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Curro Holdings Ltd develops, acquires and manages independent schools in South Africa for learners from three months old to Grade 12.
Curro has their own brand of private schools and they own Meridian. Total number of learners part of the Curro Holdings group was sitting at 51 305 as at 31 December 2018 |
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About Curro (COH)
Curro was established in 1998, and is the leading for-profit independent school provider in southern Africa. It develops, acquires and manages independent schools for learners from the age of three months to Grade 12.
Curro believes that education is the cornerstone in the development of quality leaders and responsible citizens who will positively impact the economy, environment and society.
Curro’s vision is to make independent school education accessible to more learners throughout southern Africa.
Curro’s ethos and values
Four key principles inform Curro's value system.
They are:
These principles form the foundation of Curro’s ethical standards, which are included in the group’s code of ethics, codes of conduct, good citizenship and related policies.
Curro's services
Curro's schools apply 21st century teaching and learning methodology in classrooms, including the active involvement of technology. The Castles follow Curro's preschool curriculum, which was developed in-house. This assists in developing a child's physical, social and emotional well-being, while also providing a practical framework for both adult-facilitated and self-directed learning, laying the foundation before the child goes to primary school.
Curro considers the written curriculum to be the mainstay of its offering. It believes that successful learning takes place when the taught curriculum aligns with the intentions of the written curriculum.
The ancillary services vary between schools and include boarding, aftercare, cafeterias, school transport and activity centres.
School models
Curro provides the opportunity to learners from all walks of life to obtain quality education. It's product offerings are as follows:
CURRO SCHOOLS accommodate learners from 3 months old to Grade 12. Class sizes are limited to a maximum of 25 learners per class and the Independent Examinations Board (IEB) examination is written at the end of Grade 12. Tuition at these co-ed schools are traditionally parallel-medium (Afrikaans and English) from Group 4 to Grade 9 and dual-medium from Grade 10 to Grade 12. Naturally, a wide subject choice is offered in the Further Education and Training (FET) phase (Grade 10 to Grade 12). Excellent facilities and a significant number of elective subjects and extramural activities are offered.
CURRO SELECT SCHOOLS are schools that have been acquired by Curro Holdings. Although owned by Curro Holdings, these schools retain their original well-established identities and ethos. Select Schools accommodate learners from age three months to Grade 12, at the end of which the IEB (Independent Examinations Board) is written. The medium of instruction and learning is English, complemented by superior facilities, a rich heritage, sound academic and extramural results.
CURRO ACADEMY SCHOOLS accommodate learners from age five years (Grade RR) to Grade 12 and some Academy Schools also include a Curro Castle and can accommodate preschoolers. With a maximum class size of 35 learners, Academy Schools are co-ed, single-medium (English) and write the National Senior Certificate (NSC) examination at the end of Grade 12. This cost-sensitive model ensures the lowest possible school fees without compromising academic standards and the excellent Curro curriculum. Focussed sports and cultural activities are offered.
MERIDIAN SCHOOLS accommodate learners from age five years old (Grade RR) to Grade 12 with a maximum class size of 35 learners. Meridian Schools are co-ed, single-medium (English) and write the National Senior Certificate (NSC) examination
at the end of Grade 12. This cost-sensitive model ensures the lowest possible school fees without compromising academic standards and the excellent Curro curriculum. Focussed sports and cultural activities are offered. Meridian Schools are managed by Curro Holdings as part of a joint venture with Old Mutual.
The image below shows Curro's footprint across Southern Africa
Curro believes that education is the cornerstone in the development of quality leaders and responsible citizens who will positively impact the economy, environment and society.
Curro’s vision is to make independent school education accessible to more learners throughout southern Africa.
Curro’s ethos and values
Four key principles inform Curro's value system.
They are:
- Child-friendliness
- Positive discipline
- Christian ethos (ethics and morals)
- Creative thinking
These principles form the foundation of Curro’s ethical standards, which are included in the group’s code of ethics, codes of conduct, good citizenship and related policies.
Curro's services
- Nursery, primary and high schools offering balanced academics, sports and culture.
Curro's schools apply 21st century teaching and learning methodology in classrooms, including the active involvement of technology. The Castles follow Curro's preschool curriculum, which was developed in-house. This assists in developing a child's physical, social and emotional well-being, while also providing a practical framework for both adult-facilitated and self-directed learning, laying the foundation before the child goes to primary school.
Curro considers the written curriculum to be the mainstay of its offering. It believes that successful learning takes place when the taught curriculum aligns with the intentions of the written curriculum.
The ancillary services vary between schools and include boarding, aftercare, cafeterias, school transport and activity centres.
School models
Curro provides the opportunity to learners from all walks of life to obtain quality education. It's product offerings are as follows:
- Curro Castles
- Curro schools
- Curro Select schools
- Curro Academy schools
- Meridian schools
CURRO SCHOOLS accommodate learners from 3 months old to Grade 12. Class sizes are limited to a maximum of 25 learners per class and the Independent Examinations Board (IEB) examination is written at the end of Grade 12. Tuition at these co-ed schools are traditionally parallel-medium (Afrikaans and English) from Group 4 to Grade 9 and dual-medium from Grade 10 to Grade 12. Naturally, a wide subject choice is offered in the Further Education and Training (FET) phase (Grade 10 to Grade 12). Excellent facilities and a significant number of elective subjects and extramural activities are offered.
CURRO SELECT SCHOOLS are schools that have been acquired by Curro Holdings. Although owned by Curro Holdings, these schools retain their original well-established identities and ethos. Select Schools accommodate learners from age three months to Grade 12, at the end of which the IEB (Independent Examinations Board) is written. The medium of instruction and learning is English, complemented by superior facilities, a rich heritage, sound academic and extramural results.
CURRO ACADEMY SCHOOLS accommodate learners from age five years (Grade RR) to Grade 12 and some Academy Schools also include a Curro Castle and can accommodate preschoolers. With a maximum class size of 35 learners, Academy Schools are co-ed, single-medium (English) and write the National Senior Certificate (NSC) examination at the end of Grade 12. This cost-sensitive model ensures the lowest possible school fees without compromising academic standards and the excellent Curro curriculum. Focussed sports and cultural activities are offered.
MERIDIAN SCHOOLS accommodate learners from age five years old (Grade RR) to Grade 12 with a maximum class size of 35 learners. Meridian Schools are co-ed, single-medium (English) and write the National Senior Certificate (NSC) examination
at the end of Grade 12. This cost-sensitive model ensures the lowest possible school fees without compromising academic standards and the excellent Curro curriculum. Focussed sports and cultural activities are offered. Meridian Schools are managed by Curro Holdings as part of a joint venture with Old Mutual.
The image below shows Curro's footprint across Southern Africa
So to the numbers we go
Highlights of the financial results reported by COH in their financial results are as follows (All data relates to continuing operations)
The numbers we are interested in are discussed below:
- HEADLINE EARNINGS Increase 23% from R201m to R248m
-
REVENUE Increase 19% from R2 099m to R2 496m
- HEADLINE EARNINGS PER SHARE (HEPS) Increase 23% from 49.0 cents to 60.1 cents
- EBITDA Increase 33% from R473m to R627m
The numbers we are interested in are discussed below:
- Headline earnings per share of 60.1c per share
- PE ratio of 43.5 (yes its very high but strong earnings growth is still taking place implying the future PE ratios will become lower)
- Dividend yield: Maiden dividend per share declared of 12c a share. Therefore a very modest dividend yield of 0.46%
- Profit for the period: R242million (up 20%% from R202 million for the prior period).
- Cash generated per share: R1.53 a share
- Net asset value per share: R12.77 (so trading at 2 times its book value)
- Cash on balance sheet per share: 22c a share (so less than 1% of the company's share price is made up by cash on balance sheet)
- Number of Curro learners: 41 992 (up 16% from 36 205 the prior period)
- Numer of Meridian learners: 9 313 (down 4% from 9 665 the prior period)
- Total number of learners for Curro Holdings: 51 305 (up 12% from 450870 the prior period)
So any comments or guidance from management on the results?
The Board is pleased with the financial results as well as the progress made in widening access
to quality school education in South Africa and beyond.
Due to both organic and acquisitive growth, more than 57 000 learners across 68 campuses are
attending a Curro school in 2019, its 21st year of existence.
In addition, Curro extended its brand offering with the opening of Curro Foreshore (Cape Town), with a new tech-focused schooling model. This provides a progressive curriculum focused on Mathematics, Science, Robotics and Coding - essential subjects for learners to operate in the Fourth Industrial Revolution era. Curro also opened the doors to Curro Private College Rivonia (Gauteng). This educational facility is the first in our stable to offer the National Certificate Vocational (NCV) as an alternative to the National Senior Certificate. Its focus in 2019 is on a NCV programme for Information Technology and Computer Sciences.
Matric results 2018 marked an exceptional year for Curro Holdings' IEB schools, with an overall pass rate of 99.7% for its grade 12 learners. The results revealed an increase in the number of students with university exemption, growing from 85% to 88%; the number of A candidates improving from 9.8% to 11.5%; and candidates with an average C or above rising from 70.3% to 73.2%. The pass rate for all Curro Holdings' NSC schools in 2018 was 94.3%. Complimenting this was an increase in the number of learners with university exemption, from 42% to 52.1%, while the number of A candidates doubled from 1.1% to 2.2%.
Construction of six new campuses to the value of R416 million. These campuses include Curro Vanderbijlpark and Edenvale (both in Gauteng), Curro Academies at Parkdene (Boksburg), Protea Glen (Soweto) and Savanna City (Johannesburg), as well as a Curro Castle at Burgundy Estate (Cape Town). A further, R118 million was invested in land banking. R590 million invested in the expansion of existing campuses, significantly so at Curro Roodeplaat, Curro Academy Wilgeheuwel, Windhoek Gymnasium (Namibia), Curro Midrand (previously Building Blocks) and Curro Heritage House (previously Curro Embury). Meridian was capitalised with R390 million, Curro's portion as a 65% shareholder amounted to R253 million. This investment was used to reduce senior and mezzanine debt.
In addition, Curro extended its brand offering with the opening of Curro Foreshore (Cape Town), with a new tech-focused schooling model. This provides a progressive curriculum focused on Mathematics, Science, Robotics and Coding - essential subjects for learners to operate in the Fourth Industrial Revolution era. Curro also opened the doors to Curro Private College Rivonia (Gauteng). This educational facility is the first in our stable to offer the National Certificate Vocational (NCV) as an alternative to the National Senior Certificate. Its focus in 2019 is on a NCV programme for Information Technology and Computer Sciences.
Matric results 2018 marked an exceptional year for Curro Holdings' IEB schools, with an overall pass rate of 99.7% for its grade 12 learners. The results revealed an increase in the number of students with university exemption, growing from 85% to 88%; the number of A candidates improving from 9.8% to 11.5%; and candidates with an average C or above rising from 70.3% to 73.2%. The pass rate for all Curro Holdings' NSC schools in 2018 was 94.3%. Complimenting this was an increase in the number of learners with university exemption, from 42% to 52.1%, while the number of A candidates doubled from 1.1% to 2.2%.
Construction of six new campuses to the value of R416 million. These campuses include Curro Vanderbijlpark and Edenvale (both in Gauteng), Curro Academies at Parkdene (Boksburg), Protea Glen (Soweto) and Savanna City (Johannesburg), as well as a Curro Castle at Burgundy Estate (Cape Town). A further, R118 million was invested in land banking. R590 million invested in the expansion of existing campuses, significantly so at Curro Roodeplaat, Curro Academy Wilgeheuwel, Windhoek Gymnasium (Namibia), Curro Midrand (previously Building Blocks) and Curro Heritage House (previously Curro Embury). Meridian was capitalised with R390 million, Curro's portion as a 65% shareholder amounted to R253 million. This investment was used to reduce senior and mezzanine debt.
So should you buy their shares?
Absolutely. With the state of South Africa's public education system in tatters, and COH group offering entry level private school for the middle class in South Africa, demand for the service that they provide will continue to grow. We do feel that since they are in the growth phase, one can forgive the demanding PE ratio it is currently at. Remember their corporate cousin Capitec Bank that traded on massive PE ratios for years while their earnings kept on growth substantially. The same is currently happening with COH. We feel COH should make up at least 3% to 5% of investors portfolio as the potential growth in the sector is enormous and we do not want investors to come back in a few years and say they wish they took a punt on COH. In addition to this the group has paid their first dividend showing they are confident enough in the cash and profit generating capabilities of their current crop of schools to start paying a dividend. And with 6 more school coming on line soon we would suggest taking a nibble.
Curro holdings (COH) valuation
All things considered we value the group's shares at R31 a share based on their current financial results, dividends, cash generated and the potential growth in the private school sector in South Africa. We believe their ever growing footprint and the need and demand for proper schooling will see more and more middle class parents send their kids to affordable private schools such as the offerings from COH. We therefore believe at it's current levels it does offer investors a bit of value, if bought at a decent enough discount to the valuation of R31, and we expect profits to continue to growth strongly for the foreseeable fuuture
The screenshot below, taken from Sharenet shows COH share price performance over the last year, 3 years and 5 years. And one can see the market has been extremely harsh on COH, and perhaps them declaring their maiden dividend will win over the market a bit.
The screenshot below, taken from Sharenet shows COH share price performance over the last year, 3 years and 5 years. And one can see the market has been extremely harsh on COH, and perhaps them declaring their maiden dividend will win over the market a bit.
