Our opinion on the current state of SDO
Stadio (SDO) is a tertiary education institution that offers a wide range of post-school training. The company offers higher education through five universities offering higher certificates, degrees, masters, and PhD qualifications. It currently has over 38300 students enrolled in 6 faculties offering more than 50 accredited training programmes. 80% of these student study online. At least 25000 of those students are distance learning students which insulates the company against the impact of COVID-19. The company has a vision of having 100 000 students, 70% of whom are expected to be distance learning students. In its results for the year to 31st December 2022 the company reported revenue up 11% and headline earnings per share (HEPS) up 18%. The company's net asset value (NAV) increased 7% to 209c per share. The company said, "In the prior year ended 31 December 2021, the EPS was impacted by the initial impairment of the right of use asset of R17 million in respect of the leased Milpark Education Campus and an impairment of R10 million relating to the STADIO Group’s Montana property, which the STADIO Group disposed of during 2022". In an update on the position at 26th May 2023 the company said that student numbers had grown by 8%. In a trading statement for the six months to 30th June 2023 the company estimated that HEPS will be between 19,8% and 23,4% higher. We believe that Stadio has a great future based on the general ineffectiveness of government tertiary education in South Africa. At current prices, and following their results, Stadio has broken up through its long-term downward trendline and it is now on an upward trend. We are bullish on its prospects. On 1st March 2022 PSG announced that it will be unbundling it shares in Stadio (25,1%) into the hands of PSG shareholders to release value.
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