Build their and our future

Yesterday Curro had a voluntary announcement that they purchased another school. They purchased, "Waterstone College which has 1 210 learners, situated in Johannesburg South".


Today is also the last day to buy Curro shares before their rights issue, where they want to raise about R590 000 000. If you own Curro shares at the close of trading today you will get 1 right for every 10 shares. The 1 right allows you to purchase another Curro share for R20, which given todays shares price of R29 is a nice discount.
"Curro currently has 31 private school campuses under its banner, accommodating approximately 28 000"This year they are spending R1.5 billion on 10 new schools and are in the process of buying 20 sites for future schools. Curro's current market cap is R8.1 billion making this year's expenditure around 18.5% of it, hence the reason for the rights issue.


The goal for them is to grow by 7 - 10 schools a year, where they hope to have 80 schools by 2020. Part of future growth is planned to include having three teachers training colleges, Durban, The Cape and Gauteng, from where they will recruit teachers for the new schools. Having trained the teachers should mean that they know the quality of teacher before they hire them, allowing them to employ the best (this is my theory anyway). After 2020, which is still a long way off they are talking of maybe moving North of our boarders.


All the planned growth for the future means that you will pay around 220 times current earnings to buy a share. They are planning on growing the number of schools by more than 2 and a half times over the next 6 years, so current earnings will rocket over the same period bringing down the multiple. For more info on the company here is a link to a piece that we wrote covering their full year results, Making a profit, growing like crazy. If you currently hold the shares I would say defiantly follow your rights.