terms of your Dividend Yield of 10%.. I think this is conservative as a yield of 7%-8% would still be highly attractive if they can generate further growth either organically or via acquisitions.

Disc: Holding.

[Hectorplains]

http://www.stuff.co.nz/business/75651403/New-Zealand-Institute-of-Sport-sale-to-Intueri-confirmed-by-overseas-watchdog

Good to see that box ticked.

[noodles]

Had a look into IQE the other day.

To keep it all simple, in a nutshell;

The run education providers in NZ and online in Australia.

The last HY profit was $6.1M
Assume no growth (conservative) and double it, $12.2M FY.
Shares on offer - 100M
Ie 12.2cps

Shareprice was 65c yesterday. If they moved to a 100% payout ratio, that's a return of 18.77% to just keep doing what they're doing!!! But that's the beauty of it, they're making acquisitions and expanding. So at 65c, you can buy an effective return of 18.77% and any growth is 'free'.

Sound to go to be true? Of course an 18.77% return PLUS GROWTH comes with risk.



They had a death at their dive school approx two years ago
They are under investigation by the TEC (Tertiary Education Commision) for the dive school and Quantum Education side. This is expected to have one off costs of up to $5M (ie yield 11% for first year).
Australia is currently undergoing a purge of private educators due to some dodgy signup and charging practices at their schools. Some have been suspended. 22% of IQE's revenue comes from Australia and there's a chance they could be caught up in this. However they fact they haven't yet suggests they may well be ok, and their competition has been decimated. The Oz government has put a funding freeze on across the industry for next year which means no Australian growth and a potential change to drip fed funding instead of up front payments. After that it may be 'all on' however, so this MAY be a huge positive.
Management have under-delivered since the float. However they seem to have improved their performance. Growth is slower than expected but has good potential, and is backed by the yield in the mean time.
Their name is hard to spell.


Other positives however;


Huge potential upside. The stock could increase to $1.22 (an 87.69% increase in shareprice) and still pay a 10% return after this year with all the growth as extra.
Even if they got legislated against by government policy change, they could almost halve in size and still pay 10%, limiting any downside.
Recent funds management buying.


This is definitely a speculative stock with the risks, however it is 'covered' to an extent by the return. The chart is all over the place, having looked like it had finally turned and then having a bad day yesterday. But if you want something with the possibility of higher returns and are happy to accept risk, then I think this stock is worth researching.

DYOR

Disc; Trading in and out. This is not a recommendation to do anything other than research.

Great post. I think you are right to assume no growth (by acquisition) because:
1. Their debt levels are likely close to breaching bank covenants (they had to raise covenants to pay for the last acquisition)
2. At their current price (EV/EBITDA multiple), any acquisition using script would be eps dilutive as prices for colleges are higher the the current IQE multiple.

Let's just hope the run of bad news has finished.

[Jinx]

Let's just hope the run of bad news has finished.

Chances of the TEC investigation coming to terrible conclusions?

[golden city]

just keep buying .., I am mad..

[Hectorplains]

Chances of the TEC investigation coming to terrible conclusions?

If they come to anything there is possible recompense available to IQE as they are legacy issues. They've said that if it comes to it they will chase the vendor (who is also their major shareholder...)

Can some confidence be taken from the emphatic sweep under the carpet the FMA gave to prospectus issues (which centred on the student enrolment issue for Quantum - the same thing TEC will be centring their attention to) raised by Tim Hunter (NBR)?

IQE's response seems more concerned by the length of the investigation (timeframe) than outcome. Given the importance to Govt education policy of Quantum - in terms of both Youth Guarantees and their focus on Maori / PI achievement, I'm not betting on much more than a wet bus ticket.

[golden city]

with the regal funds topping up.., I am confidence it is bottom out

[percy]

Question.
Has anyone been on a course run by IQE,or had a son or daughter who has been on a course run by IQE.?
If so would they comment please.
I would like to know if they;
1] Completed the course.
2] Was the course what they expected.
3] Was the course well run.
4]Was the course value for money.
5] Did completing the course make employment prospects more favourable.
6] Would you recommend IQE.
7]Who was the course funded,parent,student loan,government,or other.

[Hectorplains]

Question.
Has anyone been on a course run by IQE,or had a son or daughter who has been on a course run by IQE.?
If so would they comment please.
I would like to know if they;
1] Completed the course.
2] Was the course what they expected.
3] Was the course well run.
4]Was the course value for money.
5] Did completing the course make employment prospects more favourable.
6] Would you recommend IQE.
7]Who was the course funded,parent,student loan,government,or other.

Hi Percy,

My neighbour’s kid has. She’s not a relative but is someone I’ve had a lot to do with over the years.

In 2015 she completed a course at The Academy. The previous year she had failed NCEA level 1 at school and been told that she would have to repeat it if she returned. She hated school and wanted to leave and start working. Unfortunately at 16 with no qualification and a bad attitude she wasn’t exactly employable! So she enrolled at The Academy course in Retail, Fashion and Beauty.

She completed both the NZ Certificate in Retail and her NCEA Level 2. She also seemed to ‘grow up’ on the course. She is much more focussed and motivated, I think from the success she experienced.

She’s now working fulltime in a clothing shop. Which was her dream job. More importantly she’s still studying too.

The course was Youth Guarantees (free.)

I’m really impressed with The Academy. This has some interesting detail: http://www.academy.ac.nz/images/stories/pdf/ip_summary_2015.pdf

[percy]

Hi Percy,

My neighbour’s kid has. She’s not a relative but is someone I’ve had a lot to do with over the years.

In 2015 she completed a course at The Academy. The previous year she had failed NCEA level 1 at school and been told that she would have to repeat it if she returned. She hated school and wanted to leave and start working. Unfortunately at 16 with no qualification and a bad attitude she wasn’t exactly employable! So she enrolled at The Academy course in Retail, Fashion and Beauty.

She completed both the NZ Certificate in Retail and her NCEA Level 2. She also seemed to ‘grow up’ on the course. She is much more focussed and motivated, I think from the success she experienced.

She’s now working fulltime in a clothing shop. Which was her dream job. More importantly she’s still studying too.

The course was Youth Guarantees (free.)

I’m really impressed with The Academy. This has some interesting detail: http://www.academy.ac.nz/images/stories/pdf/ip_summary_2015.pdf

Thank you for your very positive post.
To see at risk youth achieving their goals is great news.

[golden city]

Just keep accumulating.

[silverblizzard888]

Just keep accumulating.

Nice going, I would do the same at these levels, but I have such limited cash flow.....sigh......

[Joshuatree]

Agreed PT, as a committed contrarian I'm now heavily over in both IQE and ASH.

ASH still dropping from $1.50 to now 16c ,mkt cap sub $25 mill, WOW still being punished ; better value HP., more risk? cheers JT

[silverblizzard888]

ASH still dropping from $1.50 to now 16c ,mkt cap sub $25 mill, WOW still being punished ; better value HP., more risk? cheers JT

Ash trades at a range of net assets minus intangibles. For me Ash has more risk than IQE because its in a uncertain regulatory environment and its inconsistent profit guidances which generally get lower each time. While Ash needs restructuring, IQE are mostly fine except the slight adjustment needed.

[Hectorplains]

Ash trades at a range of net assets minus intangibles. For me Ash has more risk than IQE because its in a uncertain regulatory environment and its inconsistent profit guidances which generally get lower each time. While Ash needs restructuring, IQE are mostly fine except the slight adjustment needed.

ASH's mkt cap is 3 x EBITDA forecast for 2016! They have a new CEO - Stewart Cummins - who escaped the Vocation mess with his reputation intact. There's more to them than than just training - they do recruitment and labour hire also. The training arm was restructured and reduced in Dec.

Inconsistent profit guidance has been a hallmark of IQE too! IQE carries a heavier debt burden.

Both stocks are exciting recovery propositions. I went heavy on IQE @ 35c - and I'm thinking of going again with them in the low 60's. ASH I'm sitting on a small loss - got in at 17.5 - I'm getting an itchy 'buy' finger there too!

[LadyGrey]

ASH does also carry the risk of a potential class action on top its recent woes. A lot more risk IMHO but potentially more reward if they can get through this.

Disc: trading in and out of IQE

[Whipmoney]

Ash trades at a range of net assets minus intangibles. For me Ash has more risk than IQE because its in a uncertain regulatory environment and its inconsistent profit guidance which generally get lower each time. While Ash needs restructuring, IQE are mostly fine except the slight adjustment needed.

Completely agree. I think the Australian regulatory environment is far more uncertain than NZ one which is fairly mature. IQE obviously need to clearance from the TEC re: the quantum enrollment matter, and presuming that this is achieved then I'm expecting a strong recovery in the SP.



ASH's mkt cap is 3 x EBITDA forecast for 2016! They have a new CEO - Stewart Cummins - who escaped the Vocation mess with his reputation intact. There's more to them than than just training - they do recruitment and labour hire also. The training arm was restructured and reduced in Dec.

Inconsistent profit guidance has been a hallmark of IQE too! IQE carries a heavier debt burden.

While maybe heavier than ASH's, IQE's debt burden isn't too bad, particularly given that it was used to fund acquisitions, several of which haven't yet been accretive in terms of reported revenue/EBITDA.

[silverblizzard888]

ASH's mkt cap is 3 x EBITDA forecast for 2016! They have a new CEO - Stewart Cummins - who escaped the Vocation mess with his reputation intact. There's more to them than than just training - they do recruitment and labour hire also. The training arm was restructured and reduced in Dec.

Inconsistent profit guidance has been a hallmark of IQE too! IQE carries a heavier debt burden.

Both stocks are exciting recovery propositions. I went heavy on IQE @ 35c - and I'm thinking of going again with them in the low 60's. ASH I'm sitting on a small loss - got in at 17.5 - I'm getting an itchy 'buy' finger there too!

Don't get me wrong they both appear be to good value with an above average amount of risk attached, but I'm just saying that IQE likely has less risk because out of the 11 or so schools they have 2 that have gotten themselves in trouble in past times, while as diversified as ASH is on labour and education they are one full business that is in a bit of a mess as a whole. Kill off the two schools for IQE and it will continue to live, ASH on the other hand suffers as a whole unit. Both stocks have been inconsistent and hasn't done themselves any favours, but thats how we are able to jump in at good prices.

Based on liquidation value, if ASH was to go into liquidation then the most valuable parts would be the cash and the business, which say the business fetch 30-40 million based on 5 times times current cash flow ( which is conservative but using IQE acquisition method) and the 20 million net in cash or equivalents then you get something between 50-60 million for the lot on liquidation. IQE based on liqudation the business end would be worth anywhere between 120-150 million as not all cashflows are represented at this stage minus the shortfall from debt of 20 million. IQE if liquidated would be worth somewhere between 100 - 130 million if all its businesses were sold off. Both represent roughly trading at half liquidation value, so in that view theres room for error on investors part.

I like IQE more becauses its in a good mature environment in NZ and when their cash flows from their acqusitions they have done kicks in they will have even more than we see right now coming in, not to mention the growing international student base that IQE is targeting that has room for growth. For me I'll stick to IQE and wait for more certainty for Ash before considering going in, but with limited cash I have to pick and choose and be critical on my judgement. Wish you luck on both!

[Whipmoney]

Don't get me wrong they both appear be to good value with an above average amount of risk attached, but I'm just saying that IQE likely has less risk because out of the 11 or so schools they have 2 that have gotten themselves in trouble in past times, while as diversified as ASH is on labour and education they are one full business that is in a bit of a mess as a whole. Kill off the two schools for IQE and it will continue to live, ASH on the other hand suffers as a whole unit. Both stocks have been inconsistent and hasn't done themselves any favours, but thats how we are able to jump in at good prices.

Based on liquidation value, if ASH was to go into liquidation then the most valuable parts would be the cash and the business, which say the business fetch 30-40 million based on 5 times times current cash flow ( which is conservative but using IQE acquisition method) and the 20 million net in cash or equivalents then you get something between 50-60 million for the lot on liquidation. IQE based on liquidation the business end would be worth anywhere between 120-150 million as not all cash-flows are represented at this stage minus the shortfall from debt of 20 million. IQE if liquidated would be worth somewhere between 100 - 130 million if all its businesses were sold off. Both represent roughly trading at half liquidation value, so in that view theres room for error on investors part.

Interesting analysis but how did you get c$20m in net cash/cash equivalents for IQE? From the 30 June B/S I can only see c$2.9m cash. Sure there is a significant quantity of trade receivables/accrued revenue however these would require the schools to continue to operate as a going concern (which I concede would provide them a value if sold on this basis, i.e. confirmed revenue stream).

I think your Valuation range for the group is somewhat correct, but when you say "kill off two schools" you have to remember than one of these schools is quantum which represents a large percentage of group revenues (around 60-65% of domestic revenues or 30-35% of group revenues). Also from my understanding the potential issue/risk around Quantum relates to their enrollment practices/recording of completion rates, both of which the TEC are reviewing.

If something highly untoward is found then as a worst case scenario the TEC may opt to freeze/suspend their funding, which would likely result in a c$3m reduction in revenue/earnings (as confirmed in their announcement dated 23/11.15). The actual school itself would still be able to operate irrespective of TEC funding (albeit at significantly reduced profitability) and students would continue to pay their share of the fees (via student loan). It would be fair to say that if this did eventuate then it may it put the viability of this school at risk (one of NZ's largest PTO's) which in turn would potentially threaten the education outcomes of the students. On that basis you would hope that the TEC is working closely with IQE to remedy to the situation.

Overall I think there is a reasonable degree of risk. If the TEC matter isn't resolved prior to the financials being released then IQE won't be able to classify the Government Funding for both Quantum and the Dive School as revenue (which will show a materially worse financial result). That being said, if the issue is resolved reasonably quickly then its likely that this income could be re-classified via a restatement. Despite these risks I still think the stock is priced relatively cheaply and there is significant upside in terms of them finding a resolution.

In terms of downside risk, failure to achieve a resolution could further weaken the SP, however I suspect that the company would continue to limp along and steadily improve its internal processes, business integration, and refine its overall cost structure with a view to paying down debt. Forseesably in this situation a resolution could likely be found later in the year which should lead to a recovery in the SP.

DISC: holding.

[Joshuatree]

Great post. I think you are right to assume no growth (by acquisition) because:
1. Their debt levels are likely close to breaching bank covenants (they had to raise covenants to pay for the last acquisition)
2. At their current price (EV/EBITDA multiple), any acquisition using script would be eps dilutive as prices for colleges are higher the the current IQE multiple.

Let's just hope the run of bad news has finished.

Those are very pertinent questions and the other one(thanks percy) is why management haven't been making the most of these prices and been buying in?

[Leftfield]

Too many question marks around this share for my liking. It's not for me. Good luck to holders.

[silverblizzard888]

Hi Whipmoney, I think you misunderstood what I wrote. I NEVER wrote IQE has net cash of 20 million, I wrote that ASH did, but for IQE I wrote "minus the shortfall from debt of 20 million" as the cash assets didn't cover debt, so I ended taking off the debt value from a possible business sale.

The Quantum and Drive school write off was a hypothetical scenario that worse comes to worse, even if those schools were to cease operating then IQE would still be a healthy business and continue to run at this current valuation.

[Whipmoney]

Hi Whipmoney, I think you misunderstood what I wrote. I NEVER wrote IQE has net cash of 20 million, I wrote that ASH did, but for IQE I wrote "minus the shortfall from debt of 20 million" as the cash assets didn't cover debt, so I ended taking off the debt value from a possible business sale.

The Quantum and Drive school write off was a hypothetical scenario that worse comes to worse, even if those schools were to cease operating then IQE would still be a healthy business and continue to run at this current valuation.

Oh I see now, my bad.

I think you're right about the Dive School, but Quantum is a c$30m Revenue business and as such represents a significant chunk of IQE's revenue/earnings. I certainly wouldn't want to see this carved out, as even though the residual business would be worth approx. $60m at fair value, the resulting impact on their reputation would surely hurt the SP. That being said it would be an extremely unlikely event as the TEC review will only have a bearing on the government funding component of their revenue (between $2.5m - $3m), which I also think is highly unlikely.

[DarkHorse]

Despite not being particularly intuitive I could smell a rat just looking at Intueri's prospectus, and more so with subsequent reports...so have steered well clear. Current value is very tempting for a small investment though...I also agree that the NZ regulatory environment carries less risk than the Australian one so sentiment across the ditch has lead to IQE being oversold.
But going back to the credibility of management, apart from the the combination of MBAspeak and NZQAspeak ("quality strategy" yadayada), is anyone else concerned about their statement regarding the effect of the TEC review on funding portability?

From CEO's statement 23 Nov:
"Funding portability: While TEC has confirmed it is not averse to Intueri's
proposal around the transfer of Student Achievement Component (SAC) based
funding between schools within the Intueri group, they have advised that
these discussions are now on hold. This may reduce earnings by approximately
NZ$3 million for the 2015 year, unless resolved before year end."

Correct me if I'm wrong, but they seem to have taken for granted that TEC would approve such a proposal - despite it being at TEC's absolute discretion. And then included these hoped for benefits in earning projections.

[golden city]

for me it is a very clear buy..., as long as the company still manage to survive., the share price is well undervalued unless the whole group close down

[golden city]

hopefully luck goes to my way 2016..., 2015 was a very successful year.. with thl nzr til

[Jinx]

Still going down, are others still buying?

[Hectorplains]

Still going down, are others still buying?

To be fair much of the market is down! IQE is probably more susceptible to volatility due to their outstanding issues. A lot of IQE's lower trades have been on quite low volumes too - like the one at .59 late yesterday. Results due end of Feb, hopefully no MORE negative surprises will be reflected in a stronger s p.

[golden city]

I just keep buying..., .as long as the dividends keeping alive.., I don't see any reason not to buy

[Jinx]

as long as the dividends keeping alive

Sorry if this is a dumb question, but what if any assumptions are you making that there will be a dividend coming?
Isn't there a concern that because of the TEC investigation + financial worries they wont pay on this year?

[golden city]

as they stating., that they have strong cashflow and margin.., with tec investigation it is legacy issues., unless the ceo are making faluts statement

[percy]

as they stating., that they have strong cashflow and margin.., with tec investigation it is legacy issues., unless the ceo are making faluts statement

Choose for yourself.
Does the CEO of IQE have a history of making;
1] True and factual statements?
2] Misleading statements.?
If you answer 1] buy IQE,however if you answer 2] watch IQE from a safe distance.

[Whipmoney]

Choose for yourself.
Does the CEO of IQE have a history of making;
1] True and factual statements?
2] Misleading statements.?
If you answer 1] buy IQE,however if you answer 2] watch IQE from a safe distance.

What is your interpretation of the answer Percy?

While I haven't been privy to all of his statements I note that they have given clear guidance in terms of their expected EBITA, and the financial effect of non-resolution of the TEC matter.

[golden city]

I am believer. Watch and buy happen same time cheers.

[golden city]

It is all about risk and returns.

[percy]

What is your interpretation of the answer Percy?

While I haven't been privy to all of his statements I note that they have given clear guidance in terms of their expected EBITA, and the financial effect of non-resolution of the TEC matter.

I leave you to read Tim Hunter's article page 2 in NBR December 11th 2015, and to decide for yourself.
I have previously said your local library may have, it if you live in NZ.
I do note Tim Hunter warned against investing in the IQE float,and his reporting has been right on the money since then.!

[youngatheart]

And yet Unclestock.com has this as a screaming BUY with a target Share Price of $1.73... A SP's sentiment can change overnight and then you're left wondering "WHY DIDN"T I?"...

[percy]

And yet Unclestock.com has this as a screaming BUY with a target Share Price of $1.73... A SP's sentiment can change overnight and then you're left wondering "WHY DIDN"T I?"...

So true,however if you usually invest in companies with a HISTORY of eps growth,good cashflows, a solid balance sheet,and strong management who do what they say the will do ,you take the "wondering" out of the decision.

[Onion]

So true,however if you usually invest in companies with a HISTORY of eps growth,good cashflows, a solid balance sheet,and strong management who do what they say the will do ,you take the "wondering" out of the decision.

Percy, You are taking all the fun out of my methods for picking shares -- throwing darts at the DomPost, picking the biggest recent SP drop, most posts on Sharetrader, most "encouragement" from Roger (sadly missed), biggest bets by couta (ditto). :t_down:

[Onion]

And yet Unclestock.com has this as a screaming BUY with a target Share Price of $1.73... A SP's sentiment can change overnight and then you're left wondering "WHY DIDN"T I?"...

And those investors that bought at $2.90 will be wondering how long before the future dividends will make up for the lost capital.

Disc: Have bought a few but am nervous -- I haven't done the research that Percy rightly recommends -- more speculation/gambling than investing

[Whipmoney]

I leave you to read Tim Hunter's article page 2 in NBR December 11th 2015, and to decide for yourself.
I have previously said your local library may have, it if you live in NZ.
I do note Tim Hunter warned against investing in the IQE float,and his reporting has been right on the money since then.!

I completely agree (partially with the benefit of hindsight) that the IQE float was a complete joke and that the stock was way over-priced. Arowana did a great job in bundling up some assets and flicking them off at extremely high multiple (much like Anchorage Partners who have been in the news lately..) but I've read Tim Hunter's article twice now and there is little in the way of direct criticism about the CEO (Rob Farcer) or any of the current management team.

The only direct claim that Tim Hunter makes is that Rob "should have known" with regard to the (potential) misreporting of quantum numbers however given that he was only the Group General Manager at the time of IPO/Quantum acquisition then its highly likely that he wasn't privy to that level of detail, at least at that time. Furthermore its questionable to call it "misreporting" when the so called "loophole" was put in place by the TEC itself and is likely to be standard practice in industry.

Tim then goes on to say "To it's credit, Intueri's new management appears to be trying to change the business model". Also by Tim's own analysis, in FY14, only 35% of the Quantum enrolments were the "dropouts" that fell through the (TEC course completion) cracks, with regard to pulling out prior to completing 10% of their respective courses. Assuming that management is trying to improve the business model then hopefully that percentage has further improved in FY15.

Despite the over-priced float, and over-exaggerated Quantum enrolment numbers (which have now seemed to stablise) I still think that there is still a great underlying business which is currently well priced. The current Market Cap of $58m also provides an adequate margin of safety in order to participate in what it potentially a significant amount of upside (with minimal long-term downside).


Disc: holding.