In morning trade the Idp Education Ltd (ASX: IEL) share price has been amongst the biggest movers on the market following the release of its half-year results.
At the time of writing the education services provider's shares are up 18% to $6.83.
Here are key takeaways from today's release:
- Total first-half revenue increased 27% on the prior corresponding period to $242 million.
- English Language Testing revenue increased 25% to $148.4 million.
- Earnings before interest, tax, depreciation and amortisation (EBITDA) was $50.3 million, up 38% on the first-half of FY 2017.
- First-half net profit after tax increased 27% to $30.5 million.
- Earnings per share of 12.6 cents per share.
- Partially franked interim dividend of 8.5 cents per share.
- Outlook remains positive for international education.
Overall I felt this was a very strong result from IDP Education and I can't say I'm surprised to see its shares charge higher today.
The star of the show in my opinion was its English Language Testing segment. Segment revenue grew 25% to $148.4 million during the half thanks to a 28% increase in the number of tests being taken.
This was driven largely by solid demand for English language tests in Asia. And was particularly the case in India, Vietnam, and Cambodia, which led to these nations being key contributors to growth in the region.
Elsewhere, I was pleased to see its gross profit margins increase across the board. Whilst this was partly down to favourable currency movements, the acquisition of the high-margin Hotcourses business has also helped.
Looking ahead management hasn't given any real guidance for the second-half and has merely stated that the outlook remains positive for international education. Whilst I would prefer more colour on its guidance, I remain confident that this strong first-half can be matched in the second-half.
Should you invest?
At around 28x annualised earnings I don't think IDP Education is overly expensive given its current growth profile. This could make it worth considering ahead of fellow education shares G8 Education Ltd (ASX: GEM) and Navitas Limited (ASX: NVT).
