I look forward to your price estimate @Solvetheriddle.

@Rick $16.50 that assumes 11% eps growth for 5 years PE 26x exit multiple and 10% reqd rate of return, thats builds a margin of safety. Holders will hope for better

Thanks @Solvetheriddle. Sounds reasonable! I’ll keep adding down to that price.

@Rick @Solvetheriddle Ive just added 25% to my RL position at $17.28.

I probably have one more bite until I get my full position, but as we are still in a down trend, I’ll keep some powder dry.

I haven’t changed my view on valuation ($24.50) although volumes may face a head wind in the next year or two.

Longer term, however, my thesis is that $IEL will gain share in growing international markets with the lions share of growth coming from placements and service augmentation around placements. ( I’m not bullish on language testing.)

My view is that the current macro headwind provides that classic opportunity when market leaders strengthen their relative position, and emerge stronger when the winds change. Therefore, this is the time to be buying. Not when the sector is back in favour.

@mikebrisy @Rick thanks guys i appreciate people talking in real time, which all investment decisions are made, not after the race is won or lost

@Solvetheriddle ditto, I appreciate you putting your "Buy" price and assumptions out there - as I was able to challenge my own thinking just before putting in my Buy order.

Its a good acid test.

I'm more bullish than you on 5-yr NPAT growth (15%-20%), and therefore my buy price is higher to get a 15% expected return. My factor of safety is that I'd not be devasted to end up with a 10% return! A soft year or two could indeed lead to that outcome.

But I think the negative sentiment on international students could turn very quickly. Once economies start re-positioning themselves for growth, industries will be howling about skills shortages. The unis will always pull whatever they can in any event, because overseas fees drive their viability.In the US, even though employment is softening, there are still more job openings than available workers,... as Fed Governor JP puts it every month.

While it will face head winds in its established markets, $IEL is now also growing into the US. It signed 10 universities in 1H FY24 and is working on a pipeline of 100 other unis for 2H FY24 and FY25. As it signs the universities and revenue starts flowing, it will be likely to allocate more resources to that market. It will be interesting to see how the US market shapes up, and this could be a material upside over time.

College education in the US is next level in terms of costs. Last year, I stayed with a friend in Oregon whose son is studying at UC Berkeley. We were discussing fees and all the associated costs and all I can say is that when my family came back to Australia, my daughter didn't feel so hard done by as a humanities student at a global top 100 Aussie uni.

If $IEL can crack placements in the US, and sell international students related services around that, I expect it to be a very high margin business and a solid driver of growth as there are actually almost 3,000 unis in the US that offer 4-year degrees. So their initial list of 100 is scratching the surface, although no doubt carefully prioritiesd to be the most attractive for international student population.

Sorry, I'm rambling.

@mikebrisy @Rick @Solvetheriddle thanks for the dialogue … I’ve taken a small opening position on this one following my review of the discussion on Strawman and some digging around company materials myself. The big things that jumped out for me were that the decline in English Language Testing is more than made up for by the Student Placement services.

I was also happy to see increase in placement related cashflows as indicated by the Contract Assets

The other thing that jumped out for me was the upside in student placement services … which is much higher margin than ELTS. It also looks that IEL has been investing in headcount and reach to increase their share of this market and the recent performance looks like that is working (i.e. they are growing faster than the industry yet the industry is still growing even as different countries play with visa rules etc … which I suspect will always be part of underlying macro economics impacting IDP)

I also appreciate the @mikebrisy ramble about the cost of US education … It puts into perspective for me that if someone can afford that (eg. Emerging Indian and Chinese upper middle class) then a small % clip of the ticket for IDP for placement services can still be a relatively significant amount (hence the high margins in that growing part of the business).

DISC: Held IRL and order in Strawman (now there is real money on the line this is more than an academic exercise and I’m going to keep digging)

Love it @RhinoInvestor, and thanks for your contributions here also @mikebrisy and @Solvetheriddle. Please keep digging guys. IDP Education now makes up 8.4% of our IRL portfolios, so it’s in our top five positions.