"EDU Australia (ASX:EDU) – We discussed the prospects for higher education provider EDU in our November update. EDU (which has a December balance date) in CY23 delivered a -$3m loss, however in 1H24 it returned to profit, recording a $1.6m turnaround in NPAT as student growth drove strong operating leverage. Enrolment growth has further accelerated during the second half of 2024 with its most recent trimester intake +363%, so we expect EDU to deliver even stronger incremental profit improvement in the second half. Then, in 2025 EDU will further benefit from the full year revenue and margin contribution from its 2024 cohort (as it will into 2026 and 2027 given these are 3 – 4 year degree courses). Based on its 2024 enrolment numbers (which are now locked in) we have modelled a significant NPAT result for EDU for 2025 to 2027. With a net cash balance at June 2024 of $6m, and a current market cap of just $14m, supported by both recent director buying and a share buy-back, based on our profit expectations for EDU for FY25, we believe there is potential here for a significant re-rate during 2025."
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