AdvTech

EDUCATION MATTERS

ADvTech specializes in providing education, training, and workforce solutions. The company operates in the private education sector and offers a wide range of services that include:

1. ADvTech operates a network of schools and colleges that offer primary, secondary, and tertiary education. These schools provide high-quality education to students, which includes a range of academic and extracurricular activities.
2. ADvTech provides skills development training to individuals and businesses. The company offers a range of courses that include leadership, management, and technical skills training.
3. ADvTech offers a range of workforce solutions that include recruitment, staffing, and HR consulting services. The company provides staffing solutions to businesses in various industries, including healthcare, finance, and IT.
4. ADvTech also provides higher education through its tertiary institutions, such as the Rosebank College, Vega School, and The Design School Southern Africa. These institutions offer a range of degree, diploma, and certificate programs.

INVESTMENT CASE

Growing demand for education and skills development

One of the main reasons to invest in ADvTech is the growing demand for education and skills development in South Africa and other African countries. The population of Africa is expected to reach 2.5 billion by 2050, and there is a growing need for education and training to support economic growth and development.

According to UNESCO, the education sector in Africa is projected to grow by 5.6% annually from 2015 to 2025. ADvTech is well-positioned to benefit from this growth, given its established presence in the education sector and its range of offerings, including primary, secondary, and tertiary education, skills development, and workforce solutions.

Diversified revenue streams

ADvTech  has a diversified revenue stream, which includes income from school fees, skills development courses, and workforce solutions. This diversification helps to mitigate risks associated with any one particular line of business. In addition, the company's revenue streams are spread across different geographies, which further reduces its exposure to any one particular market.

Strong financial performance

ADvTech has a strong financial performance, with a track record of revenue and earnings growth. The company's revenue has grown at a compound annual growth rate (CAGR) of 12.2% over the past five years, while its earnings have grown at a CAGR of 18.1%. In addition, the company's net profit margin has increased from 7.3% in 2016 to 11.2% in 2021, indicating that the company is becoming more efficient in managing its costs.

Expansion into new markets

ADvTech has been expanding into new markets, including Zambia, Kenya, and Mauritius. This expansion has helped to diversify the company's revenue streams and reduce its exposure to any one particular market. In addition, the company has announced plans to open new schools and colleges in these markets, which will further increase its presence in these regions.

Strategic partnerships

ADvTech has formed strategic partnerships with other companies to enhance its offerings and expand its reach. For example, the company has formed a partnership with Microsoft to provide digital education solutions to its students. In addition, the company has partnered with various businesses to provide workforce solutions, including staffing and HR consulting services.

Experienced management team

ADvTech has an experienced management team, led by CEO Roy Douglas. The management team has a track record of successful execution and has been instrumental in driving the company's growth and expansion.

RISKS

As with any investment, there are risks associated with investing in ADvTech. Some of the key risks include:

1. ADvTech's revenue is largely dependent on the economic conditions in the markets in which it operates. A slowdown in economic growth could impact the demand for the company's services and negatively affect its financial performance.
2. The education sector is highly competitive, and ADvTech faces competition from both public and private institutions. The company may struggle to maintain market share if it is unable to differentiate itself from its competitors.
3. ADvTech operates in a heavily regulated industry, and changes in regulations or government policies could impact the company's operations and financial performance.
4. ADvTech operates in multiple countries and is exposed to foreign exchange risks, which could impact its financial performance.

FINANCIALS

Revenue growth Revenue was up 18% in 2022, posting strong growth off the back of the Covid lockdown slowdown. The Compound Annual Growth since 2019 is 11% per annum .

Gross Profit Margin Revenue  was up 20% in 2022, posting strong growth in line with Sales growth. The Compound Annual Growth since 2019 is 15% per annum .

Cash vs Debt The ADvTech group ended the year with R600 million in debt and R262 million in cash. The group operations produce R792 million in cash, which makes it highly free cash flow positive. As an investor, keep an eye on debt levels, even though highly manageable right now.

CONCLUSION

ADvTech is a well-established company with a strong track record of revenue and earnings growth. The company's diversified revenue streams, expansion into new markets, and strategic partnerships make it an attractive investment opportunity for investors looking for exposure to the education and training sector in Africa.

Disclaimer: Nothing in this article should be seen as financial advice. Everything stated is for educational purposes only. Always do your own due diligence.