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Yesterday we received results from AdvTech, a stock we have recently recommended. There was a trading update a few weeks back which meant there were no real surprises in the numbers. The image below breaks down the revenue and profit splits for the 6 months ending 30 June 2017.
As you can see, the school's division was a bit of a laggard compared to the other 2 divisions. In the commentary section, they mentioned that people immigrating had a negative impact on the numbers. When families immigrate they pull their kids out of school during grades which are not easily replaceable. This caught a lot of media attention and reflects the negative political and economic situation we currently find ourselves in. Many parent's abilities to afford private schooling has also depleted somewhat.
Having said that, Roy Douglas the CEO, said applications at the entry levels were doing well. The demand is there for new entrants, however replacing kids who leave mid studies is tough.
The shining light was the tertiary division which continues to thrive. A few deals, especially in the culinary and hotel management sector has excited the team. Tourism has thrived amongst a struggling economy. Jobs in the sector are high in demand and are far better quality than mining or construction for example.
The resourcing division also surprised to the upside. Demand for the kind of graduates the tertiary division churns out is still strong. They are growing this business throughout the continent.
We still see plenty opportunities for this company. Although the economic conditions are not ideal, this is the kind of business that will thrive regardless. Especially if they adopt technological advances such as remote learning, which they are very excited about. We are pleased with the results and remain buy rated.