In 2021, we saw a $A1.14bn Block trade of IEL, representing 15% of the company, executed at $27.75. The block had been well flagged as the 38 Australian universities locked in huge profits, having together owned 40% of the soaring stock via an entity called Education Australia. The sale was a huge shot in the arm for the financials of the universities, which also arguably reduced their alignment with the fortunes of IEL. In hindsight, the sale demonstrated excellent timing, with stock over 50% lower today.
The share price has declined for several reasons over recent years, including restrictive policies in its key markets, including Australia, the UK, and Canada. The October AGM did nothing to appease investors: CEO Tennealle O’Shannessy said “We anticipate international education student volumes in our markets will decline 20-25% in the year ahead,”
- We see no reason to buy IEL, which is still trading on a rich 27x valuation relative to persistent earnings headwinds.
MM is neutral toward IEL
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