Regulatory delays impact Stadio, but two mega campuses still on track

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Stadio's Krugersdorp distance-learning support centre.
Stadio's Krugersdorp distance-learning support centre.
  • Higher education provider Stadio held a virtual AGM on Tuesday.
  • Stadio's investments include Milpark Education, Stadio Higher Education and AFDA.
  • It is currently developing two mega campuses in the country.

Regulatory delays in accrediting programmes and site extensions impacted JSE-listed higher education investment holding company Stadio's growth plans for many of its contact learning sites, its CEO Chris Vorster said at its annual general meeting which took place virtually on Tuesday.

Stadio's investments include Milpark Education, Stadio Higher Education and AFDA.

Vorster, however, believes that contact-learning student numbers will recover once regulatory approvals are finalised and "normalcy and stability return to campuses post-Covid-19".

Distance-learning student numbers showed good growth of 16% from 30 June 2020 to 31 May 2021. Contact-learning student numbers, however, declined by 8% - mainly as a result of students delaying or deferring studies given the uncertainties of Covid-19.

During the first semester of 2021, student numbers had increased by 11% by the end of May. Distance learning had 28 659 students by that time compared to 24 784 by the end of June last year, while contact-learning students were 5 797 by the end of May this year compared to 6 269 by the end of June last year.

Other feedback provided by Vorster at the AGM included that the transfer of land in Cape Town's northern suburb of Durbanville is being finalised. It is earmarked for the development of a "mega campus" serving the Western Cape and due to open in January 2024.

Furthermore, the first phase of Stadio's Centurion "mega campus" is set to be completed in June this year and to open in January 2022.

Stadio has also concluded the acquisition of the remaining 26% interest in Southern Business School (SBS) Namibia and partnered with Capitec Bank to pilot the launch of the Capitec "credit for education" product.

'Nothing new'

According to independent analyst Anthony Clark of Small Talk Daily, there was "nothing new" in Stadio's presentation during the AGM, but he is happy with the underlying narrative. Clark is also encouraged by the underlying growth in learners, which continues to meet and exceed company expectations. 

"Significant demand for their courses and distance learning, as one would expect, is picking up during the Covid-19 pandemic. All in all, I thought the narrative of today's Stadio presentation was fairly upbeat and optimistic," said Clark.

"Stadio's share price hit a 52-week high [on Tuesday] at R3.34. I would not chase it much further from here. We want to see how the interim results will look. It all depends on the growth in the second half and the recovery they intend to see at some of the 'more problematic children' like Milpark. CA Connect with [its] diploma in accounting is apparently doing [very well]."

Earlier this year, Vorster told Fin24 that Stadio was well positioned in the market and in a much better position than in March last year when the Covid-19 lockdowns started. He said Stadio follows an industry-related approach and that there is a huge demand for higher education which the state does not have the capacity to meet fully.

During the financial year ending December 2020, Stadio's student numbers increased by 10%, from 31 869 to 35 031, while graduates increased by 13% from 7 294 to 8 224. Over the financial year until the end of 2020, core headline earnings increase by 33% to R117 million, while core headline earnings per share grew by 31% to 14.2 cents. Revenue jumped 14% from R815 million to R933 million.

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