This could be another opportunity @RhinoInvestor.

Sorry, I haven’t been very active on Strawman lately, or on the share market either. I’ve just let our portfolio do its thing while my wife and I have turned our focus to more important matters.

My mother has not been well for over two months now, most of that time spent in hospital. We are lucky to still have her with us after 2 heart stents, a helivac flight, CPR twice (once for 11 minutes), and a pacemaker installed.

We’ve also had to work through myAgedCare, ACAT, Centrelink, trying to find permanent aged care in an overloaded system, before finally settling her into a lovely aged care facility after vacating her retirement village. We are absolutely exhausted!

I take my hat off to all the hard working medical staff amongst us who are tirelessly helping people back to good health. I’m very grateful!

Hi Rick,

Good to hear from you, and that you have been spending your time where it really matters. (The great thing about a good portfolio, is that it will still be in good shape after time away!) Having spent what time I could with my aging parents when they were still alive, every minute was time well spent. And it's not easy at the time.

@RhinoInvestor covered the important points from yesterday's AGM. Clearly, over recent days, some investors holding on for the hope of good news have capitulated and so we might be getting to the point where I'd be tempted to put in my final 25% tranche. Although, that said, I am happy to wait longer for the real bottom, as I felt the last recovery was a false dawn. And the p/e is still pretty strong for a company - which - given a short term horizon, is in decline! Tenealle's remarks yesterday that they expected to see student volumes down in the current FY by 20-25% clearly did not impress many, but it is evident in the Visa data.

Regarding your earlier question of a month ago, in the picture below what we can't see is how high the 2024 numbers are, but essentially 2025 over 2023 is flat, but of course 2023 was a dramatic rampup on re-opening compared with 2019.

At the AGM they again showed the following slide:

Which shows the phenomenal outperformance to the sector.

At a marco level, the sector will not be attracting a lot of investment from competitors or new entrants, and it is clear that $IEL are working hard to strengthen their market leadership and appear to be having success.

Given that it's tougher for students, the premium of using a service with differentiation in terms of approval of programs entry and % success of visas is potentially a self-sustaining virtuous circle through the current trough. They are coming from a low market share base, so they have plenty of running room.

And as @RhinoInvestor has pointed out, they are clearly pushing hard into the US - but of course this market remains attractive and is therefore likely more competitive. But the good news is that they can focus their attention and redirect resources there.

I think the hard thing for "believers" is that none of us really knows how deep or long the bottom of this cycle will be. I've read lots of views, but I haven't seen any compelling analysis. So, I have to be open to the possibility that I bought this at precisely the wrong time, and risk destroying portfolio value by holding it through a long trough, as prolonged macro-economic torpor, growing protectionism, and perpertually broken housing markets means that growth doesn't return for some time.

So that's the bear case.

But it's not my base case. The Universities are working hard. First to try to get a delay in the caps, negotating exemptions and carve outs from the quotas, and making the broader case of the "national interest", chipping away at it. And they are also announcing new accommodation investments to further strengthen the case. Because the international student fees are their lifeblood.

It will be interesting to see what happens in the UK. With a new government, likely to redefine the fiscal rules in the forthcoming budget so that they can drive growth, that could be a foretaste of things to come. Here in Aus., Government will hunker down until after the 2025 election. Canada will likely be locked in until late 2025 with their cycle. And the US is quite international-student friendly on both sides of the aisle. (International Students don't eat cats. They don't eat dogs. They don't eat the pets of the people that live there.) So on both the political cycle and the macro-economic cycle, my base case is for 2026 to be the year of resumed growth.

I wasn't expecting any good news at the AGM. There isn't anything in the public domain to feed it. So we are more of less where I expected to be.

Read my lips. Long term investor.

@Rick @RhinoInvestor @mikebrisy thanks for your comments and I broadly agree with the direction. I am surprised at the post-AGM SP reaction, as I didn't see anything really new, maybe there were some hoping for some positive inflection, but maybe too early for that. what may have been misinterpreted, imo, is the comment about volumes expected to be 20-25% lower this year. although my understanding is that is industry volumes and not IEL volumes, it was not made clear in the most recent comments from what i can see. obviously, IEL is strongly outperforming the rest in volumes, while a volume fall of 20-25% for IEL would cause a large fall in the SP, imo. i am assuming around flat volumes in 2025 to offer a large upside in the SP.

Rick you are doing the right thing, re parents, do everything, you don't want any regrets. Both my parents have now passed.

@Solvetheriddle I think you are right about some misinterpreting the 20-25%. TBH, on such an important point, I think Tennealle should have been clearer. Here’s what she actually said:

“The underlying message here is that as market conditions shift towards an increased focus on quality and conversion, IDP’s differentiated and highly trusted business model outperforms the market, creating unique opportunities to strengthen our leading position. This is important as we anticipate international student volumes in our markets will decline between 20% to 25% in the year ahead. However, with a combination of our expert people and leading technology, we stand ready to grow our share“

The statement is problematic in several aspects.

First, like you, my reading of “in our markets will decline between 20 to 25%” is that she is referring to the market volume and not IDP’s volume. However, it is ambiguous. The next sentence doesn’t do enough to resolve the ambiguity, although I think that is what it is attempting to do.

The second issue is using an aggregate range of 20-25%. Does it mean the aggregate volume of all the markets, or the range of expected declines, market by market?

Whichever definition, is she including the US in “our markets”? If yes, then the number is problematic. The US has c. 1 million international college students. With the UK in the ballpark of 750k, Canada 300-400k, and Australia c. 500k (that’s unis, and enrolments not commencements,…ballpark numbers only), we know the US isn’t declining … an ICEF Monitor report in May this year indicated that the US remains on a solid growth trajectory, with an expected CAGR of 4.6% over the next decade. In the short term, it will likely be a beneficiary of policy tightness in UK, Canada, Aus., as well as given the strong US employment market/soft landing.

For the aggregate decline to be 20-25% including the US, then the aggregate decline across markets excluding the US would have to be 30-40%, roughly, and we know that is not the case, based on visa numbers coming through.

My point is, if the US is so large and still growing, then how can the aggregate volume across markets decline by 20-25%? And clearly the range of declines across “our” individual markets cannot be 20-25%.

In an AGM that lacked any forward guidance, this problematic paragraph has been seized on as the only quantitative, forward looking statement. Given the state of the SP and the state of the industry,I think that was a mistake. (As someone who spent 5 years of their working career writing CEO scripts for investor communications of a large company (FTSE-20), I think much greater care should have been given to this part of the presentation.)

So now you’ve got me thinking. If that’s what caused some investors to bale out yesterday and drop the SP, then it is potentially a significant over reaction. As we are now in a renewed short term down trend, if the momentum players continue this, will we get an even better buying opportunity?

I am starting to salivate!

@mikebrisy i agree. the definition of markets, imo, does not include the US, that is my working assumption.

Not meaning to bang on excessively about this, but a good source to monitor is the Department of Education Website, which has a monthly tracker. (There are similar, though less user friendly tools in the UK and Canada. I haven't a clue how to track the US, but it doesn't matter because $IEL is start from such a low base, and US policy isn't restrictive.)

There is a database with a Powerbi app to cut the data anyway you like.

In the first graph below, you can see the light blue showing how many international students are enrolled in Australian Unis, as at end July 2024. That's $IEL's key segment.

In the second graph below, you can see Commencements by sector - which is the major driver of the Placement Revenue. The metric is YTD July, the latest month of data in the system, so each bar is showing 7 months of that year.

You can see the 2023 - 2024 growth levelling off. The hard go-slow in Visa approvals started in December 2023, so you can get an understanding of just how much inbound demand there was for 7 months of slowdown to not yet have pushed YTD commencements into decline. That lies ahead in the next perio.

The Unis number of 180k (7 months) is much bigger than the Government cap of c. 145k (full year) because of all the exclusions from the Government caps. (Australian scholarships, Pacific Island students, NZers, Research Degrees. and more!) Expect unis to keep working hard to expand the exclusions.

But anyway it is the trends that matter.